The title is a sarcastic quip which I use frequently whenever topics on corporate misbehavior comes up. This blog attempts to explain to you people why the "free market" concept does not work in this modern world, and why keeping 'gubberment intervention' out and waiting for the people to 'vote with their wallet' in order to regulate the market is a stupid idea.
So, lets explain what the Free Market is all about. To explain simply - the government doesn't interfere in anything. It makes sure of certain things - such as that crime doesn't interfere - but otherwise companies are allowed to do what they like, and the market will fix any problems.
So here's an ideal case where the free market actually works:
You have a small village of say 100 people. You have 3 shops which sell bread. They are the only source of this bread, and the village is the only place they can sell the bread. Someone discovers that shop A is adding chalk to its flour and making poor bread. He tells everyone else, and these 100 people avoid going to shop A. Shop A goes out of business, or must otherwise change its habits, in order to avoid this. If Shop B raises its prices, then people will go to Shop C, and B will be forced to lower it again.
So here's why this system doesn't work in real life:
1. Patents - Companies love them. But in effect this breaks the free market, since its a government interference in the system. So when a company which has a collection of patents argues against government intervention, it's being very naughty indeed. Recently a company got a patent on a frequently used drug. Where it was once sold at 50 dollars or so, now its sold at 3000. Its totally legal in the free market.
2. Exclusivity - This may be caused by patents - however the main problem is that people are egoists. They won't sacrifice anything if they don't gain anything for it. So, lets say that a particular company is selling an exclusive gaming platform which has a bunch of nice games. This company then does some immoral things, such as putting rootkits on cds, or using the law to get large masses of information on people who visited a hacker's website [if you're not following the rules lately, this is pretty much what is happening to Sony]. The free market would tell you to boycott them if you dislike them, and they'll change. It'll be pretty easy to avoid buying certain things, tons of companies make televisions or other electronic media. But if you want to buy an item which only they can sell (such as their gaming console) - you'll have to go without. For an abstract idea. Nobody is going to do that.
3. Mega-Corporations float too much - Huge corporations make millions and billions of profits every year. You think that getting 5000 people to boycott them will make a difference? It'll cause a rounding error drop in their profits. It won't work. And even then, other companies could still trade with them. Sony makes the iPhone 5 cameras too. Do you boycott that as well?
4. Companies communicate and fuse. Small companies become large companies. Companies agree with each other and keep prices high on purpose. Companies will form their own monopolies through agreement. Companies will buy each other and larger 'harder to sink' companies come out.
5. Start-up is expensive. In our ideal free market, companies pop up all the time to replace the ones which died, and to add mixture to the market. However in many of our most important sectors, this is very difficult indeed. I can't just wake up tomorrow and start a car-making factory, or a telecommunications company, or a public transport company. So we'll get naturally monopolies in certain areas.
6. Information is hard to get - if a company does something very bad, it can usually cover it up. It can advertise the opposite or put a spin on it. People will eventually forget how your company started a civil war, how you supported a fascist dictatorship or how you shoved illegal software into your products.
I'm sure there are other reasons, I just can't remember them right now. But the idea that the market will sort itself out... is stupid. We need a powerful force to watch over things and ensure that everyone plays ball.
Llama
Which drug are you talking about?
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