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It is time to play a Wild Card! Every now and then, a book that I have chosen to read is going to pop up as a FIRST Wild Card Tour. Get dealt into the game! (Just click the button!) Wild Card Tours feature an author and his/her book's FIRST chapter!
You never know when I might play a wild card on you!
and the book:
Authentic (April 1, 2008)
Dr. Bruce Howard joined the faculty of Wheaton College in 1980 and currently serves as professor of Business and Economics. He holds a PhD in economics and a masters of administration in accountancy. He is a member of the American Institute of Certified Public Accountants. He has also has worked with Tyndale House Publishers since 1980 and currently serves as a member of the board of directors. Prior to his academic career, Dr. Howard worked in the banking and health care industries.
List Price: $ 12.99
Paperback: 168 pages
Publisher: Authentic (April 1, 2008)
AND NOW...THE FIRST CHAPTER:
My family had just moved into our new home, and Dad was helping us get things situated. He’s a handy kind of guy and good with virtually any home project. In short, he’s the perfect father-in-law for me. We had a new coach light to install outside by the front door. Coach lights involve electricity, and that, of course, meant that I called my father-in-law.
No problem! After a quick survey of the situation, he decided on the course of action. My job was to turn off the electricity while he pulled the old lamp off the wall. There was a switch inside the house that controlled this light, so I dutifully turned the switch off. If you understand the workings of electricity better than I do, you already know what’s coming. Don’t ask me to explain it—but although turning the switch off might have extinguished the light, it did not kill the current to all of the wiring. A few moments later I heard this nasty “pop” and saw my father-in-law flying off the ladder with a smoking screwdriver in his hand! The noise was so loud that even my neighbor from down the street heard it and came running to see what had happened!
The word shocked is used in many contexts, but it really should be reserved for moments like this. Dad was shocked, a bit dazed, and sore from the fall, but otherwise OK. The only lasting result was a little spot on his ring where a bit of the metal had melted.
I don’t think there is a person on earth today who believes electricity is a bad thing. On the contrary, electricity is a wonderful form of energy that does us a tremendous amount of good. But make no mistake, electricity can also hurt you physically—and do a great deal of damage to property as well. If you’re going to work with any force, be it electricity, natural gas, coal, or nuclear energy, it is critical to understand that force and to maintain a healthy respect for what can go wrong.
There are economic forces as well. And just like the forces of energy, they have the power to do us either good or harm. In the everyday course of life, it is easy to take these forces for granted. I’d like us to consider for a moment the power of market forces to bring us goods and services by thinking through some of the daily events of our lives.
THE PERVASIVENES OF MODERN MARKETS
What did this day look like for you? Did you begin by taking a shower? At a moment’s notice, clear, clean, hot and cold H2O came rushing to your beck and call. Did you happen to take a moment to reflect and ask, Where does all this water come from? How about the soap and shampoo? Did you use a towel made in Indonesia and blow-dry your hair with a hair dryer made in Taiwan?
Did you have cereal for breakfast made with grain grown in North Dakota or Argentina? Coffee from Colombia? Sugar from Honduras? Orange juice from Florida? Did you put on clothes made from cotton grown in Texas but sewn in Thailand? Or were they made from synthetic fibers engineered and produced by an international chemical giant with production facilities in Germany?
On your way to work, did you read a newspaper using paper made from pulp shipped from the Northwest, ink produced in the Midwest, and printed on presses made in the Northeast? Maybe you pulled out a laptop computer assembled in Malaysia with computer chips manufactured in California and ran a piece of software designed and written by programmers in Calcutta. If you drove to work, you may well have chosen to listen to the radio. You may have selected one or even half-a-dozen stations to listen to, depending on the traffic and the ease with which you could surf the airwaves looking for just the right melody or message to suit the moment. A cell phone, of course, would have opened a completely new vista of options for what you could have done during your commute.
Think just a bit about that car you may have been driving. Did it use gasoline refined in Houston but made from crude oil imported from somewhere in the Middle East and then transported on ships built in Japan? Where was the car made? The most difficult part of that question is figuring out where all the component parts came from. Of course, the car was probably assembled in and shipped from one place. But even so, I have been in auto assembly plants both in the United States and in Europe and have noted that much of the highly automated process involves sophisticated robotics and other machines that are themselves manufactured in other places in the world. So trying to figure out the real source of all value-adding activity that goes into assembling an automobile these days is an exceedingly complex task.
At the risk of belaboring a point, think for a moment about all of the things you can possibly purchase at a moderate-sized grocery store, and then ask yourself, Where does all this stuff come from? Pick up any packaged product, and you will find a list of ingredients on the label; ask the question again: Where did all those ingredients come from?
I can’t possibly tell you where all of these things came from, but I can tell you how they got there. They got there through the power of the marketplace. Embodied in our use of the goods and services we take for granted every day are the acts of literally thousands of economic agents (people doing a job) engaged in millions of acts and making millions of little decisions that collectively all add up to the stuff of our lives. It is the power of markets that brings to us the things we want—when and where we want them.
Markets are simply unparalleled for serving our material needs and wants. Each and every day, in hundreds of ways, markets mysteriously work in the far reaches of the world, as well as just down the street, to orchestrate our own personal concert of consumption. It is virtually impossible to comprehend the full magnitude of all the global activity that occurs each day in order to fulfill our sophisticated, individualistic, and highly nuanced set of needs and desires.
One of the most amazing aspects of all of this is that we don’t personally have to ask for any of it. Through the power of markets, the vast majority of things we use every single day come to us without our asking. The only thing that is required of us in return is a willingness to part with some of our money in exchange for the stuff of life.
The Meaning of Marketing
Marketing is a word that is mostly misunderstood. People generally associate it with sales and advertising. Marketing is treated like a noun, but it is better understood as a verb, an action—the action of making markets. Marketing is the process of looking outward in order to discern the needs and wants of society. It also includes looking inward at the resources and skill set of the producer to see how they can be used to meet these identified needs and wants of society. The marketing process includes everything that has to happen in order to first generate an idea and then implement that idea in economically sustainable ways to meet the needs of the targeted segment of society.
This is a big job, and it operates on a 24/7 basis. Right now literally millions of people are thinking about you and me and what they can do to meet some unfulfilled need or want we might have. People are thinking about ways to cure our cancers, treat our diabetes or heart disease. They are also thinking about new gadgets to help us chop onions, carve a turkey, or secure our homes and automobiles. A host of people work hours on end trying to figure out new ways to entertain us and otherwise help us enjoy our leisure hours. They are also thinking about ways to improve the many products and services we already use. It might be a better-tasting toothpaste. Maybe it’s a new form of packaging that is easier to open and reseal. Maybe we would prefer a smaller—or larger—package of a particular product. How many times have you heard the phrase “new and improved”? Next time you do, you can pinch yourself and say, Ah, that is the result of marketing!
The most powerful component of the marketing force is this channeling of the creative capabilities of all of humanity toward the goal of serving the material needs and wants of humanity.
The world is moving at an accelerated pace to embrace markets as the system for organizing economic activity. Many are pleased with this trend, and many are not. But like it or not, it is a force that began thousands of years ago and is growing exponentially as fast as people around the world can connect. When one more person or firm enters the world of markets, it is much like adding another fax machine to the global inventory of fax machines. If there are already a billion fax machines operating in the world, then adding one more machine increases the world’s faxing potential by a factor of not just one, but one times the other billion fax machines with which it can connect. So it is when one more player enters the market arena. The potential for additional market transactions increases by one times the billions of already existing participants.
People throughout the world are connecting like never before. Iron curtains that previously shut people in have melted away, and countries that were once closed have opened their doors to market forces. These same market forces are working to unite Europe and increase the connectivity of people throughout the continent by allowing the free flow of people, goods, and services between borders and by adopting a common currency and set of economic rules.
I recently traveled down a rather remote, single-lane road in the Bohemian-Moravian Highlands of the Czech Republic where we stopped outside an old stone building that looked like a converted barn. All around were potato fields. Chickens roamed freely about the grounds. But something remarkable was going on inside this building. No matter what it looks like on the outside, inside a global business is providing employment for twenty people from the local community. This crystal-cutting factory crafts beautiful glassware that is sold primarily to customers in China and Japan. These customers use the Internet to find this company and then to place their orders. Products are shipped worldwide via UPS and DHL. I went away scratching my head and trying to figure out whether this is a high-tech or low-tech business. Either way, it is certainly a global business.
When the world was much less connected, people only had the small number of residents in their villages or communities available to think about, create, and deliver the goods and services they enjoyed. But today there are vast numbers of people on the other side of the world thinking about us and our needs and desires and how they can marshal their particular set of resources to fulfilling those needs and desires.
As you can probably tell by now, I am very impressed with the power of markets to produce goods and services and raise the material standards of living for people throughout the world. In my life roles as a consumer, an auditor, a banker, an accountant, and a professor of business and economics, I have had my share of exposure to markets. We all have. In my primary vocational role of teaching business and economics, I have plenty of opportunities to share my enthusiasm about this powerful force.
I love to teach the introductory course in economics. My students are mostly college freshmen and sophomores. By the time I get them, they have studied lots of math, history, science, and language. They began studying these subjects in grade school and continued doing so right up through high school. But very few have ever taken a formal course in economics. Therefore, I have the opportunity to open the lid on this discipline and introduce my students to the world of economic reasoning. Even after teaching this course for over twenty years, I believe the subject is as fresh as it was the first time I taught it. Much has changed over the last twenty years, and it is interesting to talk and think about those many things. But it is equally interesting and even more important to reflect upon the things that have not changed. The operational principles of markets have not changed. They are an enduring force to be reckoned with.
Is There a Worm in Your Apple?
Over the years of teaching economics, however, I have discovered a real problem. Teaching about market economics is like offering my students an appealing, lush, ripe, juicy red apple. Here it is; take a bite. See for yourself just how sweet and delicious it is. Savor that taste for a while, and then enjoy another bite. With each additional bite, students get closer to the core of the apple. And as they do, they are very likely to discover that at the core of this apple there is an ugly, repugnant worm. A word of caution: Don’t eat the worm!
This book is the result of my own wrestling with the question of what I am supposed to do with this worm at the core. I began this journey eight years ago. Back then I wrote a manuscript in response to the problem that, by my own admission, was not a very good manuscript. Good writing is essentially about good thinking and having something worthwhile to say. At that point, I don’t believe my efforts reflected either quality. But during the past eight years I have thought a great deal about this issue. I have read and listened to many other voices along the way, all the while trying to process those voices in the context of my wormy problem. This book is my humble attempt to name it and then deal with it.
I am absolutely convinced that we need to name the worm and warn others that it is present, lurking at the core.
So, what is the worm?