Commentary Magazine


Topic: capitalism

Capitalism at Work

The secret of capitalism is free entry to the marketplace. In theory in a capitalist economy, if you have an idea for a product that you think you can sell at a profit, you need merely produce it and take it to market. If you are right, you create wealth for yourself and others. If you’re wrong, you lose money. (In the real world, of course, government often restricts access to the marketplace, requiring licenses and certificates of need for all sorts of goods and services.) Read More

The secret of capitalism is free entry to the marketplace. In theory in a capitalist economy, if you have an idea for a product that you think you can sell at a profit, you need merely produce it and take it to market. If you are right, you create wealth for yourself and others. If you’re wrong, you lose money. (In the real world, of course, government often restricts access to the marketplace, requiring licenses and certificates of need for all sorts of goods and services.)

There have been some spectacular miscalculations, such as New Coke and the Edsel, but also equally spectacular home runs, such as the iPhone and, in the 1980’s, the video cassette recorder (VCR).

There have also been no shortage of silly, but fleetingly profitable, ideas such as the Pet Rock introduced in 1975. And, of course, many a profit has been made off human gullibility and ignorance. It is an abiding characteristic of free markets that fools and their money are soon parted.

Yesterday I ran across a great example of this. At my local supermarket, you can now buy water for $2.50 a quart. Milk at this supermarket costs $1.48 a quart, $2.44 a half gallon.

Water

The market (DeCicco’s) is, admittedly, a rather upscale one, with lots of fancy cheeses, pâtés, microbrewery beers, and organic and gluten-free everything. They even have gluten-free ice cream, which is interesting as ice cream doesn’t have gluten in it to begin with. Gluten is a protein found only in wheat, barley, and rye products. But DeCicco’s also has everything from Wheaties to Hamburger Helper.

The marketing gimmick here is that a box made from recycled whatever is more eco-friendly than the ubiquitous plastic bottles supermarket water usually comes in. The water itself is merely an afterthought. It doesn’t come from some secret spring in the Austrian Alps known only to yodeling goatherds. Indeed, there is no indication where the water comes from, which means it comes from the tap at the factory.

So the business plan for “Boxed Water” is that there are people out there so anxious to save the planet that they will fork over $2.50 for a quart of tap water.

I admit to having a double dose of the Scottish frugality gene, but really. Who would be that stupid (and affluent) to pay $2.50 a quart for tap water? Apparently quite a few as, according to the check-out girl, it is selling quite briskly. P. T. Barnum, call your office.

Perhaps the next attempt to capture the damn-fools-with-too-much-money market will be organic, gluten-free air, packaged in recyclable balloons, $2.50 a lungful.

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