We often consider the cost of a good as the price we pay. But if you really understand economics you would go for another method of explaining. But the real cost of a good is the time and resources you need to pull together to be capable to get access to the good.
This is an important thing to understand. It is the perfect proof that our actions are intended to maximize value. We, humans, intend to create value and by doing so we improve living conditions around the world.
An economy is nothing more and nothing less than the pulled resources together. Resources like human action, raw materials, and capital goods. By creating value we got a better life.
Unfortunately, most people are only focussing on the outcome. The result of the chain of actions and interactions. Interactions which gained value within the complete value chain.
Those who are not focussing on the complete chain but only on the outcome are pointing out that every cycle and every wasteful period are bringing positive things. WWII bought the production of artificial rubber. Rubber which was prior to the war harvested by the natural method.
So WWII bought society some progress. But the progress was at very high costs.
Another example of wasteful activity was the space race during the cold war. Billions where spend, but what did we gain? What did it bring society? Nowadays we can’t go to the moon, but over half a century ago we could. But now we have smartphones which have more computer capacity than that we had at so-called supercomputers during the moon landing.
In the world are we all competing to create value. Bureaucrats and politicians are often saying that entrepreneurs are there only to compete on costs. This is not the case.
t is obvious that price competition is a good method to set yourself aside from the competition? Take as an example the European market of postal delivery. If you are prepared to wait a few days longer you could save almost half upon the costs of sending post. But when the delivery was not happening there was no value created. So publishing houses returned to more expensive companies that delivered on time.
Competing on price is low hanging fruit. The best improvement for society comes from those who serve a need for just a better method. The golden rule is that you should be 10% better.