July 23, 2012

Too Big to Regulate

Capitalism is broken, needs fixing or must be further regulated to protect the market from oligopolies. This is related to inequality of income. If we desire to fix inequality, we must fix capitalism.
"The central problem, then as now, was that very large corporations could easily undermine regulatory and antitrust strategies. The Nobel laureate George J. Stigler demonstrated how regulation was commonly “designed and operated primarily for” the benefit of the industries involved. And numerous conservatives, including Simons, concluded that large corporate players could thwart antitrust “break-them-up” efforts — a view Friedman came to share.
Simons did not shrink from the obvious conclusion: “Every industry should be either effectively competitive or socialized.” If other remedies were unworkable, “The state should face the necessity of actually taking over, owning, and managing directly” all “industries in which it is impossible to maintain effectively competitive conditions.”" Wall Street is Too Big to Regulate,  GAR ALPEROVITZ, New York Times, July 22, 2012
The United States was founded on the principle that everyone is born with the right to life, liberty and the pursuit of happiness. Early on our forefathers decided the best economic model to reach these pursuits was capitalism. Free markets was chosen to best attain the nations economic objectives. Capitalism is here to serve society. Society is not here to serve capitalism

Our early leaders recognized in order for capitalism to work markets must be free. Free markets meant the individual must have a wide variety of choices as to whom he could buy goods and services. Many providers  forced them to provide the best products at the lowest prices possible or they would go out of business.

Early settlers were less concerned about government over-regulating markets then about devious suppliers trying to control markets. Today when a conservative complains about the destruction of free markets he is condemning the government saying it is over-regulating the markets and not allowing them to operate effectively. The damage caused by regulations pales to the damage caused by markets taken over by oligopolies and oligarchs.

With the consolidation of market control comes the consolidation of income. This is at the heart of today's unequal distribution of income. If a small group of companies are in control of a market, they can set prices and set the quality of the products produced. They also have more control over the cost of labor in the idustry.

A corporations principle objective is to maximize the wealth of its shareholders. In a competitive marketplace, with many buyers and sellers, this is accomplished by selling the best products at the lowest price possible. In a tightly controlled market, this is accomplished by tightening the control of the market and making it hard for the consumer and suppliers,  including labor,.to go to a competitor.

The oligopolies are tightening their grip further by buying influence in Washington with huge campaign contributions. We are now seeing the results of the so-called Super PACS. We have one billionaire financing a major portion of Gingrich's campaign. Romney's campaign is being financed by huge contributions from Goldman Sachs and other Wall Street firms. The news media is reporting that Obama will be spending a billion dollars on his reelection campaign. One man one vote is being replaced by one dollar one vote.

This must change and here is how.

1. Prohibit corporations and unions from financing political campaigns by amending the constitution 
2. Enforce anti-trust laws against oligopolies and monopolies!
3. Bring our deficit under control and amend tax code!

The question is do we citizens have the will to do it.

1 comment:

  1. Good article, and I'm totally on board with what you are saying, but please don't undermine our argument by saying that inequality of income is the problem. It is not "inequality" that is the problem. It is EXTREME and INAPPROPRIATE range of income that is the problem. No one is looking for equality of income, but rather income that makes some kind of sense as a "reward" for ACTUAL PRODUCTIVITY. Someone who works harder than I do SHOULD make more, maybe 10 times more, maybe 20, but 1000 times? Get real. The numbers we are seeing are a clear indication that something is broken. People at the upper level of income have NOT suddenly become more productive....

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