Over the past few days, I’ve been getting into discussions with various conservatives comparing their concern about big government with liberals about their concern about big business. My primary concern is that centralized power, whether it be with big government or big businesses is not the best way of addressing the issues we face.

Some may note that these days the dividing line between big business and big government is becoming blurrier. Others may note that this discuss applies much more broadly and may talk about peer-to-peer networks as opposed to highly centralized networks. These are interesting topics worth exploring. However, today, I want to focus on the conservative response and what I think are some of the flaws.

The conservative response focuses on the free market, and their belief that free markets are the best ways of addressing problems. Some would argue that our markets are not really free, but that government policies particularly benefit big business. They would point to the vast sums that big business spends on lobbying. This argument has a lot of merit, but still, we need to dig deeper.

The free market enthusiasts all recognize the danger of monopolies. Monopolies prevent free markets from doing their magic. Yet they often look at monopolies in terms of whether there is a single corporation controlling the market, and over look the aspects of when several companies are virtually indistinguishable from one another and this group of similar companies controls the market.

This leads us to the key issue. Free markets are good at rewarding short-term profitability, short term profitability may not be the best way to address problems. If one company is very successful, other companies will imitate these companies and the largest companies end up being very similar, and we lose any sort of diversity. Personally, I don’t find a lot of difference between Burger King, Wendy’s or McDonald’s. I don’t see a lot of difference between Verizon and AT&T. I don’t see a lot of difference between ABC, NBC, and CBS. I don’t see a lot of difference between Borders and Barnes and Noble. I don’t see a lot of difference between Budweiser and Miller. I don’t see a lot of difference between Ford, GM and Dodge.

Essentially, free markets tend to create monocultures with minor differences between the brands. So, what is wrong with monocultures? Look at nineteenth century Ireland for the answer. Everyone was growing the same type of potatoes. It was the most profitable crop, at least in the short term, just as SUVs had been the most profitable vehicle in the United States for quite a while. However, when things changed, such as the potato blight in Ireland, or the steep increase in gasoline prices, the profitable crops and products rapidly became unprofitable and massive dislocations were created.

Those interested in longer term stability would do well to look beyond a simplistic view of free markets and think about how we can promote a better diversified economy.

Trackback this Post | Feed on comments to this Post