Business should charge as much as possible (to keep prices low)
Debate Rounds (3)
The story of Standard Oil is an excellent illustration as to why allowing high prices is important to a growing economy. Prices enable entrepreneurs to see what is in demand and provides them with the necessary profit incentive to produce the demanded item. If you want low prices you must first allow them to rise so that investors will be attracted to that industry. As more companies move in to get the high profits, the supply of the item will greatly increase which causes its price to drop until a "market equilibrium" has been reached where there is no longer a shortage of the item. If the government steps in and tries to force the cost down with a price control that will simply block the financial signals that producers need in order to know what kind and how much of a product or service is needed-leading back to shortages.
An account from British economist Peter Wiles is very telling when he traveled to Poland in the 1950's and inquired as to how the Soviets planned out their economy. He reported: "What actually happens is that "world prices", i.e. capitalist world prices, are used in all intra-[Soviet] bloc trade. They are translated into rubles ... entered into bilateral clearing accounts." The Soviet Union only lasted as long as it did because it was consulting private industry about what it should be producing.
The "immoral" practice of price gouging is another example as to why unregulated profiteering is important. When a disaster strikes, demand goes up for certain vital items like food or gasoline. Grocery stores and gas stations raise their prices at such a time because they know the customers are willing to pay the higher prices-but those are not the only factors at play in the situation. Competitors in nearby areas will hear of the higher prices and move quickly and also try to profit from the situation. The result is that the higher prices are driven back down and the needy residents have more of the vital items available to them.
My opponent fears that a great wealth gap would be created in an unregulated market. In the United States the term "free-market capitalism" is completely inappropriate to describe an economy that has been micro-managed by government regulators since before WWII. Government has controlled and distorted prices with its miles of red tape, creating a very difficult environment for keeping a healthy industry that moves to the demands of consumers. The dreaded "One-Percent" in America have acquired their vast wealth through back-room deals with government in an effort to stomp out their competitors. Companies such as Wal-Mart have supported raising the minimum wage to nine dollars an hour despite the fact that they already pay their workers that amount because they know their competitors won't be able to afford it. Many local governments have refused to allow food trucks to operate in their townships which obviously helps the brick-and-mortar businesses. Bureaucrats have gone as far shutting down lemonade stands run by children, which, to a lesser extent, give big business competition.
It is understandable why companies should want barriers put on their competitors, in a truly free-market it is very difficult to maintain a hold a large part of the economy because it can only be done by providing the highest quality service at the most reasonable price. If a monopoly did emerge on a free-market it would only exist because it was pleasing the customers so well that it was not profitable for anyone to compete with them.
Prices are simply a measure for seeing how valuable a certain item is to the consumers. High prices mean a high value and broad demand. The vital goods needed by everyone such as food, healthcare, housing, etc, are too important to let government regulators move in and distort the markets that investors would naturally move into and build up until they reached the desired and very profitable state where surpluses and shortages no longer exist. It is this "horrible" system of capitalism that lifts society to new living standards and benefits everyone-especially the poor.
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