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Printer Friendly Page Free Markets ~ #7

Free Markets ~ #7

By Alan F. Kay, PhD
2002 (fair use with attribution and copy to authors)
Sep. 1, 2002

As the Soviet Union began to collapse, the U.S. government trumpeted the victory of markets over a command economy. In subsequent years, "markets" morphed into "free markets". "Free" is a magical word. When placed in front of "markets", "free" helped sell the myth that the markets buttressing the world's most successful economy are self-regulating and need minimal — preferably no government rules, standards or oversight. The acceptance of the myth made possible the wholesale deregulation of industry after industry in the U.S. The implication of "free" as not costing any money, although completely erroneous, reinforced the myth. Organizations and companies that own, run or transact in "free markets" (1) make lots of money for their efforts and (2) arrange rules and practices to benefit themselves. Markets are seldom run fairly to benefit the consumer. The myth is nonsense.

Within the last year the U.S. stock market suffered its biggest collapse ever and monstrous fraud was perpetrated by the largest multinational companies. All who cared to look could see that the emperor had no clothes. Will the glorification of free markets cease? In the U.S., governments, corporations, and the media have not faced up to that prospect. What does the U.S. public think about this?

The U.S. policy of encouraging free markets has been justified as beneficial to the consumer since free markets stimulate competition. The emergence of wannabe monopolies that dominate major industries and de jure monopolies like Microsoft, also seem to contradict this rationale. What does the U.S. public think about this?

I searched polling databases, containing over a million questions, with key words related to "free market", "capitalism", "monopoly", "fraud", and "stock market". Virtually all these questions were designed to benefit special interests, not to serve the public-interest. Here is what I found:

In the last four years only a trickle of four questions contained the term "free markets". My comments follow the response findings:

(1) Sept. '98 How important it is to teach kids that "The American economy works best under capitalism and the free market". A whopping 86% said "important" or "absolutely essential"

The collapse of the stock market and the exposure of gross fraud by leaders of major corporations happened years after this survey was taken. Four years ago the U.S. was not ready to stop teaching its young about the central position of free markets in the economy or curtailing the excesses of capitalism.

(2) May 2001 question: "Is China moving more toward free markets?"

Experts have written contradictory volumes about which way China is moving. The absence of a majority for either side and the large "Don't Know's" are quite expected.

(3) A Jan. '02 survey question offered three choices for what kind of control would best "protect the privacy of your medical and financial records". Responses were:

Control by individuals (63%)
Government regulations (29%)
The free market (4%)
 
When even staunch capitalists think about personal protection, few want to rely on the free market.

(4) In Jan. '02, a political organization asked: For improving the economy, which of two programs do you prefer? To a sharp political ear, each program consisted of four policies, one portraying the Republican way to improve the economy and the other the Democrat way. The program that used the phrase "free market" received less support by 3%.

In the perpetual tussle between U.S. political parties, this question is meaningful only to an analyst working for one of them.

No surveys looked into the public's view of the importance of the "free market" to the economy. Would a different search have found what the public should have been asked? A search under "capitalism" in its various forms found only three new questions, all investigating whether U.S. capitalism was a source of the 9/11 terrorist hostility. Prior to 9/11/01 only 39 "capitalism" questions were asked. The newest was five years ago.

A search under "monopoly" in its various forms found only 16 questions asked in the last six years, 15 asking for reactions to various developments of the Microsoft case. One exception was a question by a public-interest polling organization on possible consequences of big pharmaceutical company monopolies. The contradiction between the emergence of companies with monopoly power and the benefits of free markets favoring the consumer with lower prices was never touched.

Compared to the preceding sparse findings, a search under "fraud", over the whole era of scientific polling, came up with 225 questions, 50 of which were asked recently (after April 1999). All 50 of these fraud questions asked the public for reactions to what the government (or its branches) was planning to do (or doing) or what the media was saying (or asking). Most of the questions in the last year pertained to current scandals of massive fraud by corporate leaders. A few questions were about awareness of other kinds of fraud: health-care, internet-based, voting, house-repair/maintenance, and credit card frauds. Other than these, none were about what the people thought should be done about current massive fraud scandals. More important, none were about the effect of these scandals on public support for free market ideology.

A search under "stock market" found 1095 questions going back to 1937 (a low point of the depression) and reaching a peak rate of 62 questions in the short period, July 18th to August 6th, during the lows of the market collapse of 2002. The questions of most relevance to this column were about the effects of the collapse on "you and your family", "your involvement in stocks", "who you blame for your own losses", and "how much the stock market drop is affecting the economy".

In a July 2002 Gallup/CNN/USA-Today poll, 78% said the stock market favors the rich, 19% said it does not favor the rich. This question on the fairness of the stock market was the only one of the 62 that looked at the market systemically. There were none on whether the collapse of the stock market reduced support for the myth of the free market.

The questions retrieved in my search came from surveys conducted by virtually all prominent polling organizations in the U.S. Neither the sponsors nor the pollsters asked the questions exposing free markets to public scrutiny. What should have been and still can be asked? Here is my answer:

First ask directly a trend question, repeated 3 to 6 times over a few years, showing whether the "free market" concept was gaining or losing public support. Second, accompany the trend question with further questions asking if the public saw a connection between that support and the collapse of the stock market and between that support and the explosion of fraud indictments of leaders of the largest companies. The search found none of these. What the people want is not of interest to the moneyed special interests that pay for polls.

 

 

>>> 2.5  The Polling Critic

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