Capitalism is not perfect and is vulnerable to both human nature and major flaws that have flourished since the Presidency of Ronald Reagan. In order for true Capitalism to function correctly, the government has to counter the flaws of capitalism, without hindering the market place, and provide a level playing field to insure competition as it facilitates the necessary means of growth.
Free Enterprise Market is a Myth
In a free enterprise environment, there is a persistent, natural flow of capital to the powerful, whether through design or sheer luck. This propensity for movement towards the concentration of wealth continually reduces both the number of businesses and an ample supply of individual consumers. Because of the cyclical nature of economies, this eventually begins to actually discourage commerce. All studies, computer models, research and statistics in the past and present validate this fact.
Concentrated wealth, promoted by this flaw of capitalism, creates a system of, “The Rich get Richer” for both individuals and businesses. This natural partiality to the already wealthy reduces competition and the number of adequate individual consumers.
This is why anti-trust laws were established. They are meant to counter this harmful monopolistic tendency that stifles competition, increases price-gouging and reduces the competitive drive of capitalism. The political/fiscal system of taxing the rich and redistribution back to the many was created to solve this problem on an individual basis and to perpetuate the economy as a whole. Only when the majority of the population has excess money to spend on what they want vs just what they need can capitalism thrive.
As it stands now, the GOP has made this necessary component of successful Capitalism into a boogey-man by framing it as less-American, or worse, a twisted and erroneous definition of Socialism. They know that it is not, but because of the continual need to re-stock campaign coffers, the GOP has made the conscious decision to propagandize this lie into a mantra…a very successful mantra.
Adam Smith stated: “capitalists left to their own devices would rather collude than compete.” Doesn’t the logical progression of this GOP mantra want you to forget that this means the natural goal of a commercial enterprise is to attain monopoly status, control or own all or most of their market? Of course it does with ample proof within the current generation; e.g. the healthcare industry, medical insurance and pharmaceutical companies as prime modern day examples.
- The healthcare industry(yes, for profit = industry) feels no compunction to stop continually raising prices despite tort reform that used to be the most often repeated excuse.
- Medical Insurance Companies have an explicit exemption for antitrust oversight and the GOP has fought adamantly to keep it in place. This essentially gives the industry monopolistic protection to raise premiums at will to cover exorbitant administrative and profit goals, as well as medical costs.
- Pharmaceutical Industry: The GOP has stymied each effort to allow Medicare to significantly lower its overall expenses by not allowing Medicare to NEGOTIATE drug prices in the same manner every other customer, from Wal-Mart to CVS, is allowed. Again, the GOP has chosen to side with the deep-pockets in order to maintain the symbiotic nature of both group’s existence.
Throughout U.S. history, both Republicans and Democrats have recognized this flaw. In 1890, the Republican Party passed the Sherman Antitrust Act, which was enforced by Republican President, Theodore “Teddy” Roosevelt. Years later, the Democratic Party started the Keynes fiscal policy of redistribution of income and wealth under Franklin Roosevelt.
But today, in an effort to concentrate political and economic power, the GOP is ruthlessly, and to a large degree successfully, diverting public attention from the basic fairness that capitalism usually affords the populous as a whole, in order to enable the ultimate power-grab for the very few. If the current direction of the GOP is not curbed in this November’s election cycle, it could very well have dire consequences for voices of reason, compassion and fairness for the foreseeable future.
As it stands today, the corporate take-over of major networks in the U.S. is complete; and it is still the primary source that the U.S. public depends on. As you can see from the list below, all major networks are now owned by corporate entities with entertainment and profit motives, not news as the common thread. As such, the entertainment industry has formed its own oligopoly and has taken objective television news with it.
ABC-Disney NBC-Comcast CBS-Viacom FOX-Murdoch CNN-Time/Warner (and probably merging with Comcast-NBC)
What Happened to Anti-Trust Laws?
At the beginning of the Reagan Administration, the U.S. stopped enforcing the majority of our antitrust laws because they subscribed to the system of belief known as laissez-faire economics. The laissez-faire-libertarians believe that the market place is perfect and self-adjusting. They have no problem with ever increasing mergers and acquisitions that create monopolies and oligopolies. And ever since Reagan declared war on unions, regulations, and antitrust laws, we have seen a massive consolidation of firms from investment banks to the pharmaceutical and agricultural sectors.
These monopolies and oligopolies smother capitalism under their oppressive weight by the following methods:
- They reduce competition, which produces many economic negatives
- They reduce employment
- They reduce innovation and the quality and free exchanges of goods and services
- They reduce oversight of human frailties and greed and regulation requirements
- They increase bankruptcies and inequality
All of the above have taken place in the last 30 years.
In an earlier article, “Stop the GOP Assault on the U.S. Economic Future”, I detailed the protections enacted during the period following the Great Depression that have been eliminated one-by-one in the last 30 years essentially dismantling all defenses against a repeat of that terrible time in U.S. history.
The dramatic tilt away from enforcement of antitrust laws is yet another example of the road to ruin that the GOP has set for America and its system of capitalism that had served it well for over 150 years. There can be no denying why the GOP set this course.
The Power(and money) that monopolies and oligopolies bring to bear for those in charge. Why else would a billionaire such as Willard Mitt Romney spend the last quarter century on a quest to earn $400,000/yr?
Monopolies and oligopolies destroy property and liberties, which is why it is beyond me that the American public has so easily forgotten this lesson.
Adam Smith wrote that “monopolies raise prices, suppress wages, distort investment, unsettle international relations, pervert the functioning of markets and are enemies of good management. He also wrote that monopolists destroy men, governments, and nations”.
The Free Market As We Know It Has Been Destroyed by De-Regulation and Monopolies via the GOP
As I said before, there is no such thing as “free markets.” That is why I call them “competitive markets.” Today,markets are political institutions in which some form of market regulators oversee economic competition among different groups within a society.
Unchecked, these unregulated so-called free markets are bringing global economies down at a staggering rate.
Just a few Major de-regulated industries and the results:
- Airline Deregulation: The first thorough dismantling of a government-regulated industry.
- Result: Failure of Eastern Airlines, Midway, and Pan American, and the bankruptcy of carriers such as Continental, America West, and TWA. Less competitive pricing, fewer carriers, fewer services for customers, additional charges for services that used to be part of the ticket price
- Agricultural Deregulation: In economic terms, farmers were asked to take on risks heretofore assumed by the government in exchange for deregulation and the promise of increased exports.
- Result: The Omnibus Farm Bill – and the export-led growth strategy upon which it was based – has been a massive failure. The U.S. farm trade balance declined by more than $13 billion between 1996 and 1998. Speculation by a few massive companies has been controlling prices since then.
- Electricity Deregulation: replaced 100 years of cost-of-service regulated rates with prices in many parts of the country set by market-based prices thereby treating an essential service—electricity-as a commodity
- Result: The Enron Scandal
In order to survive the onslaught of deregulatory influences by monopolistic and oligopolistic means, government needs to vastly expand its antitrust division, not de-rail what is left of it as Mitt Romney and the GOP proudly promote. It astounds me how so many Americans do not realize how thoroughly they’ve been sold on ideas against their interest and think they will somehow benefit ftom them.
This phenomenon has taken a particular hold on poor, southern whites who routinely vote for policies and politicians that may represent a social issue that appeals to them, but whose economic policies are keeping them poor. I also addressed this in an earlier article that traces the roots of this anomaly back to the Revolutionary War in “Revolutionary War-Republicans and the New Confederacy“. Oddly enough, more Caucasians in the U.S. depend on food stamps than minorities.
And Of Course There are the Banks
If capitalism is to survive in the U.S., effective oversight must be applied to the current financial banking system’s consolidation. The ability to raise and/or create money with a relationship or outright ownership of a commercial bank allows financiers to become absentee owners. The humongous institutions that gambled and lost or were sold a bill of goods by AIG in the housing bubble debacle of 2008 are even larger now. I discussed the recent evidence from JPMorgan previously; it is plain to see the situation has gotten worse, not better.
This is why it is essential to have an adequate antitrust policy and enforcement. The GOP used to stand for the mantra that the more competition the better! The GOP pretends to idolize Ronald Reagan. In reality, they simply pay lip service to these tired old slogans and routinely vote against antitrust measures in order to finance the smear campaigns and keep the network “news” conglomerates under their thumbs
The resistance to proven Keynesian fiscal philosophy of redistribution persists in the current conservative industrial and political leadership as they resist most types of government spending except military.
In doing so, they hinder the creation and improvement of effective economic recirculation programs. They clearly feel politically expedient in pretending to support certain types of these spending programs, of which Social Security and Medicare are the largest. But by continually pushing an agenda that lacks adequate oversight, they have put our capitalistic societies in danger from economic depression-recession or outright revolution.