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Why is that a problem?

I love a good medium-rare prime steak, but I also used to live near a restaurant called Best Steak House, which was anything but. However, they delivered a passable steak/steak sandwich that was worth what you paid for it. And considering that they were in business for decades, probably most people felt the same way.

A great steak is an occasional luxury; a "just edible" one is an everyday meal.

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That’s what the entire economy does by design. You make the lowest common denominator people will still pay for.
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I worry what that says about our lives as a whole. The government will make our lives the lowest common denominator that we are willing to endure.
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How are you still blaming this on “the government”? Is your thesis that the business world would be delivering high quality products and experiences if only those damned bureaucrats would get out of the way? What possible evidence do you have left for that hypothesis at this point?

EDIT: this was a misread on my part, retracted, carry on.

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He isn't blaming the software problem on the government. He is saying that if we apply this reasoning to everything in our lives, then we have a race to the bottom in other facets, of which one is government.
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Yep, I see it now. Thank you.
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He is saying "if we apply (or are applying) the same business mentality to government, we will get literally the worst government we are willing to tolerate based on money"

It's not blaming. It's an explanation for probably why things can go wrong.

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Gotcha, ok - I’m misreading it. Thank you.
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And people seek out the highest quality product they can pay the lease for
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Not always. There are diminishing returns at the top end of the quality spectrum. I tend to go with the cheaper item even if I can technically afford the more expensive one if their quality is close enough.
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The thesis is covering the flat scenarios mostly. I think the scenario where the job is done so poorly that the steak has to be thrown away needs to be included as well. At times the pans would get damaged. And eventually the business is in debt and needs to be closed
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I can go out today and pay $50 for a thick cut ribeye at Ruth's Chris that has been visually inspected for marbling then hard seared in a special high temp over to temp by someone who knows wtf they're doing. I can also go to Denny's and pay $20 for a t-bone cooked to within shouting distance of what I asked for on the same griddle they use for the pancakes that doesn't get the sear I'm looking for.

Point being, you're absolutely right that the goal for a company selling a product is to be barely satisfactory but they don't actually get to decide what's satisfactory.

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