This week, AT&T announced its plans to buy their competitor T-Mobile. Now it’s up to regulators to approve the merger.
Politicians pandering to the Tea Party love to talk about a free market. It sounds sexy. It sounds like wealth and freedom got married and had a perfect concept. If capitalism is a religion – free market is the savior. This free market will punish bad behavior and reward virtue. The free market knows all and endows accordingly. We don’t need to worry because the free market will figure it all out.
What is never mentioned when propping up the immaculate free market is the defining characteristic of the idea – honesty. It’s transparency and allowing shareholders and consumers access to real information, good or bad. A free market is essentially crowdsourcing or democratizing business. And you can’t make informed decisions without accurate information. That’s a tenet lawmakers and business tycoons tend to glaze over when touting their “principles.”
Deregulation is also a tenet of free market economics – it’s keeping the government out of Business. Deregulation has proven to be much more popular than its “honesty” counterpart.
And if the word “deregulation” brings to mind Gulf seagulls suffocating in crude oil and rows of tract homes in foreclosure, then you have the gist of it. The housing bust crashing on bundles of what became toxic assets was not technically the “free market.” It was a horribly mutated half-breed hybrid of the venerated free market.
And the free market can fix it just like Sasquatch can fix it. Meaning: they can’t. Because no matter how much they’re talked about neither exist.
The housing crash was a semi-legal, giant and complex Ponzi scheme. Yes, the Ponzi scheme named after 19th century-born fraudster Charles Ponzi who fittingly didn’t use the name Ponzi while doing his namesake scheme.
The truth is we don’t have a “free market.” Never have and probably never will. So when politicians like representatives Paul Ryan and Michele Bachmann talk about how this savior-in-theory can deliver us – it can’t. Using this super sexy sounding concept of “the free market” is exactly what got us demonstrably bad policy. Just like the inadequate regulation and insufficient honesty which caused our current gigantic recession.
The debate over regulations is always “less vs. more.” Instead, how about better regulations and more of those?
So AT&T, a huge cell phone provider, wants to become even bigger. The first thing you need to know is, according to OpenSecrets.org, AT&T is the number two “heavy hitter” of the last 20 years. The company has given to both parties a total of $46,292,670. The top single recipient was Speaker of the House John Boehner – a politician who loves talking about the illusory free market, occasionally with a dry eye. Second, AT&T was already broken up after an anti-trust case in the 1980s. AT&T regrouped and started growing bigger in 2005.
In the next 12 months there will be debate over whether regulators should allow this giant merger. One of the arguments for the merger will be: “This is the free market at work.” How rewarding a giant company for being a giant is a good thing and the government (i.e., the people who’ve been receiving campaign donations from said giant company) should stay out of it. It’s akin to saying we should feed horses what we feed unicorns – because look how great unicorns are.
The bottom line is: Lack of competition hurts consumers. The cell phone companies are already unique in that if their service is awful (as an iPhone user I can testify that with AT&T there’s no “if”) – you have to PAY to leave them. It’s like if a restaurant gave you food poisoning, and you had to pay them $200 to let you stop eating there. Congress could have outlawed this practice – but they didn’t.
Already, all cell phone companies except T-Mobile were compliant in George W. Bush’s NSA warrantless wiretapping – so much for the government staying out of business.
Now if regulators approve of this purchase, a company which already doesn’t have to work that hard for our business will have to work even less. While this is great for AT&T – it’s not great for us. AT&T should not be allowed to buy T-Mobile.
And politicians shouldn’t be allowed to say this anti-competition, secret, virtual monopoly is somehow their mythical “free market.”