Tag Archives: free market

Capitalist conundrum

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By Erik Dolson

Office Depot put my local stationary store out of business, then the men’s store downtown that carried shirts I liked closed their doors because of the new mall. And there is always Walmart. Capitalism may be efficient and creative, but has some serious side effects.

I think of myself as a capitalist (and a liberal, but those are not really incompatible). But I worry that unintended consequences of unfettered capitalism may harm “we the people” it ostensibly serves. Since we’ve given the rights of “personhood” to corporations, perhaps we’re the servants.

Lower costs certainly benefit consumers. The savings may come from efficiency gains and purchasing power. I love Costco, but it’s instructive to listen to companies that sell to that big-box giant. Walmart sells t-shirts made so cheaply in China that consumers in America, at least those who still have jobs, can buy new ones whenever they want. That does not include out-of-work textile workers in Alabama.

Amazon sells for less by eliminating the cost of brick and mortar stores. Of course, I can no longer go in and feel if a product is well made, but I can always return it with the cost carried by the seller. They may lose money, but they have no choice because Amazon has become the market place. If a seller is not there, they’re nowhere.

Wealth and profit are driving forces of capitalism, and are not dirty words. But when profit is the primary motive of company leaders, and a higher stock price rewards executives who cut costs by stepping on workers and buying back shares, then capitalism can lead to wide-scale destruction of value, and often of corporate values. See Boeing, 737 Max.

Why does VISA own our money, charging the businesses we buy from a couple of percent off the top and setting us up to fail so they can charge usurious interest on underpayments when we get in a jam? Of course credit cards are convenient, and possibly cleaner as we consider coronavirus, but what is the true cost of VISA to national productivity? Would it be wise to bring money back under national control?

The “free market” does not serve us well when it comes to health care.  Proof is easily found by anyone who cares. I won’t waste effort defending the statement.

These trends will accelerate, and hardship become worse, when Amazon buys Tesla robot semi trucks to move goods, further reducing Amazon’s cost by eliminating truckers, one of the last sorta kinda well-paying jobs for the undereducated. Then all those truck stop cafes will close, putting all the Serving Shirley’s and Grillin’ Gary’s out of work, too. Then the companies that provide the pre-prepared chicken fried steaks, and frozen blackberry pies.

Car manufacturing is increasingly done by robots, as recent photos of factory floors and employment numbers from Michigan have shown. It’s not just that jobs are going to Mexico, though they have, but it will be even worse when we start importing electric cars from China made by robots built in Germany. Even logging in my home town uses huge cutter/buncher machines that do the work of seven or nine men with only a crew of three.

Capitalism makes companies more efficient, they make more profit, and can compete more effectively in the “free market.”

So capitalism may lowers costs (unless there’s a monopoly, or collusion in the market to keep prices high — see AT&T, Verizon), but when the primary cost is labor, that means jobs are lost. Politicians owned by corporations sell it as “freedom” in the “free market” and giving people the “freedom to choose.” Capitalists say, “… the unemployed should retrain for jobs that are in demand.”

Okay, maybe some of those unemployed loggers will retrain and get a comparable job writing software. Maybe they can go into real estate. By the way, thanks for cutting funds for their education and health care while they’re out of work, and for making student loans unassailable so those with dreams can live in servitude for decades after getting a worthless degree from Trump Chump U.

Of course many give up. Change is happening so quickly now, retraining for most is a pipe dream. So pass that pipe, because “worrying about all this shit aint getting me nowhere when there aren’t no jobs in the first place, and big business has bought all the companies that used to pay a living wage.”

So perhaps there’s an element of self destruction in the creative destruction of capitalism. After all, workers who are getting squeezed are also consumers that power 60 percent of the economy. At some point, would it be wise to consider the total impact of individual decisions, and protect the system that supports all of us? Might that be the role of government?

Ultimately, we’ll also have to confront the question of our indvidual value in this brave new world. Traditionally our value, to ourselves, to our families, to our society, was measured at least partially in terms of our work. That’s different than our value to the market, defined by capitalists who manipulate our consumption, which is primarily as a consumer.

What happens to our “value” when we no longer have a job, and not enough money to consume?

Failure of “free market” health care

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By Erik Dolson

In the last two weeks of March, nearly 10 million people lost their jobs. Of those, more than 3 million also lost their health insurance.

With the coronavirus looming over every household, think how this might feel — your father is sick? Your child? Everything you worked for is on the line when you sign those hospital forms. Feeling sick yourself? Maybe just see if it clears up, right?

That loss of health insurance affects not just you and your family, but everyone you come in contact with.

The brilliance of capitalism is the efficiency with which it allocates resources. In theory, capitalism balances costs versus quality by giving buyers a choice in a transparent market place. This is the essential mechanism.

But health care has disconnects that violate the basic rules of capitalism: consumers (patients) don’t pay the bills and don’t really make the choices. Insurance companies and government pay the bills, and consumers rarely “shop around” for the best or least expensive care.

This malfunction of the market place is seen by comparing costs of health care in the U.S. versus other countries: U.S. health care is twice as expensive, for mostly mediocre results, than any other developed country in the world. Ultimately, the burden of this falls on citizens through high insurance rates and taxes. We just don’t get to choose.

It’s legitimate to ask, where does the money go?

Drugs cost ten to twenty times more in the U.S. than elsewhere in the world because drug companies have purchased the U.S. Congress.

Private equity firms have swooped in and purchased doctor’s offices and hospitals across the country. Like insurance companies, their goal is to maximize profit, which they do by increasing fees and cutting costs. If you notice absurdly high charges and confusing write offs on a hospital bill, or long wait times and hurried doctor’s visits, this is part of the reason why.

But wait. If the payers and the providers are both interested in reducing cost, why don’t we have the least expensive health care in the developed world? Because insurers and corporations take a large share, and fighting over that share costs about 30% of every dollar spent on “health care.”

Why don’t we have the best health care in the world? Because when we talk about payer and provider, what’s missing from the “free market” equation? The receiver of the service, the patient, you. The one who is most concerned about the outcome. For a market place to work, the receiver of the product or service has to make a choice between price versus quality, and that doesn’t happen in health care.

And, as we see with the coronavirus crisis, health is not an individual concern. You choosing which car to buy doesn’t really affect me. You coughing in line behind me at the grocery store does.

Freeing the free markets

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The weird thing is, I believe in the “free market.” I believe that removing consequences for bad behavior encourages that behavior. I don’t believe “inequality” per se, is a bad thing, as long as we ensure opportunity. In short, I am a conservative.

From about 1965.

Of course government is inefficient. The sky is blue. But government’s role is not to be efficient. Government needs to be the referee, mark the playing field, protect free markets and provide services under the law that we would not entrust to our neighbors without guidelines, or that need to be done to avoid loss of our humanity.

But we don’t have “free markets,” we have market manipulation by oligopolists who collude with corrupt politicians and fight transparency.

The only folks facing consequences are the poor—the leaders of Goldman Sachs, ATT, and Pfizer don’t face consequences for their greed, regardless of the damage they do to our country.

Ownership of our money by big banks has caused irreparable harm, first in the Great Depression, which was followed by bank laws, then in the Great Recession that followed repeal of those same laws. Some of those working in the largest banks hurt far more people than John Dillinger. Increase capital requirements, so they face the consequences of their failure, or break ’em up, so if they fail, it is shareholders and not farmers and teachers and gas station workers who are out of a job.

There should be vigorous price competition between cell phone networks. No, there’s not. We need to make sure that no one company or four companies can grab all of our radio spectrum, nor limit our choice of phones, nor throttle in any way our access to the Internet. The ‘Net is now too important, and every citizen should have a wide-open pipe, buying what they want, paying for what they use.

There should be vigorous market competition in the drug industry. It should be illegal for one company to pay another, in collusion, to keep generics off the market. Patent law should be changed so that new generics are available much, much more quickly. Consumers should have the right to buy their drugs from wherever they please. Drug prices, and hospital equipment prices, should be published, not hidden. The market needs information to operate efficiently.

Corporations are not people. If a corporation has broken the law, someone in that corporation did the breaking. They should do time if they did harm. It’s not just marijuana users who are a threat to society. In fact, I don’t think pot smokers are any threat at all, and we should leave them alone to face the consequences of their behavior.

But maybe that’s just me, being a conservative.