Friday, May 22, 2009

Don't try it, you'll like it

Krugman nails the insurance fraud being done through deceptive attack ads:

“We can do a lot better than a government-run health care system,” says a voice-over in one of the ads. To which the obvious response is, if that’s true, why don’t you? Why deny Americans the chance to reject government insurance if it’s really that bad?
The market relies on competition, and corporatists in both parties (all the Republicans and a large number of Democrats) pay lip service to it, but American big business intentionally structures itself to avoid competition.

The motivation of business is obvious: Competition is often fatal to the losing enterprise.

To avoid it, businesses scale up by mergers and acquisitions until they're too big to fail - or so they hope. Look around and you'll see that national markets are usually dominated by a few large companies, not at all the environment that Adam Smith envisioned.

Businesses also strive to define a niche in which they can dominate for the same reason.

Like predators in the state of nature, businesses are not at all interested in starting any fight they might lose, even if the odds of losing are quite low. Wolves are happy eating rodents.

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