Replies to post #4860 on Distributed Digital Property Board

[goin fishn]

Hi Blue Fin

Here is why I say free markets are a failure of governmental policy:

Governmental policy is the expression of the desires of the body politic. Those desires will always favor that which improves the quality of life of the members of the body politic. Businesses do not pursue improvements in quality of life for the people of a country. They pursue profits. Pursuit of profits is not evil, and I am not in favor of a socialistic approach to this problem. I do think that capitalism provides an important venue for the creative and ambitious parts of the human spirit to benefit us all. But, there are problems that need fixing, problems that businessmen will not fix on their own.

Some economists would argue that free markets are self policing. They say that when people find out about corporate misdeeds, they will punish that company by not buying its products. This can be true, as the campaign against tuna companies to make their tuna “dolphin free” suggest.

However, I would argue that this is not the norm.

I think that if they had the opportunity, businesses would do away with the free market. They were moving towards monopolies in the latter part of the 1800s and early 1900s before a series of reformers took them on. Today, companies short circuit the free market in two important ways that come easily to mind.

First, they employ sophisticated marketing schemes, using psychology to achieve “Branding,” which leads consumers to lessen the amount of critical thinking that they employ when making a decision to purchase a product.

Think of “Baseball, Hotdogs, Apple Pie and Chevrolet.” What does that have to do with the quality of their cars? Nothing. It is an attempt to use preexisting feelings in American consumers to get them to buy a Chevy.

By using tactics such as this, corporations seek to hijack the “free” market. The notion of the free market presupposes that allowing the mechanisms of the free market to function unfettered will lead to better, cheaper products and more efficient companies. How does using people’s psychology against them as in the Chevrolet campaign result in cheaper cars, or a more efficient company? It doesn’t, because it encourages people to buy simply because of their love for America.

The free market is really a market of ideas. Those ideas produce wealth for a company when they result in superior products or production efficiencies. By using psychology to goad or trick people into buying products, companies circumvent free market forces. It happens all the time. People in marketing even have a term for it. They call it “created needs.”

The second way in which companies seek to avoid free market principles is when they lavish money upon public officials, both while campaigning, and while in office. Defense contractors do this, giving generously to get the right candidate elected, and then expecting favoritism when they take office.

Defense contractors will also deliberately establish production facilities for defense projects in the home districts of key congressional committee members. Whenever a vote comes up regarding continued funding for those projects produced in a congressman’s district, the defense contractor can be sure to have the congressman’s support for the project.

If the markets were truly free, congressional decisions would be based solely upon the quality of the product, and the need for the product.

The markets are not free, and it is because the corporations don’t want them to be. They complain about governments obstructing “Free Market Forces” when it suits their needs, and quietly circumvent those same “Free Markets” when free market forces might be inconvenient.

It would be a mistake for our government to say “let the free market rule,” and take a hands off approach to business when, in reality, governments are an important protector of free market forces.