Tag Archive for US Economy

How Big Corporations Are Destroying the “Free Market” – Money Morning

As an economist, I wince whenever I hear someone say that we live in a true free market.
The reality is we live in a semi-free market where regulation stifles business and corporate money influences and distorts what would normally be a highly competitive marketplace.

And over the last two decades, the situation has only gotten worse for consumers, producers, and defenders of the so-called “free market.”

From 2008 to 2010, 30 major corporations paid more money in lobbying fees than they did in taxes, according to the Public Campaign.

But while traditional lobbying once centered on altering tax rates and encouraging legislation to liberalize and deregulate the economy, it has now evolved into a competitive weapon for companies trying to box out competitors and raise barriers to entry in their markets.

It’s a business phenomenon that I like to call the “Rise of the Fifth Rail.”

You see, in traditional markets, companies compete on four specific principles: Price, product quality promotion, and place (market access). These principles are known as the “four P’s.”

The first three are self-explanatory in that customers want the highest quality product at the cheapest price. Companies use promotional techniques to instill a need for its products and do so by marketing against the offerings of a competitor.

The fourth principle centers on a company’s ability to reach new markets and still provide low prices for high-quality products. A strong coordinated distribution network tends to make this possible.

Naturally, when all four work together, you end up with a company like Walmart (NYSE: WMT), which has the ability to provide low, everyday prices due to its best-in-class distribution network.

But over the last few decades, this new phenomenon of using lobbying as a competitive tool has altered the course of market economics, and driven fair competition into the ground.

And that phenomenon is rotting the American free market from the inside.

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A Simple, Scary Way to Neuter Goldman Sachs and Friends – Shah Gilani – Money Morning

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission. TBTF is the acronym for “too big to fail.” It’s the crazy notion that certain banks are so large and systematically important (which really means so threatening to financial systems) that they must be kept alive by the…

Five with Fitz: What I See When I Look Over the Horizon

When you’ve been working the markets as long as I have, you learn that the biggest dangers are always found in a place just over the horizon.

It’s why I spend my time hunting for stories, news items and opinions that in the old days were considered far “below the fold.”

Invariably, what I am looking for is the stuff that everybody else has missed.

Because I believe that’s where the real information is — especially when it comes to uncovering profitable opportunities others don’t yet see or understand.

It’s the story behind the story that interests me. To find it, you need to go beyond the headline news.

In that spirit, here’s my take on five things that I’m thinking about right now.

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