Is the American market rigged?
Much of the national debate about widening inequality focuses on whether and how much to tax the rich and redistribute their income downward.
But this debate ignores the upward redistributions going on every day, from the rest of us to the rich. These redistributions are hidden inside the market.
The only way to stop them is to prevent big corporations and Wall Street banks from rigging the market.
For example, Americans pay聽聽for pharmaceuticals than do the citizens of any other developed nation.
That鈥檚 partly because it鈥檚 perfectly legal in the U.S. (but not in most other nations) for the makers of branded drugs to pay the makers of generic drugs to delay introducing cheaper unbranded equivalents, after patents on the brands have expired.
This costs you and me an estimated聽a year 鈥� a hidden upward redistribution of our incomes to Pfizer, Merck, and other big proprietary drug companies, their executives, and major shareholders. 聽
We also pay more for Internet service than do the inhabitants of any other developed nation.
The average cable bill in the United States rose 5 percent in 2012 (the latest year available), nearly triple the rate of inflation.
Why? Because聽聽of us have no choice of Internet service provider, which allows them to charge us more.
Internet service here costs 3 and-a-half times more than it does in聽, for example, where the typical customer can choose between 7 providers. 聽
And U.S. cable companies are intent on keeping their monopoly.
It鈥檚 another hidden upward distribution 鈥� from us to Comcast, Verizon, or another giant cable company, its executives and major shareholders.
Likewise, the interest we pay on home mortgages or college loans is higher than it would be if the big banks that now dominate the financial industry had to work harder to get our business.
As recently as 2000, America鈥檚 five largest banks held 25 percent of all U.S. banking assets. Now they hold聽聽鈥� which gives them a lock on many such loans.
If we can鈥檛 repay, forget using bankruptcy. Donald Trump can go bankrupt four times and walk away from his debts, but the bankruptcy code doesn鈥檛 allow homeowners or graduates to reorganize unmanageable debts.
So beleaguered homeowners and graduates don鈥檛 have any bargaining leverage with creditors 鈥� exactly what the financial industry wants. 聽
The net result: another hidden upward redistribution 鈥� this one, from us to the big banks, their executives, and major shareholders.
Some of these upward redistributions seem to defy gravity. Why have average domestic airfares risen 2.5% over the past, and are now at their the highest level since the聽government聽began tracking them in 1995 鈥� while fuel prices, the largest single cost for the airlines, have plummeted?
Because America went from nine major carriers ten years ago to just four now. Many airports are now served by one or two.
This makes it easy for airlines to coordinate their fares and keep them high 鈥� resulting in another upward redistribution.
Why have food prices been rising聽聽than inflation, while crop prices are now at a six-year low?
Because the giant corporations that process food have the power to raise prices. Four food companies control聽聽of beef packing,聽t of soybean processing,聽of pork packing, and聽聽of chicken processing.聽
Result: A redistribution from average consumers to Big Agriculture.
Finally, why do you suppose health insurance is costing us more, and co-payments and deductibles are rising?
One reason is big insurers are consolidating into giants with the power to raise prices. They say these combinations make their companies more efficient, but they really just give them power to charge more.
Health insurers are hiking ratesnext year, and their stock values are skyrocketing (the聽Standard & Poor鈥檚 500 Managed Health Care Index聽recently hit its聽in more than聽twenty years.)
Add it up 鈥� the extra money we鈥檙e paying for pharmaceuticals, Internet communications, home mortgages, student loans, airline tickets, food, and health insurance 鈥� and you get a hefty portion of the average family鈥檚 budget.
Democrats and Republicans spend endless time battling over how much to tax the rich and then redistribute the money downward.
But if we didn鈥檛 have so much upward redistribution inside the market, we wouldn鈥檛 need as much downward redistribution through taxes and transfer payments.
Yet as long as the big corporations, Wall Street banks, their top executives and wealthy shareholders have the political power to do so, they鈥檒l keep redistributing much of the nation鈥檚 income upward to themselves.
Which is why the rest of us must gain political power to stop the collusion, bust up the monopolies, and put an end to the rigging of the American market.
This article first appeared at
