How Regulations Help Sustain Corporate Monopolies

An ever-familiar hymn sung by conservative and classical liberal economists in the past 100 years has been that of regulatory burden. This is the idea that certain norms, dreamed up and enforced by the altruistic State, are actually doing more to harm innovative economic growth than anything else. In a time of economic stagnation, this is certainly a legitimate query to ponder. So, say these economists, cut the regulations!

In this same line of thinking, it is generally conceived that most business people would certainly agree: regulations and government intervention are actively hampering prosperous economic growth and expansion. They would argue that because of ordinances, regulations, and laws, they are not allowed to fully commit to their goal of providing the best service or product for their customers, and that therefore this makes the marketplace more restricted to additional income and labor.

In the ideal world, this is surely the case.

However, in the world which we inhabit, most in the “business community” (who are actually antithetical to true business), tend to favor the status quo where regulations are concerned. This conglomerate of business interests do their part to actually favor certain regulations, especially those that would save their huge corporate monopoly from the doomed-uncertainty and promise of competition a truly free  market would provide.

This is a point that many in the anti-corporate progressive sphere seem to conveniently neglect, mostly because it does not fully adapt to their own world-view. In the minds of progressives, the economic reality is a constant struggle between the people and the “evil” corporations. The corporations are greedy, immoral entities willing to usurp anything at any cost. They are hell-bent on enslaving the people in sweatshops to make shoes and clothes for 2 cents a day. Their ultimate goal is to further perpetuate poverty and completely eviscerate the middle class. Big business is there to hurt you. Hence the new liberal adoration for government intervention. Government should be there to protect you. Therefore, the people lend their support to the government to protect themselves from the “evil” corporations who would otherwise, if left unregulated, trample all human life. As is often the case in us versus them scenarios, however, this just does not stand up to the facts.

The fact is that the government has been intervening in businesses for decades on end, and corporations have only gotten more powerful and more influential with each passing session of Congress. This is entirely contingent upon the rules and regulations which are proposed and adopted by the legislative authorities, supposedly for the benefit of a “safer, fairer” marketplace. Why is it then that businesses have continuously increased their lobbying budgets over the years while increased regulations, which supposedly have been drafted to restrict them, have been passed at an exponentially increased rate? It is no mistake that money spent on lobbying Congress alone has virtually tripled in the last ten years:

Source: OpenSecrets.org

The numbers speak for themselves. To those who may be skeptical, it may be beneficial to mention specific regulations which have been passed under the guise of protecting society, but have actually done more to favor corporations and monopolization. Though a plethora are readily examinable, a recent one has been the ban on traditional incandescent light bulbs. According to the Energy Independence and Security Act of 2007, passed by the democratic Congress and signed by Republican President George W. Bush, incandescent light bulbs are to be completely phased out by 2014. On the surface, this seems to be an environmentally-friendly move by the government. The government is protecting the people from the wasteful, inefficient light bulbs created by Thomas Edison over 100 years ago. The government has the people in mind and is attempting to do something great for society. This seemingly-angelic move by government, however, is far from virtuous or environmentally-friendly.

The biggest proponent of this regulation, without a doubt, was the corporation of General Electric, who spent over $39.2 million dollars lobbying Congress in 2010. General Electric is the principal provider of the compact fluorescent light bulbs (CFLs), which green advocates have always been eager to promote as a more sustainable choice than the traditional and cheaper incandescents. Despite CFLs containing significant amounts of mercury, costing significantly more, and not producing the same quality of light, the government seemed to side with GE, disfavoring the traditional bulbs which continue to be quite popular and cheap today. Instead of the free and open marketplace to allow consumers to choose what type of light bulbs to buy, the government has now reduced that choice and favored an alternative, which also happens to be the product of a company that spends millions of dollars lobbying the politicians in Washington. This means that producing and selling incandescent light bulbs to compete with GE CFLs will be illegal past 2014, punishable by the force of government fines or cages.

The next case is much more emotional and personal than what type of light will be allowing us to read the Sunday comics early in the morning or providing direction for our bathroom trips late at night. I speak of accidental death insurance, provided by a private company to a family when one of its members has an untimely passing. This is normally sought in order to provide funds that a otherwise healthy family member would have provided, barring their unfortunate death. Totals normally amount from around $100,000 to over $5 million, depending upon the case and the need of the family. These are contracts which are mutually agreed to and signed by both parties, each acknowledging an obligation one has to the other. The family shall pay a small balance each month, and the company shall provide the maximum amount of funds if any accidental death is to occur. So far, this is a well-sought legitimate service which provides mutual benefits for both the companies and the customers. The problem begins, however, when the business and the government begin to collude.

The example I shall be drawing from is documented on Bloomberg News, in an article published just yesterday. It is titled Accidental Death Becomes Suicide When Insurers Dodge Payouts by David Evans. Evans analyzes the case of Todd Pierce, a 46 year old cancer survivor killed in a horrific and fiery car accident. Through his employer, Todd took out accidental life insurance that would pay his wife were he to pass away unexpectedly, as did happen. Due to the pursuant contractual obligations mutually agreed upon by both parties, MetLife was expected to pay Todd’s widow an total of $224,000.  Despite the sheriff, the state medical examiner, and the official autopsy report concluding that Todd’s death had been an accident, however, MetLife made their own medical decision. They labeled the death a suicide, noting Todd’s previous battle with cancer and the toxicology reports which indicated he had a prescribed drug in his system. As any breach of contract would be submitted to, the case was brought to Federal court in Montana by Todd’s wife, Jane Pierce. What Jane didn’t know, however, is that she wasn’t just fighting for her husband’s benefits, she was fighting the corruption of the entire American corporate monopoly system.

The regulation standing in Jane’s way was the Employment Retirement Income Security Act (ERISA), orginally passed as a measure to standardize all pension plans for private employers. This, again, would seem to have been done under the veil of a good cause. The government was attempting to make all private pension plans fair and standard. But, again, the law favors the very corporations which it is imposed upon. The crux of the regulation was that:

In order to achieve ERISA’s goals, federal courts ruled that employees must surrender their rights to jury trials and compensatory and punitive damages if they sue an insurer for wrongfully denying coverage.

This means that, in order to pursue any case where insurance has been denied, the plaintiff must surrender any hope of jury trial or extra compensation so that the case will be heard. In a market place free of regulation or ordinances such as this one, this certainly would not have been applied. Instead, however, under the authority of the government and the liking of the insurance corporations, the pursuit of any claims beyond the original plan and a jury trial must be forsaken. The little guy loses. The big guy wins. The regulation passed by government therefore, favors the corporate monopoly the private insurance provider holds over the customer, something that would not have been enforced where that regulation not passed. The article in Bloomberg documents multiple other cases which deal with accidental insurance cases as well, where corporations use the regulatory loopholes provided by ERISA and other legislation to avoid paying for what they were once contractually obligated to do. The corporations can twist the government rules in order to benefit themselves, where an otherwise free market would have caused their demise. In this case then, the rules are made by the powerful for the benefit of the few, not a new calling. This is what government and business collusion brings about, and should be the strongest argument for redacting and reducing regulations in certain industries today.

In conclusion, it is always beneficial to return to the casting narratives which plague the current American political landscape. While progressives cling to the fear of Big Business and conservatives rally against all-but-their-own Big Government, there is nothing more harnessing than exposing the ever-more dangerous collusion of both against the individual. When the interests of the government and certain favored businesses align, there is always a case to worry, a case for lamenting a loss of freedom or just and competitive commerce. The free market is the only place where this is guaranteed. A place where monopolies, abusive corporations, and powerful corporate lawyers cannot be sustained. A place where the small are not forced to face the mighty and justice is always in favor of those who do right and not those who are the most physically strong. In the struggle of protecting the individual from harm, it is freedom, not compulsion, that is the shield against malice.

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