A sport shop in town sharpens ice skates. The owners invested thousands of dollars in a large, console-type machine to provide top-quality service to their customers.
Other businesses in town have offered skate sharpening. On the basis of price, quality and the intangibles of customer service, these establishments competed for customer dollars. Gradually, all but one gave it up.
The survivor, a multi-sport shop, balanced its offerings through the four seasons of each different year. It did not set out to have a monopoly on sharpening. That condition was an accident.
One customer, an accountant with several hockey-playing children and ample disposable income, decided he no longer wanted to pay the established sharpening business for their services. He invested instead in his own machine.
Over the years, he has developed a sort of client list among various skating groups. What is not clear is whether he is charging for his services or simply giving them away because he enjoys it.
If he is giving away a service another business has made a capital investment to offer at a professional level, he is undermining the free market. He takes unfair advantage of his position, having a comfortable income from another source, to reduce the income of hard-working people who don't have the same options he does. If he is charging a rate so low that no commercial establishment could match it, he's competing unfairly, using his other income as a subsidy.
From a standpoint of personal freedom, this guy should be allowed to do whatever he likes. But if his hobby involves legitimate services someone else has to charge for, its ripples travel throughout the financial world. In this microcosm you can see what dooms the fantasy of a completely free, unregulated market. Unpaid dabblers throw unmeasurable turbulence into the calculation. And they are but one variable.
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