A Sunday article from the New York Times pretty much defines the state of “capitalism” as it exists now.

Detractors contend that awarding contracts based solely on price means that the government risks ending up with inferior products or services, though this is a risk even when the government does not use reverse auctions.

The target of that “criticism” is FedBid, a relatively new service that allows venders to bid on government contracts. The Times is worried that the government may actually end up paying less.

The central contention lies in the ephemeral idea of “inferior products and services.” In terms of government contract work, I am at a loss to see how that fits at all. Governments submit specs and the vendor has to meet those specifications. There is no such thing as inferior services – this is strictly pass/fail. Even in contracts where specifications are limited (as the Times implies further down in the article) such competition would actually force the government to increase its own productivity regarding vendors and its own needs.

Through FedBid, government agencies use “reverse auctions” — in which the lowest bid wins, rather than the highest — to decide who is awarded contracts. In theory, the process can save money for taxpayers by encouraging businesses to offer the best possible prices.

The only entities that may not want “the best possible prices” are corporatists that decry any and all forms of competition. The crony “capitalists” have on innumerable occasions used the “inferior” label as a barrier to competition, price or otherwise.

But the real problem here is the underlying philosophy being espoused by the Times, used by cronyists. Namely, they see competition and inferior as being synonymous. That certainly may be the case in limited anecdotes, but it used to be self-evident that competition actually creates far superior products. That was an unchallenged, unqualified feature of a true capitalist system because even the “big boys” had to stay on their toes lest they be surpassed and rendered obsolete. In other words, the life cycle of business was an essential part of delivering rising living standards, the widespread adoption of more and better products at cheaper prices.

Now they just hire lawyers and PR firms to encourage the attitude that only large firms can deliver quality. And what happens when only large firms succeed? There is no forward momentum of productivity, leading to an eventual stagnation whereby “economists” are forced to come up with convolutions and excuses for its occurrence and stubborn persistence.

 

 

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