Kurt from class asked me another question, " If product prices can go down with lower manufacturing and materials costs, but can services be sustainable too?"
Sustainable Services: Avarind Hospital in India, is providing free surgery for the 15 million blind people there. As the project got underway, they found the problem was the expensive costs of lenses. A business man in the US, Peter Green, heard about Avarind and wanted to help. He was able to develop a process that produced lenses for only $1. An interesting thing has happened. I assumed that because they were giving their services away for free that they would be low quality surgeries. In reality, however, many people that can afford eye surgery prefer to go to Avarind and pay for the surgery because the hospital has such extensive practice through performing such a large number of surgeries.
Through sustainable business practices instead of standard competitive practices, the prices of lenses has fallen, optical services have expanded, more people are receiving eye care and the quality of the service provided is increasing.
I don't know if I can say Adam Smith is wrong, but I think it's time to be updated to the 21st century.
I think Adam Smith is right. I think individual self interests drive an economy. It is what motivates people to get up out of bed in the morning to go to work, to solve problems, and to make good things happen.
ReplyDeleteI think it is incredible when people come together in their self interests. There is power in numbers. Then it isn't just about self-interest, it is community interest as well.
I read parts of the wired article as well and like this statment, "practically everything Web technology touches starts down the path to gratis, at least as far as we consumers are concerned. Storage now joins bandwidth (YouTube: free) and processing power (Google: free) in the race to the bottom. Basic economics tells us that in a competitive market, price falls to the marginal cost. There's never been a more competitive market than the Internet, and every day the marginal cost of digital information comes closer to nothing."
This is exciting because it means that individuals are coming together to freely share information with everyone. The self interest is to get information out to the masses and this drives the cost of digital information down to 0.
Read More http://www.wired.com/techbiz/it/magazine/16-03/ff_free?currentPage=all#ixzz10wlYkc1C