Business

Here are three examples of surprise endings to business ideas. Things often don't work out the way they were planned. Nobel Prize winner Milton Friedman proposed that the free market is the most efficient way to produce goods and services. He said that if country A can make gigets of similar quality cheaper than other countries then they should make those and sell them to others. This made sense and with the onset of globalization this became the standard practice. Then along came China that started using government subsidies to produce products below the cost of production and that along with manipulating their currency put other companies at a disadvantage, not caused by the market. These lower cost caused other countries to move to China and resulted in job losses. In 1980 China opened up to the free market and everyone in the West just assumed that this would be the end of communism but that did not happen. The thinking by the experts was that a free economy would lead to a democratic government. Back in the fifties companies that had excess profits would use that money to expand their business and that would lead to new job. In the political jargon of the day it was called priming the pump at the top. The opposing view was to give workers higher wages and they would buy more products and that will lead to new plants and this was called priming the pump at the bottom. Both of these ideas held true until sometime in the 1970's when companies found out it was more efficient to just buy and existing company instead of expanding. Here they had a ready made work force and so priming the top no longer worked.