One of the main tenets of capitalism is that it allegedly creates competition, giving consumers higher quality and lower costs. But when competition drops from 37 national banks to 4, that “consumer wins out in the end” theory goes right out the window.
But don’t even think of regulating the banks!
This is not the result of free market capitalism, but of crony capitalism aka corporatism. Government bestows favors and grants protections to those cronies who provide more palm grease, thus the system favors giant corporations. If government cannot impose taxes or offer tax breaks, impose tariffs or offer subsidies, impose regulations or offer liability protections, impose fees and licensing or offer interest-free loans, impose wage and price controls or offer bailouts - then what good is it for a corporation to control the government? And without such powers granted by government, the big corporations would have to face their competition on an even playing field - the “little guys” would have a fighting chance against the “big boys” when the entire system isn’t legislated against them.
Only government has a monopoly on force and as such only with government’s help can corporations be gifted guaranteed revenue streams and protections from failures. And, further, in an actual free market, these corporations would be accountable to millions instead of simply to a favored few.
What statists, particularly leftists, don’t realize is that the very regulations that are meant to hamper the influence of big banks and corporations end up entrenching the politically-connected few. In every industry - agriculture, green energy, oil, finance, tobacco, etc. - it is the biggest corporations who benefit most from legislation ostensibly created to rein in their power.
It is intellectually dishonest, at best, to point at the shortcomings of crony capitalism as evidence of failure of free market capitalism. Crony capitalism (aka ‘state capitalism’ or ‘corporatism’), after all, is the economic framework for fascism. Free market capitalism, on the other hand, is the economic framework for liberty.
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