Aren’t “Free” Markets Competitive Markets? Might Democrats Seize That Rhetorical High Ground…?

Competition!?! Egads! That’s totally against free market principles!!  [Whiskey spray-sputter from the Monopoly plutocrat in the top hat….]

What does a “free market” really mean?  Lots of competition?  Or lots of consolidation? The freedom to compete?  Or the freedom to gouge?   Its an interesting but often elided question.  Why?   The Republicans have seized the term and avoided that debate. Why? Gouging is good (as even Gordon “greed-is-good” Gekko mightn’t have courage to say).

Obama is muscling into the Republican’s “free market” rhetorical space.  It might amount to nothing, but watch to see if Hillary (and Elizabeth Warren)  follow his lead. From the NY Times – specifically talking about opening the Cable TV set-top-box market but…

[Obama] will sign an executive order calling on every federal agency to send him proposals within 60 days for steps they can take to promote competition in a range of industries and better protect consumers.

Politically, this points to a “pro market, BUT anti-capitalist” message that could resonate for the Democrats.  “We’re for free markets!  For healthy competition!  Low prices!  We’re just against the fat cats divvying up cozy, collusive cartels!  Raising your prices! limiting your choices!

For your average American consumer and (especially) small business man, that is going to be pretty darn appealing.  And it could start to peel off a decent segment of voters.  It also sounds like a particularly useful bit of messaging for Hillary in the general election.  Obama is putting the ball in the air.  Watch to see if she catches it…

In terms of tactics, the NY times article goes on to note those proposals were actually requested a while ago.  Meaning.

  • A raft of “pro-competition” proposals to hit the news right around the run-up to the general election.  Probably controversial from a plutocratic perspective, but appealing from a populist, consumer perspective.
  • If one of them grasps the public imagination (especially FOX News’ indignant ire), Hillary takes that ball and runs with it…
  • Even if nothing goes viral, Obama craftily shifts the rhetorical goalposts for his successor.  Cementing/extending/defining his legacy.

Is Oligopoly a Problem?
As usual, The Onion’s nails it far better than The Economist. “drugstore giant Walgreens confirmed Wednesday it is proud of its origins as a small business that in today’s economy would absolutely never have been able to get off the ground. “Here at Walgreens, we still live by the same commitment to customer service preached by Charles Walgreen when he opened his first store back in 1901,” said company president Alex Gourlay, referring to the miniscule, independent pharmacy that, if opened in the modern era, would quickly be crushed by the present-day Walgreens and other retail chains whose outsized bargaining power allows them to squeeze out would-be competitors at will.

But you know worries about oligopoly in the US economy are mainstream when right-leaning The Economist is writing “Profits have risen in most rich countries over the past ten years but the increase has been biggest for American firms. Coupled with an increasing concentration of ownership, this means the fruits of economic growth are being hoarded.

Backing that up is work by actual Economists.  There’s been increasing murmurs in the econ blogs about how certain otherwise perplexing US data can be best explained by a model that incorporates excessive industry consolidation etc etc.  NB these are “real” economic researchers not political shills.

You can gut check this just by looking around you.  And hearing the howls of aspiring industry concentrators singed by a newly energized DoJ Anti-Trust department.  My own pet peeve is the “distribution” oligopolies in areas like housewares.  You can have any brand of can opener you’d like, as long as its an (overpriced) model from GOOD GRIPS or a nasty piece of crap…. 

On Cable Set Tops:
Cable companies are screaming bloody murder about the FCC’s sudden enthusiasm for a competitive set-top box market.  Unfortunately, the brought this on themselves.

  • Cable used to argue it was too complex to provide set-top data.  The last effort (Cable CArd) was kneecapped by the cable operators complicating the hell out of things precisely to guarantee a still-born market.  But left that battle with a “on paper” commitment to an open set-top market.
  •  They didn’t give that enough thought when designing their own IoS and Android phone apps.  These work just fine.  The FCC is just asking them to provide a similar “raw” data feed to other, 3rd party apps.  Since its obviously not a technical problem…. Oooops #1!
  • They also brought this on themselves by having lousy decorating sense.  The set-top is a hated object among those who actually care what their living room looks like.  Who are not often male hardware engineers…. Oooops #2….

I don’t think Comcast minds this all too much.  They are getting out of the set top business (in favor of home-wide gateways)  anyway.  It is more of a challenge for Charter and TWC.
Note that their deal hasn’t been formally approved yet.  Which is a nice point of leverage for the FCC’s set-top agenda.  Ooooops #3.

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