The Marketplace: Desire, Supply & Demand
A good deal today might not be a good deal tomorrow. Factors that affect what determines a good deal are primarily desirability and availability. An iPhone 6 was very desirable in 2014 but today it isn't worth anything. Desire is a complicated mix of need (real or perceived), novelty, quality, convenience, personal skills/capability, available time and countless other real or perceived influences. Desire equates to demand for goods and services. Advertising is a service that is designed to create or increase desire in goods or services. The best goods and services solve problems that most people cannot solve themselves or lessen the impact of those problems. Quality is how well goods and services measure up to each other in the marketplace. Availability is dependent on supply and demand, how much of a good or service is available compared to how desirable the good or service is. The scarcer and more desirable a good or service, the more people will be willing to trade for it in return. The tickle me elmo toy of 1996 is a perfect example of how viral social demand quickly overcame the available supply in toy stores increasing the price people were willing to pay for the toy. As demand increases in a free market the price of the good or service will increase creating incentives for others to develop the skills or apply their resources to exchange for that good or service. Capable competitors will enter the market offering slightly lower prices for the goods or they will innovate on the product or service to create better goods for the same or increased costs. In this way less valuable goods will lose out to higher value goods and prices will be held at the point where those in the market are making enough profit to warrant their effort for goods that are of enough value to those willing to pay. This is the basis of free market capitalism.
Disrupters to the free market
When left unimpeded by artificial obstacles such as government regulation, or other barriers to entry into the market such as price of entry or larger competitors using established capital at scale to price competitors out of the market, the market will result in ever improving higher quality goods at relatively (to inflation) reduced prices over time for those higher quality goods. Disruptors to the free market can come from an unexpected change in the market such as a disaster that affects supply chains, the loss of irreplaceable skill (death of a famous artist), or most often it comes in the form of artificial manipulation of organic supply and demand due to radical imbalances that prevent equal competition (using slave labor), monopolies creating or leveraging natural barriers to entry for competition, or government or other regulatory interference. Let's consider medical services covered by insurance. Insurance is a service that is designed to help people that can't afford really expensive rare medical procedures receive those services in the unlikely event they will need them while avoiding financial ruin. For this service they pay a relatively small amount each month for this "coverage". The insurance company promised to provide this medical coverage to thousands or millions of people when they agree to pay the insurance company each month. If the client agrees to pay more, the insurance company will expand their service to pay for regular medical visits and services too. Once the insurance company has signed up enough people, they will then go to medical providers and offer them access to all of their clients in exchange for the medical providers agreeing to only charge the insurance company a reduced % of their normal service fee. The medical providers will initially agree because it gives them access to so many patients, but the truth is that the doctors cannot actually make a profit by only charging 30% of their actual fees, so they increase their fees significantly so that they can make a profit. The consequence is that anyone who does not have insurance will have to pay the new artificially increased prices which puts pressure on them to sign up with an insurance company who then has more negotiation power with medical providers to decrease what % they are required to pay and because there are fewer people that are independently paying for their services, they might be forced into accepting the new terms of the insurance companies unless they have enough clients or there are other insurance companies offering better terms. In the mean time, while the insurance companies are leveraging medical companies to reduce how much they charge, they will also increase how much their clients pay (premiums) until the people just can't afford it and seek regulatory help. But when they create rules that interfere with the actual cost of goods and services it tends to hurt one side at the expense of another side of the market. Government and agency regulations are helpful to prevent companies from using monopolies to reduce competition, but are extremely detrimental when they use regulation to benefit some parties at the expense of other parties. This is what is meant by the term "Crony" Capitalism and unfortunate it is rampant in our system of government. It is virtually impossible for an average citizen with good intentions and ideas to get elected on their own today. It requires millions of dollars if not hundred of millions of dollars at the Federal level to pay for advertising. Companies and wealthy individuals give money to individuals willing to support their interests regardless of whether it is in the interest of the people that elect them into office. These politicians are obligated to enact or vote for legislation to support these companies and wealthy donors. This legislation often interferes with free market principles and as we have seen with the efforts of DOGE, the dispersing of tax payer money to non-accountable non governmental organizations that use money in unknown ways for unknown purposes while finding ways to compensate politicians in various ways, most often technically legal, even while still in office. Consider Rick Scott or Nancy Pelosi's uncanny stock picking skill worth hundreds of millions of dollars or the other 131 public servants with an estimated net worth over $5 Million yet only earning about $187K a year.