August 26, 2024
E.J. Dionne is a decent person and offers reasonable takes on most policy issues, but he really is enmeshed in the right’s view of the world. In the middle of a piece praising Vice-President Harris’ coalition building and economic agenda, Dionne tells readers:
“She champions the new economic consensus that President Joe Biden began to bring to life, replacing the view that markets alone, spurred by low taxes and deregulation, can save us.”
It is totally understandable that the right wants people to believe that “markets alone” were responsible for the massive upward redistribution of income of the last half century. But it happens to be total crap.
Starting with my favorite, government-granted patent and copyright monopolies are not “markets alone.” This concept is apparently hard for people who write in elite media outlets to understand.
The market alone does not threaten to arrest people who make copies of Pfizer’s Covid boosters without its permission or Ozempic without the permission of Novo Nordisk. Nor does the market alone threaten to arrest people who make copies of Microsoft’s software without Bill Gates’ permission.
Patent and copyright monopolies are the GOVERNMENT. Again, it’s understandable that the rich people who benefit from these government-granted monopolies like to pretend this is just the free market. It sounds much better to say “I’m rich and you’re poor because my skills are more valued by the market,” than “I’m rich and you’re poor because I rigged the market to give me all the money.” But why does an ostensibly liberal columnist go along with this blatant lie?
And there is huge money at stake here. In the case of prescription drugs and other pharmaceutical products alone we will pay over $650 billion a year for items that would likely cost us less than $100 billion in a FREE MARKET (see Line 121). If we add in the higher prices we pay for medical equipment, computers, software, and other items where these government-granted monopolies are a large share of the price, we are almost certainly well over $1 trillion a year and possibly close to $1.5 trillion. This would be roughly half of after-tax corporate profits. (See chapter 5 of Rigged [it’s free].)
These inflation-causing monopolies are far from the only way the government intervenes in the economy to make the rich richer. The supposed “free trade” deals of the last four decades all included provisions that required our trading partners to make these monopolies longer and stronger in their own countries.
The “free trade” deals also did little or nothing to reduce barriers to trade in highly paid professional services like physicians’ services or dentists’ services. As a result, these professionals get paid more than twice as much as their counterparts in other wealthy countries, even though our manufacturing workers get paid less. Again, we get why the winners want to call it “free trade,” but that is a lie.
Bailing out the big financial institutions when they did themselves in by their own greed and incompetence in the housing crash and more recently with the run-up in interest rates was also not “the market.” Many of the very rich got their hundreds of millions or billions as a result of the government’s coddling of the financial industry. Why don’t we call out the government assistance instead of pretending it is the free market?
Similarly, our CEOs get paid many times more than their counterparts in Europe or Japan. That’s not because they are smarter or harder working, it’s because we have a corrupt corporate government structure that largely allows top management to set their own pay and rip-off the companies they work for. If it’s too complicated for our great intellectuals, the market did not write the rules of corporate governance.
To take one more example, the market did not give us Section 230 which protects Mark Zuckerberg and Elon Musk from being held liable for spreading defamatory material in the same way that the New York Times or CNN is held liable.
I could go on, but the point should be obvious to anyone who does not write columns for a leading news outlet, the government has rigged the deck. Extreme inequality is not the result of a free market, it is a result of how the government has structured the market.
The market is just a tool, like the wheel. It makes as much sense to rant against the free market as to complain about the wheel. Unfortunately, the right has managed to get the bulk of the left in this country screaming at the wheel. As long as that remains the case, it will be difficult to make much progress in reducing inequality.
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