It is very simple. Adam Smith understood it and commented on it. If you allow businesses to have control of the market they will take benefits they don’t deserve at the expense of society. And many business will seek every opportunity to collude with other businesses to stop the free market from reducing their profits and instead instituting anti-competitive practices. Unless you stop this you don’t get the benefits of free market capitalism. Free markets (where perfect competition exists, meaning no player can control the market) distribute the gains to society by allowing those that provide services in an open market efficiently and effectively to profit.
Those that conflate freedom in every form and free markets don’t understand that free markets are a tool to and end (economic well being for a society) not a good in and of themselves. Politically many of these people just believe in everyone having freedom to do whatever they want. Promoting that political viewpoint is fine.
When we allow them to discredit free market capitalism by equating anti-market policies as being free market capitalism we risk losing a great benefit to society. People, see the policies that encourage allowing a few to collude and take “monopoly rents” and to disrupt markets, and to have politicians create strong special interest policies at the expense of society are bad (pretty much anyone, conservative liberal, anything other than those not interested in economics see this).
When people get the message that collusion, anti-competitive markets, political special interest driven policies… are what free market capitalism is we risk losing even more of the benefits free markets provide (than we are losing now). That so few seem to care about the benefit capitalism can provide that they willingly (I suppose some are so foolish they don’t understand, but that can’t be the majority) sacrifice capitalism to pay off political backers by supporting anti-market policies.
Allowing businesses to buy off politicians (and large swaths of the “news media” talking heads that spout illogical nonsense) to give them the right to tap monopoly profits based on un-free markets (where they use market power to extract monopoly rents) is extremely foolish. Yet the USA has allowed this to go on for decades (well really a lot longer – it is basically just a modification of the trust busting that Teddy Roosevelt tried). It is becoming more of an issue because we are allowing more of the gains to be driven by anti-competitive forces (than at least since the boom trust times) and we just don’t have nearly as much loot to allow so much pilfering and still have plenty left over to please most people.
I am amazed and disgusted that we have, for at least a decade or two, allowed talking head to claim capitalist and market support for their special interest anti-market policies. It is an indictment of our educational system that such foolish commentary is popular.
This is exactly the type of behavior supported by the actions of the politicians you elect (if you live in the USA).
It is ludicrous that we provide extremely anti-market policies to help huge companies extract monopoly profits on public resources such as the spectrum of the airwaves. It is an obvious natural monopoly. It obviously should be managed as one. Several bandwidth providers provide bandwidth and charge a regulated rate. And let those using it do as they wish. Don’t allowing ludicrous fees extracted by anti-free-market forces such as those supporting such companies behavior at Verizon, AT&T…
Related: Financial Transactions Tax to Pay Off Wall Street Welfare Debt – Extremely Poor Broadband for the USA (brought to us by the same bought and paid for political and commentary class) – Ignorance of Capitalism – Monopolies and Oligopolies do not a Free Market Make
I guess the 99% are protesting against the culture of allowing bought and paid for politicians to put their donors interests above the countries interets. But this is no change from what has been going on for a long time. The “solution” is easy. Elect people with ethics and a concern for the country instead of those that are bought and paid for. But we have shown no interest in doing so, and don’t show much of one now. My prediction is we will chose to elect the same people have sold the countries interests down the road for decades.
Those that believe in special interest politics and against free market capitalism (instead supporting large business special interests against the free market system) dominate the talking head and political leaders in the USA. Until that changes nothing will change in any real way. yes occasionally you will have minor successful measures such as restricting some of the abuses by large banks (while allow most of the abuses to continue instead of dealing with the problem of restraint of competition and free markets) but the effectiveness of such measures is very limited.
All we have to do to change is elect smart, decent, ethical people like Elizabeth Warren. But we need to elect hundreds of them. There are probably 20 or 30 in Washington now but that can’t do much against the bought and paid for politicians.
I understand the sensible criticism of overregulation. Fools that think the EPA is a bad thing are another matter entirely. Criticizing the poor implementation of regulations, is a good expenditure of resources. Debate over how we regulate externalities in the markets. Perfectly sensible. Market based solutions are great. I understand some far out people will even argue for not regulating pollution and the like (those that think the EPA needs to be abolished for example – the EPA is already so de-neutered it is amazing to see people still fighting against the institution). Fighting against bad regulations or execution, yes, sure, that makes lots of sense. But the idea that we shouldn’t have the government concerned about the externalities of pollution for our health is crazy. There is no other way to see it. We are all free to have crazy ideas. We shouldn’t be taken seriously when we do, however. Mostly, it isn’t crazy, but paying off people giving large amounts of cash in order to have special rules to allow them to harm society. Why we accept such behavior from anyone we take seriously is beyond me.
Visa, Mastercard Accused of Price Fixing
The companies, in a lawsuit filed today in federal court in Washington, are accused of “eliminating or severely restricting independent decision-making” among ATM operators by establishing a uniform agreement with almost every card-issuing U.S. bank to “fix” ATM access fees.
“The ATM restraints prevent ATM operators from offering their customers a discount or benefit for completing a transaction over a network that is less costly to the ATM operator, so consumers cannot be rewarded for using a lower cost and more efficient network,” the lawsuit states.
It is pretty obvious ATM fees are ludicrously high. The most likely reason (given the political economy culture [essentially the support of anti-market forces that aim to help interests collect profits gained by restricting the ability of the market to provide value to society] we have right now) for such a situation is collusion to prevent free markets from providing value to society and instead a few players extracting profits from anti-market policies.
We should also note that in many locations (all?) we have allowed the judicial branch to be bought and paid for as well as the legislative branch of government. The executive branch is bought less directly with “capture” by the regulated and the promise of jobs that pay well later, for those who provide favors today (plus, of course, buying the political leaders at the top of the executive branch). Also the top of the executive branch organizations are often seeded directly by those that gave the politicians money. This is a very bad situation. And the corruption it leads to is not something that is easy to fix. When even the judicial branch is so highly tainted it is a very bad state of affairs.