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The Myth of the Free Market

Rand Paul’s ambivalence (and by “ambivalence” I mean “antipathy until he realized he was getting killed politically”) towards Title II of the 1964 Civil Rights Act, followed immediately by his “sometimes accidents happen” defense of BP against big neck-booting meanie Obama gave us a great reminder of the biggest of all of conservatism’s zombie big lies: The free market makes regulation unnecessary.

Yes, that’s right: We don’t need any of that oppressive government regulation, because corporate wrongdoing will be found out and punished by angry customers and shareholders withdrawing their business.  But the thing is, after 30 years of aggressive deregulation, corporate capture, and starvation, our regulatory landscape is already starting to resemble Lord Of The Flies.  And how has that worked out for us?

Well, let’s see: We had countless food and drug poisonings, an epic financial meltdown, some horrific mine collapses, and an offshore oil rig explosion that could wipe out an entire ecosystem.  Also runaway greenhouse emissions and an insurance industry that routinely hikes its rates and denies coverage on the flimsiest of pretenses.

The common denominator?  Corporations putting profits ahead of safety, customer care and the public good because their regulators are too weak or too corrupt to stop them.  How would further deregulation make any of this better?  Are we to believe that corporations can’t afford proper risk management or customer service because they’re spending too much money on lobbyists and campaign donations?

If Fear Of Losing Customers + Ineffective Regulation isn’t enough to keep corporations in check, then why should we expect Fear Of Losing Customers by itself to do it?  Especially when we’re talking about megacorporations that can afford the very best lawyers and PR firms that money can buy, and when – thanks to deregulation – the national news media are almost entirely owned by megacorporations themselves.

Not only that, but do we really want an economy based entirely on questionable deterrence rather than actual prevention?  Isn’t locking up the matches more effective than telling your kid he’s grounded if he gets caught burning the house down?  As satisfying as it might be to see Goldman Sachs or BP go bankrupt for their misdeeds, wouldn’t it be so much better if they hadn’t been allowed to take such dangerous risks in the first place?  I would trade a dead BP or Goldman Sachs for a healthy Gulf and economy any day.

“The free market will sort everything out” is a convenient fairy tale for Chamber Of Commerce apologists, a vaguely plausible-sounding but empirically discredited rationale for giving corporations license to rape and pillage to their hearts’ content.  But we gave the free market every chance to prove itself, and it failed.  Again and again.  Tragically.  Please let us lock up the matches now.

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