HOW FREE MARKET CAPITALISM REALLY WORKS
BASICALLY IT WORKS LIKE JUST A DRUG CARTEL!
De-regulation has relegated what used to be a competitive domestic airline industry with a dozen major carriers down to four major airlines, American, United, Delta and Southwest. But. I ask you, isn’t Unfettered Free Market Capitalism supposed to result in MORE competition, not LESS? Now that Walgreens has bought up Rite Aid, which previously scarfed up Peoples Drugs, which previously ate Drug Fair for lunch, how many national drugstore chains are we left with? The answer is precisely TWO. Same with the worldwide merger of European and American brewing companies that’s been going on over the past decade. Same story with online travel search engines. With Expedia’s purchase of Travelocity and the pending merger of Expedia with Orbitz, there will be two choices from which to purchase your airline tickets and hotel rooms, Expedia and Priceline. This across the board consolidations and mergers had been going on prior to the 2008 Crash, hit a pause, but is back up full steam again. In 2007 the total value of all the merger and consolidation deals was $4.3 trillion. As of today, 2015, the total value is $4.0 trillion.
And we’ve been through this merger and acquisition monopolistic fever many times in the past. And, every once in a while, someone actually does something about it. Teddy Roosevelt’s “Trust Busters” forced the Rockefeller’s Standard Oil (today’s Exxon/Mobil) to be broken up back in the first decade of the Twentieth Century. Then it was the Department of Justice’s forced break up of Alexander Graham Bell’s Bell System (later AT&T) in 1984 or the more recent judgment against Microsoft in 2000 for anti-competitive business practices.
On the one hand, conservatives are always complaining about government regulation killing businesses and on the other endlessly plead to unleash market forces that will result in more choices, more competition and lower prices. But, unless, I’m mistaken (and no, I haven’t ingested any mind altering substances prior to penning this piece) what’s been going on in the real world looks more like monopolization rather than vigorous competition among our private sector companies even after three decades of government de-regulation. So is it that it’s the last remaining vestiges of government regulation that are preventing Rite and Walgreen’s from remaining separate Free Market competing companies? Is there some vestigial FCC rule that prevents Travelocity and Orbitz from remaining competitors to Expedia?
Of course not. Frankly, what’s happening is that the “competition” “consumer choice” “lower prices” fantasy mask that hides the reality of the Free Market Capitalist System is being shredded into confetti sized bits and pieces, exposing the real world workings behind the fiction that is used as cover for the monopolistic, anti-competitive real world “free market” forces. And government regulation, de-regulation and re-regulation has nothing to do with it. But market share, product dominance and the ability to set and control prices are very much the “competitive” bottom lines of our Free Market Forces at work. Except, of course, they are not competitive at all but monopolistic and cartel-like in their market domination, control of supply and distribution as well as control of pricing.
And yet, the mythology of the Free Market continues unabated. If you saw any of the four Republican debates you will have noticed that not a single candidate suggested that raising taxes on corporations might help to lesson that national debt; you saw every single economic “plan” that was discussed was based on the failed “cutting taxes creates jobs” fiction; you heard every candidate yapping on and on and on about “government regulations killing businesses.
What you didn’t hear is a single reference to how the Competitive Free Market System isn’t so competitive after all.
I’ve taken this piece from an excellent article in today's Washington Post by Harold Meyerson on this topic. It’s here: