Commentary: Every first year student in Economics learns that Market Economics (Capitalism) has certain conditions that should be met if this system of exchanging goods and services will fairly distribute economic benefits to a majority of people and businesses functioning in a given society. These conditions were 1starticulated by Adam Smith (considered the Father of Capitalism) back in the 18th Century. In short they are: 1) competition among providers; 2) equal access to information about the product or service; and 3) firms or individuals can enter and exit a business easily. Our modern U.S. Corporations and Hedge Fund Managers do everything in their power to distort these conditions (Corporations have over 80% of the sales of our goods and services and riches 5% controls over 70% of nations financial wealth).
Some examples of what is happening:
Health field: Since 1970, health care costs in the U.S. have gone up twice as fast as other developed (OECD) countries—to 17% of GDP. In 2003, a law was passed that disallowed Medicare to look for the best price on drugs and equipment. An egregious example—this past August a hedge fund manager purchased Daraprin, an antimalarial drug and price went from $13.50 per tablet to $770 overnight. In other developed countries, they control drug prices because they know unscrupulous managers will take advantage of life saving drugs.
Airlines: In the past decade eight major carriers in the U.S. have been reduced to four due to mergers—which means there are only 2 or 3 airlines on the most popular routes. In the past year fuel costs have gone down 40% to 60%--reducing airline costs by $3.5 billion. What has happen to Airline ticket prices? They have stayed the same or gone up due to collusion and lack of competition.
Lower Taxes for Rich: According to a recent NY Times article the overall tax rate for the Ultra Wealthy (top 400 earners) has gone from around 30% in 1995 to 17% in 2012—and still going down. For an average American worker the rate is twice that level. What has happened?—lower tax rate for investment income and an array of tax deduction loopholes and gimmicks snuck into legislation for the ultra-rich. When you give millions to a politician’s campaign or superfund you expect a return on your investment.