America’s Biggest Scam: The “Free Market”

As Americans, we’re constantly bombarded with propaganda of all sorts. Commercials, political ads, even the cable “news” — all of it carefully calibrated to influence the way we think and what we believe to be “true.” I’ve often imagined Nazi Reich Minister for Propaganda Joseph Goebbels smiling in his grave at the machinations of today’s United States.

One of the most deeply ingrained — and therefore most assiduously cultivated — American mythologies is that private enterprise always longs for free markets. This is true to such an extent that many market-friendly commentators reflexively support anything a corporate spokesperson says.

The same goes, in the opposite direction, whenever anyone in government or politics criticizes American enterprise.

But what if we’re being sold a load of bull? What if the primary enemies of American economic freedom are the very corporations that dominate our lives, and increasingly our politics and way of life?

The reality is that the U.S. economy has become grotesquely lopsided, with massive corporations operating as near-monopolies or oligopolies (uncompetitive markets) in sector after sector.

The U.S. Economy: Behind the Scenes

Since the early 1980s, corporations have consolidated control over dozens of U.S. industries, including cable, airlines, retail and agribusiness. Where once there were many small and mid-size businesses, today only a few goliaths remain.

These behemoths use their market power to extract economic value far in excess of what a competitive market would dictate. This “economic rent” — the return to market power rather than innovation or competitiveness — is transferred from consumers, workers and other entrepreneurs to rich executives and shareholders, driving the massive inequality that is the hallmark of today’s U.S. society and politics.

Indeed, America’s much-maligned “one percent” derives much of its lopsided wealth not from its intrinsic capitalistic prowess, but from its ability to purchase the laws and regulations it wants from our greedy political class. It’s not an exaggeration to say that much of corporate America invests as much in “rent-seeking” — a.k.a. lobbying — as in actual production.

Consider the $2.5 trillion U.S. health-care industry, which consumes a larger proportion of our GDP than any other country on earth. Rising health costs are rooted in a round of mergers that started in the 1980s, when competition regulations were relaxed under the Reagan administration. Most Americans today live in areas where there is little competition among hospitals, which are free to raise prices at will.

As a result, the prices charged for medical services bear no relation to the costs of production or the benefit to the patient/consumer. Market power redistributes hundreds of billions of dollars in wealth to the owners of health-care capital.

Consolidation among cable providers has enabled Comcast, Time Warner, AT&T and others to raise prices at three times faster than inflation since 2008. As a result, Americans now pay double or triple what consumers in other countries pay, for slower and less reliable broadband internet access.

In agriculture, consolidation and resulting monopolistic purchasing power has enabled firms such as Tyson to force down farm-gate prices and raise their own profit by dictating prices to farmers. The average farm price of a hog dropped 31% between 1989 and 2008, a period when the top four pork processors increased their market share from 45% to 63%.

The market power of consolidation and anti-competitive behavior also affects workers. Executives at Google, Apple, Intel, Intuit, Pixar and Adobe — who share dozens of board members — were caught in a secret agreement not to recruit one another’s employees, in order to suppress salaries. Tech workers who sued this cartel estimate the scheme reduced the salaries of 60,000 workers by more than $3 billion.

That’s money that goes into overstuffed One Percent bank accounts rather than be spent on goods and services in local economies.

Finally, the “opportunity cost” of this market dominance is the lost income and innovation of the tens of thousands of entrepreneurial small businesses, which never get off the ground or are given the opportunity to grow enough to create jobs in the face of unfair competition.

And yet, we hear little about this reality. Instead, we are treated to a daily barrage of attacks on immigrants, working people, the unemployed, minorities and others who are essentially powerless compared to the deep-pocketed, lobbyist-protected corporations that dominate our economy and politics.

Beyond Party Politics

Add all this together and you have a compelling argument that the decline of the U.S. economy isn’t as simple as we are led to believe. The very forces that invest so much to keep us focused on government as the source of our decline may well be the chief culprit, or at least co-complicit with the latter.

One of the critical pillars of the propaganda machine that successfully diverts our attention from this state of affairs, Wizard of Oz style, is the gladiatorial spectacle of Red vs. Blue, Republican vs. Democrat. We are told that the only route to salvation is to join one of these two tribes, which then dictate what we are to think. In their arrogance, they tell us theirs are the only roads we can take.

Many Americans have essentially ceded their ability to reason for themselves to highly-paid shills on 24/7 cable channels, spouting arguments that would make Reich Minister Goebbels giddy with admiration.

Both political parties are part of the mechanism that keeps America in a state of corporate oligarchy. The apparatus is designed to spread and control wealth only within itself. And that’s as far as the American Dream goes.

So what does that mean for wealth builders and those of us with a “sovereign “ state of mind, who are not resigned to the framework and refuse to become swept up in the downward spiral of the U.S. economy?

It means … find safe ground for yourself, your family and your hard-earned assets. That’s why I and the rest of the Sovereign team write for you. We’re committed to piercing the veil of propaganda that enshrouds our world and protecting the sovereign individuals who wish to take control of their own lives.

So if what we say sometimes shocks you, remember: that’s the point.

Kind regards,

Ted Baumann
Offshore and Asset Protection Editor

The post America’s Biggest Scam: The “Free Market” appeared first on The Sovereign Investor.