Shocking examples of big businesses abusing their workers. The most predatory business practice. Consumer abuse Widespread consumer abuses Reporters complain about business. We rarely cover the good things businesses do. The constant improvements that happen slowly. Here’s a new video essay by Sean Malone of the Foundation for Economic Education that does exactly that. When I was a kid my TV broadcast options were PBS, Fox, ABC, NBC, and CBS, and depending on the weather, it was hit or miss whether or not they were even watchable. To choose a movie We literally had to rent a VCR along with two or three movies we could get on VHS from Blockbuster but now just about anything I’ve ever wanted to watch is available at the click of a button for almost nothing. It wasn’t the big studios that figured out how to deliver movies and TV shows right into people’s homes. They dragged their feet, the same way they did when the VHS format first came out. Instead, the astounding wealth of home entertainment options we have today are the result of entrepreneurial start-ups. Like Blockbuster. 20 years ago, Blockbuster dominates the rental video space, charging a dollar or two per movie, but tacking on substantial fees for returning movies late. $40 in late fees at Blockbuster annoyed Reed Hastings enough to start a new subscription based company built around mail-order movie rentals with no late fees called Netflix. Meanwhile, Blockbuster was busy charging their customers over $800 million in late fees. By giving customers like me an unpleasant experience, Blockbuster was really just creating more and more opportunity for competition. By 2005, the company had lost 75% of its market share. There is an economics lesson in that. When entrepreneurs face competition, they may lose, but the fight makes life better for almost all of us. Austrian economist Joseph Schumpeter explained how that works. He introduced the term “Creative Destruction” as a defining feature of free market economies. We see this in action with the story of streaming media. Older companies like Blockbuster have to become more innovative themselves or be destroyed by their competition. This process is how our standards of living continually increase. We see this in most every industry. Think how much our phones have changed. So high tech, it could only come from Motorola. The first flip phone cost $1000, and couldn’t do the things we expect phones to do today. But competition drove innovation. We got the Blackberry, then the iPhone. Way smarter than any mobile device has ever been Now we have budget smartphones that are even better. Of course, not every new idea is a good one. And that’s why markets, and prices are important. Prices are not just money, they’re information. They tell us where to put our money. The entrepreneur is always going to think their idea is great, but as consumers, we’re the ones who get to decide which businesses succeed and which fail. This is the biggest reason why trying to centrally plan an economy just doesn’t work. Politicians and bureaucrats don’t know what people are going to value, they pick winners and losers based on what they want or what they think is going to earn them the most important allies. I consider the fact that the internet and internet-based businesses have remained largely unregulated to be one of greatest strokes of luck in history. By 2007, Netflix became a fully-fledged streaming video service. And that’s the moment you see tons of other companies trying to catch up. Around the same time, Jeff Bezos had just launched a small movie streaming app called Amazon Unbox. A year later, NBC Universal decided to put its big library of content into a new service called Hulu. 2 years later Blockbuster, once the indisputable king of home video entertainment, filed for bankruptcy. That’s something to think about now, when people call Facebook and Google monopolies. A few years ago, people said that about Netflix. They had what a lot of people might have thought of as a monopoly over streaming media. But that monopoly disappeared almost as soon as it formed. I don’t want this season to end, what happens next? [music] Without government suppressing competition, Netflix had no way to maintain its temporary hold on the streaming market. Other companies caught up real fast. Hulu introduced Hulu Plus. A restructured Blockbuster also launched a streaming service but by that point it was really just too late. Consumers had spoken. I have spoken. By 2015, you have stuff like Shudder, Playstation Vue, and SlingTV. Woo-hoo! None of this was the result of any kind of grand, coordinated political plan. It’s something that could only happen in a market economy. With no central plan, no political decision making, enterprising individuals like Reed Hastings offered consumers a service that they believed would be valuable. And those consumers are free to choose whether or not to use that service. Our choices actually mean something. TV shows and movies at your command but please watch responsibly. When I was a kid, a basic cable package cost around $73. Now we get much more choice for 1/10th the price. We have Disney+. The sheer wealth of quality content available on the platform is amazing. And you get all this for 7 bucks a month. Disney+ is amazing. So is Netflix. And Hulu, and Amazon Prime. And they’re all getting better and better. As long as politicians don’t do something stupid, the future looks really good. You can watch the full video here on the Foundation for Economic Education’s YouTube channel. 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