Dear Friends,
It seems to me that when a solution is found to a problem it is wise to use that solution even if we might find it personally distasteful lest the problem become intractable and pernicious. Like the wheel. There may be a better solution than the wheel but the wheel is so effective that we ceased looking for an alternative long ago. In fact the ancient Mayans may have found a different solution they had demonstrable knowledge of the wheel and used it in their toys but not industry.
It is when the solution comes up short, that we search for better or more task specific means, to re-solve the problem. Water works well to douse fire, but not so well, when the fire is electrically or chemically based. In these cases we find that our preferred solution comes up short. Here our ancestors came up with other solutions for electrical and chemical fires. So other solutions are used when we come across fires of these types.
Often in the search for a viable solution to a problem different people will come up with different solutions. Each thinking his solution the best, (and most profitable if his patented solution wins out). Due to an effect of Olsen’s, logic of communal action, in those that have a ‘dog in the race’ cannot be relied on to render unbiased opinions. This results in a myriad of solutions implemented haphazardly, is often dangerous, is usually inefficient to implement and difficult to maintain. In this case it is more effective for government to standardize a solution or as Confucius said it, “rectify terms.”
When government ‘rectify’s terms’ it creates a standard, a standard that can be implemented by many different businesses and creates the conditions for perfect competition. Once this happens economies move. In the US the standard for HDTV was hard fought with many actors, effecting the outcome, who had a ‘dog in the race’. They held up the process for years but when the standard was set, the price, availability, and quality of the new HDTV’s became much better for the consumer. Because setting a standard begot “perfect competition.”
A non governmental example is the computer revolution powered by the widespread acceptance of Microsoft Dos then later Windows. The adoption of theses platforms as the standard, allowed those that programmed to learn one operating system, that they could write software for making the computer more and more usable, while the standardization also allowed computer manufacturers to lower the cost, raise the quality and achieve impressive market penetration. Imagine if no standard was ever set. Computers would be exponentially more expensive, there would be limited software available and it would be platform dependant, and quality would be hit or miss.
However governments around the world don’t set standards they usually dictate policy. Government in the US regulates every aspect of the insurance industry but sets few standards. Paperwork for example. If government set a standard set of paperwork for every health insurance company in the nation, imagine the cost reduction for doctors, insurance companies and patients, not to mention the errors that would be avoided by the standardization. Instead of dictating what the very provisions of health policies within a State the nationalization of a paperwork standard would drive down costs and improve quality, as standardization almost always does. There are many other examples of where governments could set standards that would improve the economy, lower costs, increase quality and make life easier for people.
The problem is that standardization can go wildly off the rails if it is done with an eye to politics. Like in South American oligarchal capitalism, where government serves the needs of a specific faction of the population, in this case a small cadre of families, that own everything. In some instances the average person has no ability to own land only the elite. The communist countries are even worse as they serve the needs and wants of a single man instead of an aristocracy.
With the caveat of political interference always threatening every action government takes, standardization is an important role of government. Standardization works even better when it crosses political boundaries. Our earlier example of the computer revolution crosses political boundaries but the example of HDTV does not. If the HDTV example were extended across governments then the standard would have even more effect.
Yup, it’s easier to create something if there is a standard to work with; but if you have to make it all up as you go, it will be harder, take longer and won’t come out as well…
