One of the great mistakes by those who often claim to be for free markets is that they don’t seem to realize that all sorts of market conditions lead to markets not being free.
Example numero uno: Enron
In the brash language that has become a familiar coda to the electricity crunch, Enron traders and others were captured discussing in e-mail messages and telephone conversations how they could profit from the state’s problems.
In one transcript released Thursday, an Enron trader identified only as Bill called it “a good plan” to shut down a small Las Vegas power plant on Jan. 17, 2001, under the guise of “checkin’ a switch on the steam turbine.” Enron employees also suggested that their plans to exploit Western energy markets predated the meltdown of 2000 and 2001, which brought record electricity prices and emergency blackouts.
Being for deregulation often results in less free markets though it is pro-business in terms of the business with the control. Democrats have let this escape as a theme in the last couple years, but the reality is that capitalism requires a referee that can make sure no one is gaming the system.
Describing an unfettered market as free is like describing a state of anarchy as free. That freedom only exists until someone uses a club to create a hierarchy and Enron had that club.
“an Enron trader identified only as Bill called it “a good plan” to shut down a small Las Vegas power plant on Jan. 17, 2001, under the guise of “checkin’ a switch on the steam turbine.””
Like the Christmas tree that had a light that wouldn’t light on one side. I expect that power plant’s roast beast got taken, too.
“the reality is that capitalism requires a referee that can make sure no one is gaming the system.”
Sounds like someone I know….
Oh yes! Adam Smith!
Funny how everyone forgets that Adam Smith not only came out for free markets, but also government regulation and judicial action to prevent monopolies and other “gaming” as you say. That was just as important.
Thanks for pointing this out.
A lot of pro-business types use the “free market” argument to justify their policy positions. Few of them, though, ever talk about the conditions necessary for efficient markets.
Free markets only benefit consumers if they are also efficient markets. The supply and demand curves presuppose equal bargaining power, full disclosure, and a choice of sellers or suppliers. We don’t have that in most industries. The economic landscape in the early 21st century hardly qualifies as an efficient market, as your example points out.
Why aren’t more Dems talking about this?
Vasyl (and others),
I suspect the reasons Dems are not making hay of the inefficiencies of the modern version of free markets are thus:
1) they don’t give it much priority (a mistake); and
2) they can not think of a non-Kerryesque way of describing the issue (this must be fixed)
Americans have been conditioned by our glowing masters of light and sound to accept information in repetitive, short form fashion.
The GOP has mastered it: Gay marriage – bad for other marriage; it’s your money – you should keep it; mushroom cloud in 45 minutes.
The old political axiom grows truer by the day: “If you’re explaining, you’re losing.”