Thursday, June 14, 2007

Free market isn't free

This is why I laugh sardonically when people try to tell me the "free market" is a boon for consumers. There is no free market. Under this administration, the FTC operates as a corporate welfare program. Take for instance the agency's latest ruling on Whole Foods.

The FTC is blocking a merger between Whole Foods and another major organic goods purveyor.
Then, it's a budding monopoly, or so says the Federal Trade Commission, which contends Whole Foods doesn't face that much competition from the mainstream grocery stores. The FTC made that case in saying Whole Foods shouldn't be allowed to buy Wild Oats Markets (OATS, news, msgs), another organic-grocery player, because that would give Whole Foods too much power in this little corner of the retail world.

The problem for Whole Foods is that purchasing Wild Oats was a big piece of its strategy to grab market share and combat competition from the mainstream grocery chains -- you know, the competition that supposedly doesn't exist. That's why news of the FTC's desire to block the merger shaved an additional 7% off Whole Foods' stock price last week.
What a steaming crock. There's not a major grocery store in America that doesn't offer at least some organic items and most chains devote a significant section of their store to such goods. Whole Foods is a minor player in the gorcery industry. They worked hard to build their brand and now the traditional grocers are riding on their coattails, exploiting the market that Whole Foods developed. A look at the FTC's previous rulings makes it clear they're only concerned about protecting the biggest players.
There are several other odd aspects to this case. For one thing, under the administration of George W. Bush, antitrust authorities in the FTC and the Department of Justice have been relatively easy on mergers.

They did nothing to contest last year's marriage of Whirlpool and Maytag, then the top two rivals in household appliances. So far, there's been no opposition to the proposed merger of Sirius Satellite Radio and XM Satellite Radio. What's more, the FTC recently lost two attempts to block mergers in the energy sector.
Free market proponents would like you to believe that consumers dictate the choices and ultimate success of a business. If the market were truly free, that would probably be true. However, when the government actively protects the largest corporations from competition, the only thing free about it the free ride the mega-corps get from the FTC's actions and inactions.

It would be interesting to see how the rulings correlate between the corporations in question and their campaign donations to the GOP. One suspects there's a nexus.

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10 Comments:

Blogger Porthos said...

I would venture to say that most true free market proponents would also tell the FTC to get their nose out of the free market. At least that's MY feeling on the Whole Foods issue.

10:40:00 AM  
Blogger Libby Spencer said...

I would venture to guess that anyone who believes in a true free market would say the same. The problem is that I we simply don't have one and I don't really see how we ever will.

All the gov't posturing over free trade agreements are really corporate welfare programs in disguise.

11:33:00 AM  
Anonymous lester said...

the marriage of corporatism with free trade principles was a most unfortunate one for those of us who are pro market and anti state.

the market is the best trust buster. Europe tied to sue microsoft for "budling" their browser with their software, even though you can download it for free anyway. while they were doing all that, firefox came out with a browser that is giving IE all the busting it needs.

1:06:00 PM  
Blogger Libby Spencer said...

Unfortunate is a bit of an understatement Lester. Try cataclysmic.

5:56:00 PM  
Anonymous lester said...

still, the dems are so off base on economics i could never vote for them. they are as sure of the governments competency in those matters as the repubilcans are with the military. both have been proven wrong time and time again.

2:53:00 PM  
Blogger Libby Spencer said...

Say what you will about that Lester, but all I know is that when Dems have been in charge in of the gov't, I've had more money in my pocket. When the GOP is, I always end up with less while watching the fat cats of the corporatocracy line theirs.

7:33:00 AM  
Anonymous lester said...

Clinton was relatively conservative. He was a post reagan democrat and governed not much differently than ronny. neither reigned in spending, clinton met the budget by soaking the rich.

I have a hard time believing you did that much better under LBJ or Carter than Reagan.

9:37:00 AM  
Blogger Libby Spencer said...

Well, believe it or not Lester, as a working class stiff I did. When LBJ was in office, my parents were still subsidizing me, but I definitely did better under Carter than Reagan.

You may recall Reagan was the one that considered ketchup should count as a vegetable in fulfilling the gov't mandate on feeding poor people.

11:56:00 AM  
Anonymous lester said...

I don't think the government should be involved in feeding people anyway. LBJ sent my dad to vietnam. his "great society" was anything but. yeah housing projects, awesome idea. hard to bleive people would want to have riots living in one of those. Nixon was just as bad or worse than carter.

4:45:00 PM  
Anonymous Anonymous said...

The free market is always superior to top down government and political actions.

We are very pleased to announce the creation of The Free Market Hall of Fame where members of the Freedom Movement will have the opportunity to initially vote on individuals contributing most to the success and advancement of free markets and free people around the globe during 2007.

Nominations for the Free-Market Hall of Fame are open to the public and can be made by anyone by e-mailing ron@freedomfest.com Individuals can vote for or nominate individuals who they believe should be in the Free Market Hall of Fame. Write-ins are permitted.

The categories will include the following:

1. Academic economists
2. Journalists and writers
3. Business leaders
4. Legislators and government officials
5. Think tanks

A select group of economists and other free-market supporters will make the final decision and vote on upcoming Hall of Fame members.

For more information on the Free Market Hall of Fame go to http://www.freedomfest.com/hofhome.htm

“It’s time we honored all the great teachers, writers, business leaders, legislators, and think tanks that have advanced the cause of liberty," Mark Skousen

Ron Holland, Editor
FreedomFest News http://www.freedomfest.com/news.htm
Author of the online book: “The Swiss Preserve Solution”.

6:29:00 PM  

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