Adam Smith Institute

From Power and Plenty:

Another important economic link between Venice and the Ottoman Empire was the sale of high-quality Venetian woolen cloth to the latter. In the course of the 17th c., however, the Dutch and English, yet again, displaced Venice and the other Italian producers in the Levantine markets for these key manufactured goods. Charles Wilson pithily accounts for this by observing that "the Turks wanted cheap, light cloths. The Venetians offered dear, heavy ones." Constricted by guild regulations, Venice insisted on maintaining high quality and high prices. Meanwhile, northerners lowered quality and price... 

That old saw about those who ignore history being condemned to repeat it comes to mind really. Most obviously in the current success of clothing chains like Matalan and Primark: it appears that what the Brits want is cheap and light and so if you lower quality and lower price...

And so many  business disasters can be explained by that "constricted by guild regulation" line. No, it doesn't mean just unions, management has been just as purblind at times: the Austin Allegro was proof that there are things too light, too cheap and too low quality even for the British.

The basic lesson though is obvious, isn't it? The producers who actually provide what the consumers want prosper, those who attempt to supply what suits themselves do not. The next question I suppose is which side of that line Microsoft Vista belongs?

Comments (0)

Subscribe to this comment's feed