Q. What do you call it when you lie about the mileage when selling a car?
A. Fraud. The NHTSA calls this a “serious crime and consumer fraud issue.” Additionally, between 2002 and 2005 the NHTSA Office of Odometer Fraud says there was a “definite escalation in [odometer] fraud.”
Q. What do you call it when a woman falsely claims to have a tubal ligation?
A. Tom B. Taker, Jr. Or, as I like to call it, a 21-year donation to The Human Fund.
Today’s axiom is a simple one.
Tom’s Law #42
There’s no such thing as a free market.
You think I’ve gone too far this time? You say, “Open your eyes, Tom. Look around. You’ll see free markets everywhere you look.”
Bollocks! (If only those had been tied instead.)
The tale of free markets is sold as one of liberty. Ostensibly. How you can you tell when someone is lying? They’re selling something. And, contrary to odometer fraud, I don’t think this sort of thing is on the rise. I think it’s a universal constant.
You trust in the inherent goodness of people and think lying isn’t that much of a problem? Great. I’ve got “teacup pigs” for sale and they’re only $1,800 each for females. You get a $300 teacup bonus discount if you select a male. And, good news! You know how they’re unbearably cute and small when babies? They’ll stay that way. Take it to work and keep it on your desk if you want.
The idea of a free market is one without external (governmental) influence where prices are allowed to reach a natural equilibrium based on forces like supply and demand. The integral ingredient to this process is the free market transaction.
The micro transaction is the win-win heart of the whole enchilada. Two parties come together and decide for themselves to exchange goods, services and currency. Participation in a transaction is nothing less than a glorious act of liberty itself. It’s a voluntary act, a choice born of free will, where all involved can participate or walk away as they see fit. Freedom!
Convinced? But wait, there’s more!
Here’s the rub. A free market transaction requires the free exchange of true information. You sell me your ’69 Pontiac LeMans with 25K miles for $50,000? Win win, baby. But if you’re lying and the car actually has 525K miles?! That’s a win-lose. This is what the government calls a “crime.” An unlawful act that is punishable by the state. Go directly to jail. Do not pass Go. Do not collect $200.
We all know, since we’ve been trained to be consumers since kindergarten, the Latin phrase: caveat emptor. That’s simply jargon for “I know you’re trying to rip me off and if I fall for it it’s my own damn fault.” The fact is, without this little truism, capitalism itself would cease to exist. Because humans are involved. Duh.
My hypothesis: Any transaction containing any element of deception is not a free market transaction.
By definition, it can’t be. If lies are involved it’s a criminal act. And our entire economic system isn’t a crime, is it?
So, to gauge the overall health of our free market system, I guess all we need to do is quantity the amount of fraud, lies and deception. That should be pretty easy, right? We’ve got corporations lying to their customers all the time. Apple recently was determined to have colluded with five major U.S. publishers to artificially inflate prices. (Apple denies it did anything wrong.) A soft drink company lied about blind taste tests which went on to be the cornerstone of a marketing campaign. A service provider and a grocery chain were recently charged by the government to be overcharging customers and must pay penalties following negotiated settlements. (For a good time google the phrase “overcharging customers.”) The companies, of course, maintain they did nothing wrong. (Translation: It was intentional.) And isn’t that the crux of the matter?
Lying is good. Lying works.
I would argue that cases like these, at the macro level, are the norm and decidedly not the exception. They are premeditated. They are deliberate. Because they work. And, I argue some more, they represent merely the tip of the iceberg. I bet most goes undetected and/or unpunished.
Add into the mix the chemical and food processing companies that operate in secrecy. If you have no facts, how are you supposed to “beware” when making that free market transaction decision? That’s the dichotomy we face in today’s market. The failure of the transaction is ultimately our responsibility yet they want us to make that liberty decision based on no information at all. This is akin to burning your money or throwing it in the sewer.
If it works with the big guys, how about your pal down the street? Think he’s going to hold himself to a higher standard? Like when $25 might be on the line? Don’t hold your breath.
My point is simple: Free markets, to have any meaning at all, must be based on true and accurate information. False information means it’s not a free market choice at all. It’s a crime. And since there’s no such thing as human honesty when money is involved, we must conclude that free markets are as mythical as unicorns.
We need a new system. One that takes our propensity for utter deception in the equation. Maybe then we’ll be on to something.