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Michigan Business Done Right - Real ValueBy JGillman, Section News
Worth, or the value of a product when sold to a customer is determined when the want of that product provides a price that matches the desire of the seller to part with it. Sometimes the seller can be so motivated, that they are willing to sell the product for less than it cost them to manufacture, or even to buy. Ultimately, the buyer and seller will freely determine between themselves, the "value" of whatever it is that is being sold by the ACT ITSELF.
A pre-declaration of value, or pre-establishment of price, hardly makes the "worth" an absolute.
The buyer determines what something is worth based on a number of considerations. Considerations are made in how it enhances their life, by satiating current hunger with the purchase of a food stuff, if it keeps them warm as a sweater or coat may, or even how it can allow them to be more efficient in creating their own wealth through the use of a tool or specialized device.
Every thing has SOME value but the many variables which drive the realization of those values are sometimes too complex to easily predict.
Imagine you are a quadriplegic who must be fed by a nurse and the best you can do is move your head a little, eat, or sleep. It seems the value of a Bowflex would be nothing. Why would you need such a device that quite obviously you would never use? It requires the use of your limbs, so no question on its worth right?
Well... Maybe not so fast. What if you like the look of it? What if it represents hope for a future where you can indeed walk, stretch, work out? What if it fills an empty spot in your house? What can be assumed simply because you have no "obvious" use for such a device? Given the physical nature of using such a device, most would discount and assume little or no desire on your part to own this thing. Assumptions abound, both in business and in government. What you might take for granted as a reason for someone to own something, or to hire a service, or an individual, might well be wrong, unless you ARE THAT PERSON making the valuation.. or a mind reader. To demonstrate, I note that over the years locally, I have had opportunities to look at some cars parked in yards with "for sale" signs. When the owners are approached, they have given prices, and counter offers have been tendered. More often than not, what I would pay for them was not sufficient for them to part with the vehicle in question. To my surprise, many of those same cars remained in the same locations for years until the frames were rusted to the ground and WORTHLESS... To me. The owners had their own idea of worth. They decided their lawn decorations held enough value as.. Lawn decorations. Never mind the minutia of pressures that might bear on the seller to part with his prized possessions... Some reasons are to ever remain unknown. To add, what If I told you I could sell you a waterproof digital video camera for under $100? Some of you would be surprised, and might even want to buy the video camera that also has a gift case, and a kit for mounting on helmets, bicycles, uses SD cards, and runs on AA batteries. (Not sure If I can match THAT in the future for a cheezy plug) But some of you wouldn't be happy unless I provided free shipping, and maybe knocked off another $20. (talk to me.. I can do that) But some of you might not want such a thing, even if it were free. The point is, we all come from a different set of experiences, and our valuation of any given thing cannot be pinned down. Which explains why government fails when it attempts price controls, as Carter did with oil, and even now as Michigan faces down the worst recession in its history by attempting to continue "picking winners" in business as does the MEDC. While the MEDC toils in a search for business that is compatible with the wishes of our executive office holder, it spends our money in that search. Does it provide us with the best value? Can we walk away from the deal if we don't like it? Do the bureaucrats who "buy" such measures in our stead have a full knowledge of what has value to us? So what if we have less than a desire to spend the money toward that end? What happens if the MEDC decides to award a company a "competitive advantage" grant to relocate here that puts another Michigan business at risk? How is the cost of that grant which is paid for by the very competitor born out, but in a negative way? This example demonstrates in a small way the interference provided by the decisions of a few in government positions will tend to distort the real worth of a product or service to the community it serves. Today, The Mackinac center chronicles a $2,000,000.00 MEGA tax CREDIT grant which will go to the SEIU for locating a facility here. Because the MEDC has determined its value to the residents of the state to be worth that much. However, I suspect advancing union growth in a state that has been decimated by it, truly represents that much "worth" to the people who actually carry the tax burden in Michigan any longer.
In fact, the SEIU issue raises another facet of value corruption that should drive the point home. In Michigan, unions themselves distort the real value of labor through coercive means. Their argument might well be that the negotiating is done in good faith and with the agreement of the employees they are bargaining for, but what about the guy within the union who would do the job for $2-3 less an hour? Union representation might well distort his worth to be more than is necessary. It "cheats" the employer, who has no choice but to accept demands from a government mandated pool of union workers who answer not through their own means, but through those of bargainers. Further it cheats many workers who are more adept, more productive, and can actually be more valuable to the prospective employer. They could be making more outside of the closed shop scenario. Free markets alone can address the true value of any particular product or service. A transaction free of external forces is the truest way to reveal the true VALUE of anything, whether it be goods, service or business enterprise. A free market allows us to demonstrate what is valuable to us or how we value ourselves without it being in conflict with the values of anyone else. In our business, If I cannot sell something at all for any price, it likely has little to no value or worth. In government, value is irrelevant as you will pay for it anyhow.
Michigan Business Done Right - Real Value | 3 comments (3 topical, 0 hidden)
Michigan Business Done Right - Real Value | 3 comments (3 topical, 0 hidden)
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