Wednesday, May 22, 2013

More on [Not So] Free Markets

Trey Smith

Here is how we are told that the free market works: It is survival of the fittest! Companies, not burdened nor assisted by the government, duke it out amongst themselves. Those enterprises which attract the most customers and realize the greatest profits survive. The rest die.

I suppose one could say that this theory sounds nice, but even if you accept the theory, that is not how it tends to play out in real life. Often, those enterprises who are anointed as the victors receive a big helping hand at taxpayer expense. As Mijin Cha reports,
Here’s an example of how government subsidies distort market economics: Gas prices are down nearly 35 cents from last year, yet this has had virtually no impact on this year’s first quarter profits of the big oil companies.

On top of the decline in gas prices, several of the top five oil companies -- BP, Chevron, ConocoPhillips, ExxonMobil, and Shell -- have had significant spills in the last quarter. A ruptured Chevron pipeline spilled thousands of gallons of oil into a Utah waterway. Shell’s oil pipeline spilled tens of thousands of gallons of oil in Texas. Exxon’s tar sand pipeline spilled up to 126,000 gallons of oil in Arkansas. All of these spills occurred just in the first quarter. Yet, these spills haven’t eaten into the companies’ profits, indicating that fines or cleanup costs aren’t anticipated to have an impact on the earnings potential.
To recap, prices are down by a significant amount and many of these oil-based corporations are staring at major clean-up operations, yet it doesn't appear to impact their bottom lines at all! What happened to the theory that companies must make it on their own? What happened to the notion that these corporations must sink-or-swim without a helping hand?

The answer is more than obvious. The free market is a contrived myth! While Corporate America doesn't want to be burdened by laws and regulations that might impede profits, they are all about slurping up as many taxpayers handouts as they can possibly get. In reality, they want to be free of any responsibilities. That's the ONLY part of free market theory they truly believe in.

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