Too Big Not To Fail [1]: the limits of Big-Corp


[A little while ago, I wrote a little essay I never put out there on the virtues and troubles of sheer “size” when it comes to the entities that seem to govern most of our lives. I’ve decided to split it up into a couple of posts to get everyone else’s thoughts. Our nation was meant to be a nation of discourse and was built on the idea that with friction between ideas, something beautiful might happen. Let the friction begin…]

The Shortfalls of Big-Corporate

To begin, let’s use Obama’s health care law as a little case-study. A while ago, I was sent an 8-part series by Ann Coulter entitled “Liberal Lies About Health Care”.  The first article opened with these lines:

[Liberal Lie #](1) National health care will punish the insurance companies.  You want to punish insurance companies? Make them compete.  As Adam Smith observed, whenever two businessmen meet, “the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” That’s why we need a third, fourth and 45th competing insurance company that will undercut them by offering better service at a lower price.”

She goes on to rally under the banner of every good free market advocate: Competition! Competition!  Competition!  If we would but let the insurance companies cross state lines, every goal of health care reform would be accomplished with far more efficiency than any bureaucracy could.

Coulter says that “You could fix 90 percent of the problems with health insurance by ending the federal law allowing states to ban health insurance sales across state lines. ”  Insurance would be dirt cheap.  Most every American would be insured.  Pre-existing conditions would be covered because insurance companies would have so much money free to do so from all the lifted regulations and forced coverage for other things that the government currently imposes.  In fact, we could cover pre-existence conditions, she suggests, insuring unborn and unconceived children.

Now, I agree with this sentiment—in theory.  But why would those two original businessmen form Smiths’ quote decide to do that “conspiracy against the public”?  Because it is most profitable.  The fewer the entities, the more money there is to be made.  This is Coulter’s point.  Rather than impose wealth distribution, we should do it more “organically” through competition.

Okay, let’s run with this for a bit.  Let insurance companies cross state lines and lift restrictions and regulations.  Then what?  What would stop these companies that used to be restricted to state lines from conglomerating into only a few regional entities? Or a few nation-wide ones?  Because remember, the fewer the entities in such an industry, the more profit.  It would be to the corporations’ best interest to join together and continue the negative practices that abound today.

Like I said before, I get the theory behind all this.  I really do.  And it makes sense in a wooden, mathematical way.  But we don’t live in such a simplistic world.

In fact, the very fundamentals of the market, it seems, have actually changed in recent decades with the advent of what I’ll call “softer” goods.  Coulter and other contemporary Conservatives want us to compare health insurance with (as she puts it) “dry cleaning, electricians, and hamburgers”.  Can this comparison be done?  I don’t know, but my intuition cries foul.

These more “concrete” goods can immediately be changed at any customer’s whim due to their ubiquity, community centrality, and direct impact of their services.  At this level, the invisible hand moves according to plan.

But, as we see, in the market of “softer” services and goods that are either entirely digital, unnecessary luxuries, or abstract “services” that don’t have immediate impact on our everyday lives, the invisible hand can’t seem to get a hold of the reins.

Cases-in-point: the phone, cable, computer hardware, banking, and internet companies that provide the cheapest costs also have the smallest market share.  No one uses them.  When it comes to these kinds of goods and services, the principles of cost, customer service, and product quality don’t seem to correlate with profit the way we would hope.

This both helps and hurts the consumer.  In this “soft” market, the bigger, more expensive companies can offer perks, availability, and innovation that can only come with size, and size can only come from a certain lack of competition (one of the benefits of competing well).

This is especially true with health care.  The true goals that Ms. Coulter and Clan think can only be accomplished from flooding the market with competitors are really those exclusive services that can only be afforded by the larger companies that already have massive control of the market.

I fear that if the conservative dream of competition happens, you would see most of the small insurance companies either go under or be bought out within the first few years of this change.

So what do you do, Faithful Free Market Conservative?

Let the small insurance companies be drowned by the behemoths already in place?  Do you (gasp!) introduce increased regulation to prevent this?  If so, then how does this get you to any different place than where you were trying to to avoid?  Either way, to fix health care, it looks like you’ll be adding more government.

Alas, in the end, it seems, the “system” will win no matter what.  They have created an environment where we need them to continue conglomerating their own power and stripping us of our own so that we can reap any benefits from them at all.  Those in control will stay there serving their own personal interests rather than serving the consumers that supposedly keep them in power.

Wait, am I still talking about Big-Corporate?

[post continues in the next day or two or three]

[header image credit: Beverly & Pack on Flickr]

2 thoughts on “Too Big Not To Fail [1]: the limits of Big-Corp

  1. Pingback: Too Big Not To Fail [2]: the limits of Big-Gov | the long way home

  2. Pingback: free from beliefs… about liberation « JRFibonacci's blog: partnering with reality

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