David R. Henderson  

The Wonder of Markets

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"Blue Jeans meeting."

That's what I think showed up on my cell phone at about 6:20 this morning. I didn't know what it meant and I ignored it. It turned out that it was a reminder to talk to an IT person, Ron Browne, at Northwood University in Michigan, as I learned when I got an e-mail from Ron a few minutes later. An economics professor there, Alex Tokarev, wants me to give a virtual talk to his students during "Freedom Week." Ron wanted to test the software with me. It's called Blue Jeans.

So I connected to Blue Jeans to test the software in advance of my talk.

It was beautiful. I've used Skype before to do interviews on local television. It's not bad. But, on a scale of 1 to 10, Blue Jeans is a 10. Skype is a 5. It was early morning and I didn't have all the lights on in the kitchen. But even with the main kitchen light not on, Ron commented that he saw a cat over my shoulder. I turned around, expecting to see one of our cats right behind me and he was at least 10 feet behind me on a window sill.

Ron also told me that some competing equipment and software he had looked into cost $150K for the equipment and $20K annually. Blue Jeans, he said, cost only $20K annually with no equipment cost.

Why the title of this post? Regular readers of my posts know by now. (See here and here, if you don't know.) What gave us this wonder? Markets. Not completely free markets. Many markets are heavily regulated. But still, there's little enough regulation and low enough tax rates that innovations like this pop out a lot. And Blue Jeans just raised the standard. If you had asked me to evaluate Skype yesterday, I would have given it an 8 because I would have in mind what a 10 looked like. But now I know what a 10 is. And I won't be surprised if, in less 3 years, I think Blue Jeans is an 8. And you know why.

COMMENTS (5 to date)
ThomasH writes:

Maybe it is a well enough regulated market that makes it possible "that innovations like this pop out a lot." :)

I mean the :) seriously. I too think markets are amazing for all of the obvious Hayekian reasons, but this admiring post is much like me looking up as the night sky and thinking, "The heavens declare the glory of God." It's a good observation, but not probative because we do not have a counter-factual.

David R. Henderson writes:

Good point, but hard to be probative in a few paragraphs. To get why this is due to some degree of economic freedom, you have to understand the economics of socialism, the economics of regulation, the economics of taxation, etc.

ThomasH writes:

@ DH
And I did not seriously think you intended the observation to be probative and I did not seriously presume to refute you.

Robert Easton writes:

I don't mean to insult blue jeans technology, but if you haven't used one of those $150k systems he mentioned, you don't know what a 10 is. You would already think blue jeans is an 8! But I can't deny the cost advantage.

Disclaimer: I work as a tester on one of the most popular of those high end systems.

David R. Henderson writes:

@Robert Easton,
Good point.

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