Restraining the Beast

Basic capitalism economics state that government regulation can at times improve market outcomes. What about the rest of the time? Does government intervention really help the economy? John Stossel is an Emmy award winning author and journalist who writes mainly on consumer issues. In this editorial concerning the Federal Trade Commission (FTC) and their attempted stonewalling of the merger between Whole Foods and Wild Oats both organic supermarkets.

The FTC claims that the merger will create an unnecessary monopoly that will mean quote “higher prices, reduced quality and fewer choices for consumers.” Trade happens in a capitalistic system when two or more parties meet to exchange goods or services that will result in a mutual benefit. Why would a merger be any different?

Even a single producer in a system cannot charge what ever he wishes, he is limited by the demand of the consumers that decreases as price increases. If price is raised high enough, eventually a new producer will enter the market because of the enticing profit to be made. Once he enters, prices drop and quality goes up.

How many tens of millions of dollars taxpayer and consumer alike have been squandered away fighting the merger? Could that money not be used to increase workforce, product quality or be used to lower taxes and funnel more money into the economy? Why is the federal government wasting everyone’s money fighting a merger that would, in all likelihood, benefit the market?

Outside the FTC building is a heroic masculine male figure (government) restraining a wild mustang that as the statue describes would wreck havoc and destruction if not regulated. As far as I am concerned, government regulation and limitation to the free-market only hinder its growth and expansion. Government cannot guarantee competition and growth but it can guarantee a market that stalls and shrinks if regulations and rules choke it too tightly.