L.A. Liberty

Magic Pizza and Free Market Banking

In what other industry is a business’ primary product/service not only provided by government, but created by it out of thin air?

What if government could magically create pizza out of nothing, and then supply businesses with this pizza for them to sell? What if government provided certain pizza “firms” with more pizza than others? What if every new pizza made every other pizza slightly less nutritious or filling? What if the bigger the pizza joint, the more magic pizza would tend to be available for it to sell? What if the government “guaranteed” the pizza? What if government, in an all its benevolence, promised to pick up the tab of any pizza order sent to a lower income family? And what if these pizza joints, especially the extra large ones, had protections from failure from the government - not only in financial bailouts but even in immunity from wrong-doing?

Would we be surprised, then, when these businesses would find little reason to treat its customers, who don’t play much of a role in the business’ success, as prized consumers? Would we be shocked when pizza joints would merger in order to both acquire more magic pizza and help guarantee their protection from failure?

Further, would anyone be so brazen as to call this racket a free market?

Of course not.

So when letterstomycountry posts this graphic of the mergers of large investment banks…

… and pronounces it the result of a free market, one can easily imagine my reaction.

Of course, finance/banking is arguably the most regulated and controlled industry in the United States - starting with the fiat currency of the Federal Reserve that provides banks with their lifeblood by producing it out of - literally - nothing.

The graphic above is certainly cause for disgust, but it’s important to understand why: it represents crony capitalism. This continued growth of giant corporate conglomerates is the result of a corporatist system that rewards and protects big businesses - and the bigger the businesses, the more sway in ensuring government regulators swing their monopoly-on-force hammers in their favor.

Follow-up: I actually addressed this very graphic months ago when a different blog also claimed it was the result of the free market. See that response here.

Posted November 3, 2011 at 7:29pm in the fed letterstomycountry ∆ riposte corporatism | comments || home