There are many costs of production in developing products for the marketplace. Our economic goal should be to lower costs of production to make products more affordable for everyone.
You might ask, "doesn't lower production costs just mean higher profit margins for big corporations?" Maybe with a monopoly or oligopoly, but not when competition is involved in the market. Competition drives producers to pass on the cost savings to consumers to stay competitive and increase market share.
Why is this our goal? Because the best way to improve the standards of living for everyone is to lower the costs of living. This allows us to use the money that we save on these goods to purchase other goods. Lower costs of production not only stimulate more economic growth, but they help lift the poor out of poverty more than any government sponsored activity ever could.
"Wal-Mart has done more for poor people than any ten liberals, at least nine of whom are almost guaranteed to hate Wal-Mart." -Thomas Sowell
Lower costs also make products that used to only be available to the wealthy available to all. The television, microwave, and computer are just a few examples. This is why poorer people in America have high standards of living compared to the poorest countries in the world. You can see some of the things that America's poor have been able to enjoy in my post on capitalism.
So, what things can be done to lower costs of production? Here is a list of just a few:
- Increase productivity of labor
- Decrease taxes on business
- Improve efficiency through technology and innovative ideas
If you can think of more ways to lower costs of production, feel free to leave a comment.