Free Market Hypocrisy

"US would like India to move forward on opening retail" - ET, 13th Dec 2011

Free market is supposed to aid economic growth, and some claim that government intervention in industries will cause inefficiencies. Yet, government intervention is required for protecting the interests of the people. As outlined in my previous post, corporates are ‘power without responsibility’. But they claim to benefit the economy by creating employment and increasing the GDP.

The most vocal supporters of free market are those that stand to gain the most from it, like rich countries (especially US) and large companies. Thus it is logical that we consider these claims with suspicion due to the vested interests involved. In fact, there have been instances where these claims have appeared hypocritical.

For example US has stopped many foreign companies from buying a US based company, stating security reasons. For example,
1.    2005 – China National Offshore Oil Company bid for UNOCAL ... denied ongrounds of national security.
2.    2006 – Dubai Ports World acquisition ofmajor US ports ... denied on grounds of national security.
It did this while pressurising other, weaker countries to open up their own markets.

A similar situation occurred when the Indian government tried to auction some free spectrum in phases during a period of intense competition between companies. During this period, the auction prices would have shot up. Therefore the companies lobbied the government not to ‘artificially’ limit the supply of spectrum to escalate the prices. This is clearly in contradiction with the ideas of free markets that the companies support, as the government owns the spectrum and has every right to do whatever it wants to with it. It has every right to sell it at a high price. I mean, if the prices are too high, then the companies can refrain from buying spectrum, no one is forcing them to buy, are they? That companies are willing to buy spectrum is indicative of the fact that companies see value in it.

From the above examples, it is clear that the propaganda for free markets is led by parties which benefit from other markets opening up to them. Yet, they refuse to follow their own ideals when it doesn’t suit them. This is only possible due to their immense economic power.

This is another indicator why true democracy is not possible with such powerful entities in our midst, strengthening my argument in the previous post.