By Jack Werner
The market fundamentalists and libertarians have seized the College campus. IHS, “The Morality of Capitalism,” The Students for Liberty, really any of these organizations you see all advocate the same thing — laissez-faire markets. It’s so pervasive that even YouTube videos are showing ads about the wonders of capitalism and markets. So what is all this? And, more importantly, are they right? Let me say right now, before I go any further, that they’re wrong. Totally wrong. So next time you see them trying to “spread freedom,” I want you to think to yourself, “Nope, that’s absolute nonsense.”
What do you mean you don’t love the market? That’ll probably be the first question you receive. Of course, this will be followed by a basic lesson in microeconomics about supply and demand curves. And this is wrong why? Simply put: the myth of perfect information. Let me give you an example. Let’s say you’re trying to buy gas for your car. In the perfect competition model (the one with supply and demand curves), you’ll never buy gasoline somewhere that it’s more expensive, because why would you? The price of gasoline is said to stay at equilibrium. But, have you ever bought gas somewhere more expensive, only to slap yourself on the knee and say, “Dammit! It’s cheaper over there!” How come you didn’t know that? Well, frankly, there is no perfect information. It’s a myth. In other words people consistently buy goods well above their “market price.”
Yeah, what’s your point….? My point is that libertarians base their ideas on perfect competition and perfect information. It’s why they praise capitalism and markets. Once you realize that these arguments are based on models, not the real world, libertarianism seems very dangerous.
Deregulation! We want Deregulation! That’s the next line you’ll probably hear from the Tea Partyist or Ron Paulian. The best way to dismantle this argument is to point out the ways regulations engendered greater freedom in the market throughout history. Let’s take Ida M. Tarbell, John D. Rockefeller and Standard Oil, for example. From 1882 to 1911, Rockefeller was one of the most powerful men in the entire country. Prior to the federal government stepping in, Standard Oil controlled roughly 90 percent of the refined oil flows in the United States. How’d he do it? Was it just being competitive?
Well, I mean, if you think intimidation, back room deals, and sending your own private army to put people out of business is competitive, then yes, Rockefeller was quite competitive. There was a reason he could start business meetings by saying, “Join me or else.” What a great entrepreneur, right? Without Ida M. Tarbell’s compelling History of the Standard Oil Company and the Sherman Antitrust Act, who knows how long Rockefeller would have ruled the free market.
Well, that led to lower prices for oil right? That’s good for the consumers! Zing! True, Standard Oil’s practices did lead to lower prices. But, at what market and social cost? Poor working conditions? A large, multinational, corporate empire? If you really believed in the free market, you wouldn’t defend large corporations and the tactics they use to systematically conceal the truth. Perhaps, if you knew what Coca Cola or Nestle Tea did to bring you a bottle of soda for $1.50, you wouldn’t buy it. As prominent intellectual Noam Chomsky said, “Businesses put enormous efforts into ensuring that uniformed consumers will make irrational choices.” I can’t think of a better argument myself.
I don’t know. I’m not convinced. Well, let me try again. Two words: “Big Tobacco.” Beginning in 1952, the first news was published linking cigarettes to cancer. At first, Tobacco CEOs panicked. But two years later, they released the famous “A Frank Statement to Cigarette Smokers.” What exactly did it say? “We accept an interest in people’s health as a basic responsibility, paramount to every other consideration in our business.” Wow! The free market really does care about costumers! Corporate Responsibility!
Imagine the surprise then in 1994, when it was revealed that Brown and Williamson Tobacco Corporation contracted a scientist named Dr. James F. Chaplin to genetically engineer tobacco to double nicotine levels from about 3.4 to about 6 percent. This was after decades of informing the public that companies were working for “low-tar, low-nicotine products.” That’s the free market at work. Tobacco companies had no regulation; they advertised to whomever they wanted and created misinformation. My overarching question to the libertarians out there, then: did government intervention in the Tobacco industry help people or not? If it did help, that’s regulation and taking away the rights of business at the max.
We’re bombarded with a lot of information nowadays. I’m not sure why people have taken up laissez-faire capitalism again. Maybe it’s all the Ayn Rand and Milton Friedman literature that is reemerging. Or maybe it’s the poor economic conditions since the 2007-2008 Great Recession. Regardless, let’s not turn to an erratic, naive solution. Please, we already did that once, his name was George W. Bush.