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The Choice of a New Corporation

April 25, 2012

And for yet another concise demonstration from the “that’s what capitalism does” file…

Free market capitalism, in theory, is supposed to provide greater consumer choice, and the above chart seems to suggest that it does (especially when you consider how many brands have been omitted), even with limited market participants. However, it is an open question whether our planet’s version of capitalism really does so across the board, when the product is less fit to the pure competition model. See the concentration of media ownership (also available in “infographic” form).

I should say, the above illustration is not pure, free market capitalism at work. It’s really a result of corporate-captured capitalism that rigged accounting rules to allow for tax breaks by amortizing goodwill from companies that a corporation acquires. This is just one of many accounting tricks (along with LIFO/FIFO accounting methods that allow a company to overstate the cost of the actual goods they sold over a year), that grants economic advantages to being a HUGE company and allows those huge conglomerates to report $0 in taxable income.

But is this a problem? That depends on whether or not the advantages garnered by these incredibly powerful corporations are at the cost of the consumer (e.g., in the form of health concerns that are overlooked by the FDA or when actual profits get different treatment from a commonsense definition of income) or are passed along to the consumer (e.g., in the form of choice, lower costs, and increased welfare).

Even capitalism skeptics probably agree with Louis C.K.’s now timeless observations on consumer welfare.

The question we are left with is who has control of where those benefits flow. That’s an important question in an election year. Because democracy, like capitalism, issupposed to provide for greater electoral choice.

“President of The United States: 2 candidates.

Jelly beans: 36 flavors.”

-George Carlin

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One Comment leave one →
  1. April 25, 2012 2:01 pm

    Who is in control? Sometimes I think it’s in the hands of an unseen Ouija board. But you bring up many good points. We all should be more critical of capitalism.

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