I have criticized critics of capitalism and market economics. Mostly, what they denounce is either a straw-man caricature, or else a very small part of a very large phenomenon. While of course there are problems, as with any aspect of human life, if you think about it the great bulk of what you spend money on you’re very glad to get. But what people like me defend is not simply “markets” but free markets. Competition is essential; with it, businesses keep each other in check, and consumers win. Without it, beware. (And too often regulation of markets impedes competition.)
It’s easy to see the behavioral difference competition makes. Take eBay. I buy a lot of stuff there; I even used it to buy an ISBN number! (What’s that? Look it up.) The eBay market is fiercely competitive, and my experience dealing with sellers has been overwhelmingly positive.
But the company eBay itself is virtually a monopoly; akin to a “natural monopoly” (like your electric utility) where having multiple competitors wouldn’t really work. Once eBay established itself as “the” online auction site, where buyers find the most sellers and vice versa, no competing site could gain traction. And, with no real competitors, eBay’s customer service is unsurprisingly atrocious.
I recently returned a rare coin to Germany. Since registered mail each way takes several weeks, I didn’t know I had a problem until two months after my payment. I thought I was protected by eBay rules; but when I tried to open a “case,” by e-mail, I was told the window is only 45 days.
Now the fun begins. I want to talk to somebody at eBay about this. Trying to phone gets nowhere; recordings tell you to click on “live help” on eBay’s website. Too bad there’s no such place to click. My further e-mails generate a comedy of repetitive non-responsive boiler-plate replies, with more instructions to use website features that don’t exist, as well as non-working telephone numbers to call. After continuing to complain about all this, I finally get a response in German. I reply (in German) that I don’t speak German. No answer. I send a snail-mail complaint letter to eBay’s president. No answer.
(I have posted online most of the e-mail exchange; if you’ve got nothing better to do, click here).
This is what you get when there’s no competition. Will I stop using eBay? No; there’s alternative. And they know that.
Another case: U.S. Postal Service. Four big registered packages mailed the same day all stolen by a postal employee, they told me. Would they pay on the insurance? Nope. Claims denied: my dealer pricelist, customer orders, and invoices did not prove the value. Eventually, after going through hell with them, they paid. But be warned, absent unimpeachable documentation of value, postal “insurance” is basically a scam.
In contrast, I recently sold my lifelong collection of early Chinese coins, through an auction firm in Germany, Teutoburger Munzauktion. Why? I’d been favorably impressed by their operation. This is another ferociously competitive market. And Teutoburger provided outstanding customer service. Another case was the printing of my recent book, Angels and Pinheads, by 48HrBooks. Again, a highly competitive arena of business. And again, the customer service was outstanding, beyond what one might have expected.
This is why I am a free marketeer.