Posted on by Art Powell

How much power do consumers have in our economy? In theory they have all the power but in reality their power varies according to the degree of competition in any industry and their own personality.

Economic power means the ability to make decisions about what and how much is produced. If we lived in small self-contained communities such as a Pacific island these decisions would be made mostly by people for themselves. If we had perfect competition we would also make these decisions for ourselves and the market mechanism would transmit our decisions to producers. As there are lots of people who want to make decisions for others one of the conflicts of our society is over economic decision-making.

Two examples illustrate how decision-making by individuals can vary according to competition in the industry. The provision of spiritual services is, at least in Canada, the industry which comes closes to perfect competition. Education is a mostly a monopoly.

As most of us Canadians have a strong commitment to freedom of religion people are free to attend the church of their choice or not at all. This means governments do nothing to restrict competition. Anyone with an inclination to preach can rent a school or community hall on Sunday mornings and some congregations allow anyone to do services. No licenses are required by the government although some denominations use ordination, a form of licensing. A minister’s career path is determined by his ability and his/her reputation. The Bible and most other religious texts are not copyrighted. Churches receive no government subsidies other than an exemption from property taxes (which makes entry into the business easier).

On the other hand governments interfere extensively in education. Parents are required by law the send their children to school, teachers must be licensed and governments closely supervise curriculum. Teachers generally must be licensed and are very difficult to fire. Job security goes with length of service rather than teaching skills. The result is a monopoly which is strongly defended by its employees.

In the spiritual world the customers are kings and make their own decisions.. :People can and do express dissatisfaction with their feet and some people go church shopping. Ministers can be and are fired. (My observation is that ministers are asked to leave for one of two reasons: They get into an inappropriate relationship or they stay too long.) Those people with the right skills rise to the top and those without the skills drop out. To survive churches and staff must satisfy the spiritual needs of their congregations.

In education the customers (or their parents) make very few decisions. They have no say in the curriculum and very little over who teaches their children. Education is one of the most important things parents should give their children, yet it is where they have the least control. This may be why home schooling and private schools are appealing to those who can manage them. I believe education is too important to leave all decision-making to those employed in the field.

In other sections of the economy producers have to be more creative in influencing customer decision-making. Governments are usually willing to limit competition with licensing, tariffs, subsidies, patents and copyright. Some firms can use the media to make emotional appeals to customers. Consumer power comes from being able to switch to another provider. The reaction to emotional appeals may vary by person and personality. Maybe those people who don’t watch television have it easier when it comes to economic decision-making.

Another aspect of economic control is money creation. The fractional reserve money we currently use creates money when bankers make loans. This gives bankers a great deal of power to decide what economic activity happens and who does it. On the other hand creating money via a national exchange trading system as proposed in the essay “LETS go to market: Dealing with the economic crisis” on this weblog would transfer this power to individuals.

Some of us like to make our own decisions, some people like to make decisions for others and probably some people don’t care. As one of those who likes to make his own decisions I like the perfect competition model.

If you liked this post your are invited to comment, press the like button and/or click one of the share buttons. If you disagree you are invited to say why in a comment. While I like the idea of sharing this platform, my personality is such that I don’t reply to many comments.

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Filed under: Economics | Tagged: churches, Competition, consumers, decision making, Economics, Education, ministers, money creation, perfect competion, spiritual services, teachers |