allAfrica.com: Mauritius: Coffee, Cars and Healthcare... (Page 1 of 3)

Free market does a pretty good job in delivering a whole range of goods and services. However, healthcare services can't simply be compared to running coffee shops or selling cars, says the author.

Sales of the Nano, the "people's car", are expected to be huge and there are plans to export it to other countries.

After the article I wrote a few weeks ago where I took issue with a free-market approach which would involve the dismantling of publicly funded institutions like education and healthcare in Mauritius, I received a number of emails asking me for further clarification of my views. So, for what it's worth, here goes.

Although one correspondent denounced me as a socialist with Marxist-Leninist sympathies, I actually believe that the free market does a pretty good job in delivering a whole range of good and services that consumers want. For example, anyone paying a few visits to London over the last 15 years will have witnessed the incredible growth in the numbers of branded coffee shops in the more affluent areas of the capital. It started off with Costa but now there are chains like Caffé Nero, Coffee Republic and Starbucks as well as a significant number of independent shops operating in niche markets in different parts of the city centre as well as suburban and outlying areas.

Why has this happened? Well, partly because the UK has been influenced by American fashions and inward investment - the globalisation argument - but mainly because traditional cafes in the capital (often run by Italian families) where it was possible to buy (you still can) a decent cup of coffee were not the sort of places where young and affluent, middle-class consumers wanted to hang out. They didn't want to spend time in traditional British pubs either. Some sort of alternative space was required and the modern coffee shop fitted the bill perfectly (at least in the daytime and early evening).

And for those of us who are interested in such things it has been a wonder to behold as these branded coffee houses in London have adapted to changes in fashion and consumer behaviour. The seating has been changed and rearranged - there are now sofas and armchairs instead of stools in many places - so that instead of getting a message to vacate the premises as soon as the cup of coffee has been drunk, the customer is invited to linger, read a newspaper or use the wireless internet connection and buy something else like a sandwich or a slice of cake.

"I don't think that there will ever be

a time when Las Vegas-style

slot machines become an

integral part of public

hospitals in the UK."

And the types of coffee available have changed. There are varieties from all parts of the globe - Afghanistan, Brazil, Costa Rica and South Africa - with an ever increasing number in last few years bearing the «fair-trade» mark. Also if milk is required it's no longer a surprise to find that it is organic in origin.

Service has altered too - staff, many of them new migrants from Eastern Europe (as well as a few students from Mauritius working part-time to fund their studies), have been taught to form a (micro) relationship with customers by looking them in the eye, smiling and wishing them a nice day. All of these innovations - including those catering for the ethical and health conscious consumer - are undoubtedly good for profits and keep the economy moving.

So the market particularly in a major global city like London is very efficient in responding to shifts in fashion and consumer behaviour - it really is an amazing tool or mechanism in extending the range of choice available to individuals. Businesses that get it badly wrong for whatever reason find out very quickly and end up closing their doors - the 'to let' and 'for sale' signs soon follow.

And economists employing (microeconomic) rational choice theory (or marginal utility theory to provide its other name) which focuses on "goal directed" and "instrumental" behaviour in the marketplace - sorry about the jargon, but it's difficult to avoid - can reveal a lot about these successes and failures but then so can the analyses of social anthropologists, sociologists, geographers and marketing specialists.

But no advanced or emerging economy is directly comparable either to the workings of a single coffee shop (as ex-British Prime Minister, Margaret Thatcher, famously thought) or even to London's coffee bar market as a whole, simply because the role of government cannot be reduced to the supervision of economic transactions. The idea put forward by free-market economists that it can and that government shouldn't do much more than observe and occasionally intervene in legal disputes - the so-called nightwatchman theory of the state, nicely summarized by the American writer, P.J. O'Rourke, as "capitalism and the rule of law" - is absurd.

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