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Business Success in a Marketplace Democracy
by Gregory Johnson
Walter E. Williams wrote an article called Conflict or Cooperation that describes how big government can hinder freedom and liberty by allowing a majority to make choices contrary to what the minority wants. The article appears as a 31 March 2010 entry for Williams on the Creators.com website and is also on his George Mason University web page (source).
In his article, Williams provides the example of prayer in school as an illustration of how government can cause a majority choice to infringe on the liberty of a minority:
Take the issue of prayers in school as an example. I think that everyone, except a maniacal tyrant, would agree that a parent has the right to decide whether his child will recite a morning prayer in school. Similarly, a parent has a right to decide that his child will not recite a morning prayer. Conflict arises because schools are government owned. That means it is a political decision whether prayers will be permitted or not. A win for one parent means a loss for another parent. The losing parent, in order to get what he wants, would have to muster up private school tuition while continuing to pay taxes for a school for which he has no use. If education were only government financed, as opposed to being government financed and produced, say through education vouchers, the conflict would be reduced. Both parents could have their wishes fulfilled by enrolling their child in a private school of their choice and instead of being enemies, they could be friends.
Human Nature. I agree with most of what Williams is saying, but he doesn’t quite go far enough. The fact is that the failings we see in our political system are human nature and they also exist in the free marketplace. They are human failings, not political ones. It’s, unfortunately, human nature (for some humans at least), to use their majority power in politics or the marketplace to become a collective tyrant and disregard the desires or needs of the minority. Some people in politics and the marketplace simply have a hard time getting along with others. So, their solution is to take control, or, split away if they can’t be in control.
Learning to Get Along. What is really needed in our society is a sense of tolerance, diversity, and liberty. So, in the case of prayer in school, it would be more equitable and true to the principles our nation was founded on to simply allow the day to be started with a choice of prayer or not. Those wanting prayer time, could meet in the auditorium. Those who don’t wan to start the day with prayer could meet in their classrooms or another area of school. Problem solved. Rather than splitting the schools into praying and non-praying schools, why not just encourage people to cooperate with each other and respect differences. One of the most important lessons children will learn in school is to learn to get along with others. United we stand, divided we fall. What are we teaching children if we build separate praying and non-praying schools?
Separatism Never Ends. Assume we have separate schools for praying and non-praying students. What if the majority of students in praying school happen to be Muslim? For some towns in America this could easily be true. Should the prayers in the auditorium be Islamic prayers? In Williams’ example, the schools should keep splitting up into smaller and smaller schools each representing their own separatist views until, presumably, we have the kind of sectarian division and strife that exists in Iraq. It’s not practical or healthy to have as many schools as we have religions and denominations or sects of those religions. At some point, people need to learn how to live together. A better approach is to learn how we can create solutions that accommodate everyone. Those who pray and those who don’t pray should be able to go to school together under the same roof.
Marketplace Democracy. As we all know, the democracy in our country doesn’t just occur in voting booths every two years. It occurs every day when we vote with our money. What we really have in our country is a marketplace democracy more than a political democracy. The consumers of the marketplace decide everything, including who becomes elected, what companies rise and which ones fall, and what social trends will sweep the nation. No politician or government has that kind of power. Organizations, companies, services, and/or products not receiving enough money will dwindle away for lack of support. It doesn’t mean they were bad necessarily, but they just didn’t have a large enough economic support base.
When Politics and the Marketplace Fail. There are situations when the marketplace system and political system don’t work on their own to serve the greater good. For example, if we were voting (with dollars or votes) on whether to spend money in our society for wheelchair accessible buildings, the majority of people might vote that it isn’t necessary (since it doesn’t serve their immediate personal interests). The reason we accommodate and assist children, the elderly, and handicapped people isn’t because it’s necessarily economically profitable in the marketplace or prudent politically, it’s just the humane and compassionate thing to do. So, compassion is more important than democracy in politics or popularity and profits in the marketplace. Compassion is the trump card.
Here’s a real-world example of how politics and the marketplace both failed to protect liberty and equal access to services. In March 2006, a group of rural Iowans were without high-speed Internet service. They were still using dial-up modems. Qwest was providing them phone service, but not DSL, and Mediacom wasn’t there at all. Neither as consumers in the marketplace nor as voting citizens would their collective voices been enough to get high-speed Internet service. Only with the help of the Consumer Defense Resource Group were these citizens able to receive the basic high-speed Internet service that others have had for years.
- Learn More. Big utility companies like Mediacom, Qwest, and Mid American Energy are given tax breaks as well as the use of public airwaves and public lands to conduct their business. They also have the benefit of being a monopoly in most markets. In exchange for this, they are expected to equitably serve the taxpayers who partially fund their businesses. Most of their profits come from population-dense urban areas where a small investment to deliver service, to an apartment building for example, produces a larger profit than delivering service to a rural farm house. Unless pressured to do so, most businesses simply ignore any marketplace minority that offers low profitability. Yet, we all recognize that everyone, even rural farmers, need basic services such electricity, water, sewer, waste removal, phones, schools, libraries, and roads. The Federal Government now recognizes broadband Internet as an essential service that needs to be delivered to all citizens.
Business Success in Marketplace Democracy. There’s a restaurant in the town where I live called Mia Za’s. It’s primarily an Italian food restaurant, but they offer a little bit of everything for everyone including some baked goods from local bakeries. Mia Za’s has an amazing variety of foods, such as sandwiches, salads, soups, pizza, pastas, and more. That’s common for larger restaurants, but what’s uncommon is that when ordering, customers can write up their orders on highly customizable order forms. For example, you can create a salad from scratch or just choose from a menu of popular salads. In the Mia Za’s world, nobody is left out even if they represent a minority of customers with a certain food preference. In fact, every individual is treated as a unique person with their own food preferences. Under one roof, one finds vegetarians and meat eaters, pasta lovers and those who prefer sandwiches, all living in harmony. The reason this business model works so well is because it reflects and reinforces our better nature and the inner intuitive sense and desire to get along with everyone. We all want freedom and choices, not only for ourselves but for others. Were the Mia Za’s approach applied to government, politics, school, or the marketplace, we’d all be much better off. There’d be no need for the conflict that Williams addresses in his article.
- Learn More – Mia Za’s Model Applied to Education. During my senior year of high school, the school I was attending began testing a Mia Za’s-like approach to education. As seniors, we could choose what courses we wanted. It was a lot like registering for classes at the college level. Rather than serving up education like a combo-meal at McDonalds, they were taking a risk that students would have an interest in their own education and destiny. Initially school administrators were very concerned about what students would do given freedom of choice with education. Like a Mia Za’s menu, students could pick and choose what courses they wanted, and even customize the courses. Rather than a majority of administrators or parents fighting over what combo-meal curriculum would be offered, everyone got to choose the education they wanted. This is one example of many where creativity, ingenuity, and cooperation can result in serving everyone’s needs without there needing to be winners or losers.
When Quality is the Bottom Line. When I was managing a Radio Shack store in California, my pay, bonuses, promotions, and recognition were based on sales volume. The formula for success was quite easy: Focus on the high dollar sales. For some reason, I was often compelled to think beyond that model, and those around me were perplexed when I would patiently spend time helping customers with smaller purchases. One day, an elderly lady came into the store looking for a phonograph needle — the kind that could play 33 RPM or flip over and play 78 RPM albums (if you can remember back that far). I spent a bunch of time helping her, and when she left the store satisfied, the people I was working with simply had to ask me why it is that I would spend so much money on a $1 sale. So, I explained to them about what I call the other bottom line: that of excellence in service.
- Learn More. A few weeks after helping that elderly woman with her phonograph needle, the corporate office of Radio Shack sent out a letter to all of our stores. Apparently the elderly woman was so impressed with the service she’d received that she wrote the president of Radio Shack about it. The news of that $1 sale reached the desk of the president, and it became an example of how the company wanted their employees to treat every customer. When companies and employees strive for excellence in service, everyone benefits. Certainly a company known for excellent service will attract more customers and grow, but good customer service isn’t just about excelling in business, it’s common courtesy. The same is true when offering exceptional products. Of course, it’s good for a company’s reputation and long-term sales figures, but it’s also the right thing to do. The example above of Mia Za’s is a good illustration of offering exceptional products, excellent service, and great value.
Marketplace Cooperation. In his article, Williams suggests that government promotes conflict, but the free market economy promotes cooperation. Conventional wisdom tells us the opposite is true. For example, one state that does research on highway costs and develops a method to construct more durable and economical road surfaces will share this with other state governments. There is some competition between countries, yet even so, research into health and eliminating poverty is often shared when seeking to make the world a better place. However, in the free market economy, businesses are constantly competing and rarely would they share information that might give their competitor’s an edge.
- Learn More. There are some examples of marketplace cooperation, yet they don’t come about naturally. Instead, cooperative models of business are usually developed by people who recognize the benefits of working with each other rather than against each other. One example is the Iowa City Area Computer Support Cooperative. This is a cooperative business model that results in higher quality service at more economical prices when businesses work together.
Conclusion. Here are a few principles to remember:
- Fairness, freedom, and cooperation only thrive in politics and business when we take the initiative to promote and defend these principles.
- Those who make excellence (in products and services) their bottom line will ultimately have greater success than those who always choose to do what is cheapest, easiest, and/or makes the most profit.
- Cooperation with people will produce better results for everyone than competing against them. A hybrid model of competing with people (rather than against them) can inspire everyone to do better.
Video Commentary. Below is a video commentary by Gregory Johnson about the potential challenges of democracy.