Profits direct businesses toward activities that increase wealth. Competition increases efficiency and innovation. Taxation and regulation discourage production and destroy wealth . Political decision-making favors plunder over production. Central planning wastes resources and retards economic progress.
Competition is a source of discipline in the market, or in any social organization for that matter.
Producers who are earning profits for the time being can rarely afford to rest on their laurels. A single new entrant producing a better, cheaper product can turn those profits to losses very quickly. When competition is reduced by legal restrictions, regulations, tariffs, or quotas market discipline is partially suspended. Efficiency, innovation, and quality of service are reduced since they are no longer as necessary for the protected industry to stay profitable. When the author moved from Wichita, Kansas to Houston, Texas he learned this lesson first hand.