Competition is good for us, part 2

In part 1 I explained why competition is good for us because it makes things better, cheaper and more diverse. But one question remains: What the people who loose their jobs because of competition? At least competition is bad for them, right?

And of course, in the short term that’s true. They would, without competition, still have their jobs. But when looking at it in the long term, things look completely different. When one company has to close down because another company made something that was better or cheaper then they did, this is just a temporary setback. Because the money that are saved buy buying the cheaper product does not just disappear. They get used somewhere else, and more jobs are created in that sector instead. The people that lost their jobs may have to change their type of work, but competition has not made the available jobs fewer. And this works even across borders.

With cheaper clothes and toys thanks to imports from China, families with kids get more money over. Which they spend on buying other things, for example buy going to the movies more often. This expands the entertainment industry, which is largely american. So now we have the same amounts of jobs in the US, but many more jobs in China. This makes China richer, so Chinese people are now buying more goods from other countries, including the US. Although mostly they buy from Europe. Which makes Europe richer. So we buy more things from the US. In the end of this circle, all countries are richer than before. Because of competition.

So the losers are the corporations who go bust. It is then worth reminding ourselves who the open society is supposed to benefit. The open society is not supposed to benefit politicians or corporations. It is supposed to benefit the people. This is often forgotten. A good example of this is the so called browser-wars. Netscape Navigator was the biggest browser around until Microsoft came with their own browser, Internet Explorer. I remember this, and I also remember switching to Internet Explorer very quickly. It was simply much better than Navigator. It was also free. And the last blow to Netscape came when Microsoft started shipping Internet Explorer included with Windows. Many see this as unethical behaviour from Microsoft, as unfair competition. And of course it was bad for the company Netscape. But for everyone else it was good, because we got a browser that was not only better, we didn’t have to pay for it. Microsofts competition was bad for the company Netscape, but good for the people.

There were many other browsers out there too, like Opera, that was better than Internet Explorer, but you had to pay for. Nobody was very interested. The competition wasn’t good enough. And what happened without good competition? Well, Microsoft stopped improving Internet Explorer. It stayed on version 6 for years. Not until Firefox came around and we got a browser that was better, but also free, and open source to boot, did Microsoft wake up. Because they saw that their share was shrinking, rapidly, and they had to improve Explorer to make it better. This is a classic example of how improvement and invention stops if you don’t have enough competition. It also shows that in an open society, when that stop happens, this opens up for others to compete again.

Today, and this is what ultimately made me write these posts, Google announced a new browser, Chrome. It has a lot of improvements compared to Firefox, and even more compared to Internet Explorer. It also has a big name behind it, Google. It will be competition for both Internet Explorer and Firefox. But what ultimately will happen depends on how good it is. Will it be better than Firefox? Will Firefox be able to keep up? Will people who trust Microsoft, but doesn’t trust Firefox trust Google? We don’t know what will happen in the end, which of these browsers that will prevail. Some have expressed concern that this will spell doom for Firefox. That is possible, but that will only happen if Chrome is a much better browser.So yet again, competition turns out to be good.


1 Response so far »

  1. 1

    […] what about those getting out-competed? The people loosing their jobs. I’ll tak about that in part 2. This post is already way too long. Sorry about the […]

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