Pages

Tuesday, February 10, 2015

A Simple Explanation of the Difference Between Employment and Outcomes in the Risk Taking Creative Destruction Oriented Private Sector Vs. Entitlements Based Public Sector "Competition"

The difference between private sector competition and public sector government entities is easily seen in The RadioShack Lesson:

"Former Florida Governor Jeb Bush made a useful point in his speech to the Detroit Economic Club last week: Of the companies on the first Fortune 500 list in 1955, 88% “don’t even exist today or have fallen away.” That reality of American capitalism was clear from the news that RadioShack has filed for bankruptcy.

RadioShack began in Boston 94 years ago as a seller of radio gear, growing into a chain that once had 7,000 stores and was a favorite of techheads and average consumers who wanted to buy a personal computer. As recently as 1999, its share price was more than $76 as it rode the early days of the mobile phone boom. Now its shares are worth pennies.

The company made mistakes, most recently making itself hostage to unconventional financing. But its biggest challenge was coping with the rapidly changing digital world, the rise of the Web in electronics sales, and the consumer shift to mobile products from the likes of Apple that didn’t need RadioShack stores. An image that was once cool became d√©class√©.

RadioShack joins the list of other famous American companies capsized by waves of creative destruction. The lesson is that in a capitalist economy no business triumph lasts forever, and the most dangerous moment can be when you are at the height of success. Andrew Grove, the former Intel CEO, summed it up when he wrote “Only the Paranoid Survive.”

The same cannot be said for government, where failure is typically rewarded with more money. Despite its bankruptcy, RadioShack nonetheless made life better for millions of Americans while it prospered."

Summing Up

Creative destruction is alive and well in the private sector where competition is a way of life.

We the People could use a little of it -- even a lot of it -- in the public sector as well.

Prosperity and progress depend on risk taking entrepreneurs in a competitive marketplace where consumers rule.

We the People are better served, despite the inevitable and numerous bumps along the way, by a freedom based private sector oriented economy rather than a bureaucratic government dominated society.

That's my take.

Thanks. Bob. 

No comments:

Post a Comment