The idea that the people benefit when businesses thrive is generally true. Growth in the private sector generates money that creates jobs and enables news investment. The falsity perpetuated by republican conservatives is the more extreme belief that businesses’ success is always good for the people and that a completely unregulated free market will inherently weed out any mediocre or criminal business. Here is an example of their logic:
Local manufacturer Bob ‘n Co makes can openers for the emerging canned food market. The only problem is that Bob leverages being the only can opener source in town to sell at a 1000% mark-up. Luckily for the canned good connoisseur, Steve-o Inc. has just released their own can opener at a fraction of the price! Now Bob ‘n Co has to either lower their price, convince canned good consumers of their products can opening superiority or be forced out of the market entirely.
The example above is not an unrealistic scenario, but it relies on the assumption that any mediocre status quo will create an environment that enables newcomers to enter the market and force industry-wide improvements. In short, it assumes the persistent existence of healthy competition or the threat thereof will keep business interest aligned with the people’s. The reality is that an unregulated free market rewards anticompetitive behavior as an easy means to increase profits by cutting costs such as capital investment and/or labor as well as inflate prices. Given the example, any of the following would likely occur:
Bob ‘n Co buys or merges with Steve-o Inc…
Bob ‘n Co creates an array of duplicate can opener brands that force Steve-o Inc. out of stores by monopolizing the preciously limited can opener shelf space…
Bob ‘n Co leverages a piece of its vast can opener fueled cash flow to secure exclusivity deals with the majority of can opener dealers…
Bob ‘n Co leverages a piece of its vast non-can opener fueled cash flow to sell its can opener at a loss and undercut Steve-o Inc. out of the market eventually…
Bob ‘n Co leverages it’s entrenched product position to push for a redesigned can that utilizes a new can opening standard proprietary to Bob ‘n Co…
Bob ‘n Co illegally colludes with Steve-o Inc.
continued price inflation.
As anticompetitive behavior is an obvious outcome of an unregulated free market, Republican conservatives half-heartedly argue that market demand will force even monopolies into keeping customers’ interest. If can openers become too unreliable and expensive, people will stop buying them. The reality is that market demand is greatly impacted by how much a product becomes a standard of living. People are much less likely to stop buying can openers once canned goods become ubiquitous, at which point one or a handful of businesses can abuse the industry with ease.
A free market is an effective economic engine for job growth and innovation, but regulation is needed to mitigate the inherent market pressures that reward the anticompetitive behavior that diminish these benefits.
There is only one underlying policy initiative based on this assumption.
Remove all anti-trust regulation.
Assumption Based Reasoning
Government anti-trust regulation stymies healthy economic growth and is unnecessary since the people’s interest in inherent to the free market via the mechanics of supply and demand.
The free market rewards rather than regulates anticompetitive behavior. Without competition, the ability for the free market to regulate itself strictly through supply and demand is nonexistent. Government regulation is the only means people have to prevent abusive anticompetitive acts such as collusion, price fixing, and monopolizing.