Sean C. Morgan
So here’s a refresher on economics for those who’ve studied it, or a primer for those who haven’t.
Charging lower prices does not stifle competition. It is a result of competition. It is good for the consumer and good for the economy. It’s even good for the supplier because he lives and trades in a competitive economy.
As we reported in the Dec. 23 edition of The New Era, School Board members were concerned, at their last meeting, about a plan proposed by Supt. Keith Winslow to change a policy and allow the district to rent gear from its employees, such as Maintenance Supt. Josh Darwood, a contractor now working for the district.
Under the deal, ideally with a contract that protects the district and employees like Darwood from complications resulting from broken equipment, the district would save money and time by renting an excavator or scissor lift from him instead of driving to Albany or Lebanon.
This makes sense.
But on the face of it, it feels funny. The School Board’s cold response to the proposal makes sense.
We have statewide ethics regulations that deal with bidding and contracting to prohibit favoritism and unfair advantages resulting from employment by the contracting agency.
This sounds a little like those kinds of situations.
But it doesn’t have to be. It’s easy to use an objective measure to determine whether a particular rental is reasonable – and not a special favor to a favored employee with inside information. If the price is lower, it’s a good way to go.
An employee may be able to offer a lower price for several reasons – none particularly bad. Private-sector businesses offer a variety of prices based on their circumstances. None of these possible circumstances really arise from the employee’s status as an employee.
Such a policy has the advantage of possibly driving rental prices lower elsewhere. And in town, if some contractor wants to offer his or her equipment at a lower price, district officials would no doubt love to take the offer.
It’s about paying the lowest price for a specific level of quality, just like any and every transaction is. In the case of Sweet Home, it also offers convenience, saving time and money traveling to another town.
Inside information doesn’t really help here. It offers no particular advantage. A price is a price, and it likely includes cost of operation and maintenance and some number as profit – the paycheck in a capitalist society.
If an employee with equipment charges too little, the employee loses in the end.
That said, there is little capitalist about a school district. It is one of the most, if not the most, socialized industries in our country. No transaction it makes is really capitalistic or free-market.
No doubt, our capitalist sensibilities lead to the worries about stifling competition, and as an extreme economic liberal (free market capitalist – not a liberal, progressive, Democrat socialist type), I really appreciate the board members’ concern.
The fact that a district employee is willing to rent equipment he owns for a specified price doesn’t change the idea that the district can save money on the transaction, and other suppliers remain just as free to cut costs and charge less too. They face no more disadvantages than anyone else who owns the equipment in question. For these purposes, the employee is a member of the same private sector market trying to serve a public sector customer.
The board should really spend time and think this one through – keep thinking about free markets too, please.