Newsflash: Capitalism Works

A business columnist with the New York Times reports with a sense of wonder that central planning doesn’t work, while a business columnist with Time reports with an equal sense of wonder that capitalism does work.

Brad Tuttle describes a new system being tested at Disney theme parks to “to cut down on wait times at park rides and attractions.”

They’re RFID-enhanced wristbands that are worn by qualified guests and serve as an all-purpose admission ticket, hotel room key, FastPass (reservation system to book a ride or attraction without waiting), and payment system for most purchases made on resort grounds….

One example of how the wristbands might seem delightful or creepy, depending on one’s point of view, is that the character playing Cinderella could approach your daughter seemingly out of the blue and say, “Hi, Angie. I understand it’s your birthday.”

But of course Disney intends to profit from this system. It will be available only to visitors staying at Disney’s own hotels, and using the wristbands for purchases decreases the “friction” of each transaction, making visitors likely to spend more. But the big issue is this:

When guests are waiting in line, you see, they aren’t in gift shops and restaurants. They aren’t booking spa treatments or sitting down at special meals featuring princesses and other beloved Disney characters. Simply put, when guests are waiting in line, they aren’t spending money. Instead, they’re just waiting around, and the wait is probably leaving a bad taste in their mouths. By offering the possibility of skipping lines, Disney decreases the annoyance factor, while simultaneously increasing the odds that guests will do and spend more during visits.

Now all of this would be of interest primarily to those with small children who expect to be visiting a Disney park in the next few years (which is how I happened to come across it). What makes this article of wider interest is Tuttle’s conclusion.

What’s so brilliant about these services, and about much of what Disney does, is that they appear to exist mainly to benefit guests, while they also undeniably boost the company’s bottom line. That’s quite a magical combo.

Yes, it’s almost magical, with everything being guided as if by an invisible hand to co-ordinate the interests of businesses and their customers. If only the whole economy worked this way. If only you could, say, sit at a Starbucks using their free Wi-Fi to write a political newsletter, in exchange for which they sell you more cappuccinos. Which is exactly what I’m doing right now. The point is that Tuttle’s “magical combo”—the harmony of interests between individuals trading in a free economy—is a mundane fact of everyday life.

File this under “Breaking News from 1776,” the year in which (among other notable events) Adam Smith published The Wealth of Nations. Yet here we are, almost 250 years later, and this everyday fact is still being treated as something unusual and extraordinary, as the exception rather than the rule.

 

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