Democrats & Liberals Archives

Anti-Free-Market Supreme Court

President Bush will go down in history as the man who pushed the Supreme Court definitely to the right. Commentators look at what the Court did this year and call it a firmly conservative court. But I wonder what is meant by “conservative.” Are conservatives in favor of a free market? If so, how come this conservative Court produces rulings against the free market?

According to Erwin Chemerinsky the current Court is more conservative than it has been in a long time:

The result was the most overwhelmingly conservative term since the 1930s. Ever since Richard Nixon ran for president in 1968, conservatives have been striving for a reliable majority voting as a bloc across all areas of the law — and this year they finally got it.

So how come the Court produced a ruling like this:

The Court voted 5-4 to overturn a ban that's been in place for almost a century. Back in 1911, the court found that so-called "resale price maintenance" (RPM) -- an agreement between a manufacturer and a distributor on a minimum sale price -- was in violation of antitrust law. Since then, producers of goods could suggest a minimum price to sellers, as in the "manufacture's suggested retail price," but they couldn't stop the seller from going lower.

The ban on price fixing was there in order to maintain free competition. Removing the ban reduces free competition. The manufacturer has control of the market. No retailer can sell one of the manufacturer's products for less than what the manufacturer "suggests." Is this what is meant when we are told that conservatives are for free markets?

Evidently not. Bush did not appoint Roberts and Alito to the Supreme Court in order to help the so-called hidden hand of capitalism. The Senate did not confirm Roberts and Alito because they were looking to increase business competition. The Supreme Court did not remove the ban on price fixing in order to produce a level field for all types of businesses to compete.

This Court decision demonstrates that Roberts, Alito and the other conservatives on the Court favor powerful manufacturers over not-so-powerful discount retailers. We have an anti-free-market Supreme Court.

It looks as though, in practical terms, being a conservative does not mean you are for free-markets, but that you favor the rich and powerful over the not-rich and powerless.

Posted by Paul Siegel at June 29, 2007 6:00 PM
Comments
Comment #224453

Paul

WellDUH. Pretty soon some of our right wing brethren will point out that niether Bush or his court are really conservatives and they will be correct.

Posted by: BillS at June 29, 2007 7:40 PM
Comment #224456

Paul, you haven’t even bothered to explain why this “favors the rich and powerful over the not-rich and powerless.”

You use the phrase “price fixing” here, but price fixing has a specific meaning: it’s when, instead of competing, companies enter into agreements among themselves to keep prices at some artificial level.

But this matter actually relates to disagreements betweeen manufactures and distributers about pricing. A distributer isn’t required to sell any specific manufacturer’s goods at all, and they won’t if they don’t like the manufacturer’s pricing demands. If a manufacturer starts making too many such demands, a distributer can tell them to take a hike and start selling goods from one of the manufacturer’s competitors.

The only way I could see this being a problem for consumers would be if all the manufacturers of a single product ALL tried to set the same inflated price at once with their distributers. But that would be a pretty clear antitrust violation, and that doesn’t seem to be what this SCOTUS ruling relates to.

What would be wrong with me making a widgit and saying, “If you want to sell this thing in your store, you have to sell it for a thousand bucks.” If the store doesn’t think my widgit is worth a thousand bucks, or if they can sell the same thing made by somebody else for five dollars, they’ll just tell me to get lost.

This 1911 law seems to be an outdated throwback to an era when consumers and distributers didn’t have the vast number of options available to us today.


Posted by: Loyal Opposition at June 29, 2007 8:22 PM
Comment #224465

Here’s the decision. As I understand it (I haven’t done more than glance at it quickly; I still haven’t read the Seattle education decision thoroughly), the ruling says that if a manufacturer sets a retail price, that fact alone does not trigger antitrust action. The courts would decide that on a case by case basis. So if you’re a manufacturer and you set a price, you better be careful because you may be sued. I don’t know that this is a terrible decision, but it does seem a bit strange to me. If it means I gotta shell out more bucks for X because a retailer won’t undercut a competitor’s price, I’ll be ticked off.

Posted by: Gerrold at June 29, 2007 10:45 PM
Comment #224472

Paul, Good post, its funny to watch the “free market” types defend the “conservatives” running the Supreme Court whilst overturning a century old law design, and obviously working, to prevent anti competetion practices. All the “its not needed” and “the distributor can go else where” crap is hopefully eyeopening for any true conservative if there are any left. You are entirely correct when you state todays conservative is all about the rich and powerful.

Posted by: j2t2 at June 30, 2007 12:05 AM
Comment #224489

CNN is now openly reporting that the public feels the Democrat congress is failing badly.

And why not. Massive spending by ear marks is now a hallmark of the democrat congress. They’ve gone so far as to take measures to keep the public from knowing about their pork-o-rama until AFTER they have rammed it though.

Before the elections democrats preached to the nation that we had to think “of the little children” and stop Republican spending. But democrats have turned out to be BIGGER spenders and have NOT DONE AWAY WITH EARMARKS. What a surprise ehh? I think I told you this would happen.

Lobbyist legislation has not stopped corruption by lobbyists.

Harry Reid has his dirty little property deal with that mob lawyer in Vegas and corrupt democrats are putting bribe money in their freezers in capital hill offices.

There is no balanced budget, democrats openly speak of massive tax increases.

No fix for social security, no fix for Medicare, no security on the boarder, no national health care, no bipartisanship.

Gas prices are rising and democrats openly want to push them higher starting with massive tax increases on oil companies which guess what, will mostly get passed on to the consumers.

A huge ethanol bill was added to the congress energy bill that will drive our food costs up many billions of dollars per year as more and more farm land is turned over to growing corn for cars. Its estimated that we are already paying 2 billion a year more for food for existing ethanol and milk may hit five dollars a gallon this fall. Thank you democrats.

The democrats have failed, and continue to fail. But Nancy is still talking about “the little children” and how she loves them. She just doesn’t want them to have any milk.

Posted by: Stephenl at June 30, 2007 10:37 AM
Comment #224492

Stepheni- I find that CNN, a Company that had a news
Correspondent (Peter Ar nett) having Saddam Hassane, personally writing the news talking points
for the news casts during the first Gulf War to
be less than credible, an you are suggesting that
the Democrats have caused all those items in your
above post in less seven months of being in control
of Congress with out Veto prof margin. When were
the Democrats last in complete control? Why is it
that so many people buy the stories from sources
like Chicken Little-an the Sky Is Falling!

Posted by: -DAVID- at June 30, 2007 1:36 PM
Comment #224495

David….Stephen’s posts enjoy creating a picture of failure for the Congress, regardless of any success they may have. The opinion won’t change and negativity won’t diminish until a Republican majority is in effect.
We’ll continue to see the same comments interjected regardless of the subject of the post.

Posted by: Sandra Davidson at June 30, 2007 2:11 PM
Comment #224499

Good article.
However, I strongly disagree with this:
“Bush did not appoint Roberts and Alito to the Supreme Court in order to help the so-called hidden hand of capitalism.”
To me that seems to be exactly why they were appointed. Neocons have never believed in a free market anyway, even though they’re very fond of calling it that.
But Roberts and Alito didn’t just gain their appointments to do the bidding of the corporatist plutocrats alone, they were also meant to toss the occasional bone to the “Christian” Fundies and Rightwing racist base of the GOP. And that is just what we are presently seeing occur.
I knew that this would be the way it would fall out from the moment that Bush won his second term. Unfortunately, we’re in for many, many more years of this Neocon-ideological transformation of the country — and will likely no longer recognize the America they’ll be creating as a result.

Posted by: Adrienne at June 30, 2007 4:23 PM
Comment #224501

SCOTUS of the United States has become ever increasingly conservative. If one looks at the Justice’s and then who appointed them, it becomes apparent that it was already a conservative court prior to the recent appointments.

One recent decision that had the conservatives up in arms was the Kelo decision, concerning eminent domain. But if one bothered to read the majority decision, it is obvious that the decision was a very conservative one. Nevertheless the right wing was up in arms over the decision, calling it the results of an activist court, while the contrary was true. I don’t know if any of us know all the true ramifications of our beliefs. But the right will get the opportunity to see the fruit of their labors as it concerns SCOTUS, much as they have had the opportunity with their selection for POTUS.

Posted by: Cube at June 30, 2007 4:32 PM
Comment #224515

Paul:
Nice article. However, I tend to disagree with you because of the premise that this ruling hurts competition. Although I havent read the case and Supreme Court decision, I have read your link.

I do remember that about 20 years ago a Super Wal-Mart opened near our small town. They were able to sell everything for less than anything resembeling retail price. They were able to drive out all competition including several “Mom and Pop” stores including some staple groceries that have been around and helped people since the Great Depression. But these were local stores and could not stand the low profit margin versus volume strategy. I believe that Wal-Mart’s strategy was technically leagl, but dubious at best. This ruling, if it had been rendered 2 decades ealier by a more liberal Supreme Court would have not only leveled the playing field for the Son Humphery’s of the world, but it would have left the markets in Jasper,AL and other small town more free and competative. IMHO that dastardly conservaive ruling was 20 years of liberal rulings too late.

Posted by: submariner at June 30, 2007 7:34 PM
Comment #224523

I’m not physically capable of saying much, but j2t2 has it right. It’s a matter of anti-competition! That should play well for the “wally-worlds” while further rupturing the guts of “mom-n-pops”!

So, con-o-cons, if you think that’s not giving the financially powerful a stronger foot-hold and an unfair advantage, then I suggest a new eyeglass scrip (or at least a different tint in your lenses).

We’re quickly moving back to that grand era of the 1920’s! Decadence justified by ideology! I watched a bit of footage today where Romney was getting grilled about “what book he would read to guide him in the presidency”.

Of course he went right back to the “old testament”! WTF! What happened to the constitution!

The talibangicals have taken over!

Posted by: KansasDem at June 30, 2007 10:18 PM
Comment #224538

Free Markets? Ha, don’t make me laugh. The whole thing is a criminal conspiracy at the highest levels. See below;

http://www.dunwalke.com/introduction.htm

The US govt is a criminal conspiracy, and has been for a long time. Wake up America.

Posted by: Paul in Euroland at July 1, 2007 8:12 AM
Comment #224540

Sandra Davidson,

My greatest fear is that democrats will actually Fix social security, Medicare, Health Care, secure the boarders, balance the budget, stop corruption.

Lets face it, these are the major issues of our day that need resolution and the Republicans FAILED to resolve them. I told you folks before the elections the democrats would fail, they would be big tax and spenders, that a corrupt Harry Reid would not end corruption, and that the huge social safety net would not be fixed.

Now, 6 months in, it’s becoming obvious to everyone that the democrat controlled congress IS FAILING.

You folks COULD HELP THEM OUT. You could cause a ground swell of liberal discourse DEMANDING they FIX social security, Fix Medicare, Balance the Budget, Secure the boarders, Create a sensible national health care.

Why give them a pass and waste time covering up for their failure to act? Push them, they are your people, they are failing, push them.

Posted by: Stephenl at July 1, 2007 9:04 AM
Comment #224542

Look at the topic threads on this board from the top level. It’s all cultural war, us vs them, those evil neocon type crap.

Not one post about social security and what the democrat congress should do to fix it or encouraging them to fix it.

Not one post about Medicare and what the democrat congress should do to fix it or encouraging them to fix it.

Not one post about Big Government spending encouraging democrats to stop and to fix it.

Not one post about securing our boarders and encouraging the dem controlled congress to do so.

Not one post about corruption and encouraging the democrat controlled congress to stop participating in it and to fix it.

You folks know they are failing us, you refuse to even talk about the major issues where they are failing us. You should be putting it out their daily….pushing them to do more than simply wage a left wing cultural war.

Posted by: Stephenl at July 1, 2007 10:03 AM
Comment #224550

Submariner, this wouldn’t in any way have saved mom-and-pop stores from Walmart. Manufacturers do not WANT to force Walmart to charge the same higher prices as smaller stores. If they did, they’d be crazy.

In fact, what you see with Walmart is manufacturers trying to cut each other’s throats in order to get Walmart to stock their goods instead of their competitors. To survive in the modern marketplace, manufacturers need to use the same low margin high volume strategy that Walmart does. If the government wanted to step in and issue mandatory price controls, THAT really would be a blow to Walmart and a boon to mom-and-pops. But that’s an entire different issue with an entirely different set of problems.

It’s another reason why this 1911 law seems like such an anachronism—it doesn’t take into account the modern economy.

Stephenl, the liberal posters here have not said one single word about how this ruling hurts the poor or benefits the rich. It’s just a lot of vague wishy-washy resentments they have against businesses, conservatives, and the Supreme Court. Not one shred of reason is backing up any of it.

Paul doesn’t even know what “price fixing” is, and everbody else seems to think this issue has to do with government-administered price controls. Well, this isn’t about price fixing and it isnt’ about government price controls either. And because it deals with contracts between single manufacturers and distributors, it isn’t really about antitrust legislation either. But of course, all of that is just too complicated for modern liberal political thinking.

Posted by: Loyal Opposition at July 1, 2007 1:16 PM
Comment #224552

Don’t you all realize that a government ban on anything related to the economy is anti-competition? This supreme court ruling is GOOD for the free market. Any government interference in the market automatically makes the market less free, even if that interference is limiting the power of “big business,” or have you all just forgot the definition of a free market? It’s not a government-influenced market that helps the consumer, nor a government-influenced market that helps the workers, nor a government-influenced market that helps the rich. It is a market that IS NOT influenced by government. When the government bans an action that every business has the RIGHT to take, this diminishes the freedom of the market.

Maybe you still don’t like the decision, but don’t go calling a government ban on anything a boost to the free market. That is a clear contradiction in terms.

Posted by: Ryan Eckberg at July 1, 2007 2:08 PM
Comment #224558

I agree with LO and Stephenl. I think this ruling will increase competition between big business and not hurt retailers, because they will buy from the manufacturer with the lowest suggested retail price. Example Ford has a car with a suggested retail price of $12,000. Chevy has a comparabel car for $11,000. Which would you buy?

Posted by: KAP at July 1, 2007 4:53 PM
Comment #224560

Ryan E.

The lessons of history do not support your statement. Take for example common carrier laws. They require that frieght haulers charge uniform rates for all their customers. These laws were put in place as a response to ralroad monoplies. Unsrupulous carriers would charge exhorbitant rates to farmers whose land they wanted to acquire or businesses that were in competition with companies they owned etc. as a means of putting them out of business.

Posted by: BillS at July 1, 2007 5:59 PM
Comment #224564

I’m willing to reserve judgment until we see how this actually affects consumers. Even Beyer considered the decision a coin toss and only opposed because of stare decis. Abusive price manipulation can still be challenged in court.

Posted by: Gerrold at July 1, 2007 7:24 PM
Comment #224565

Opps, make that Breyer, of course.

Posted by: Gerrold at July 1, 2007 7:30 PM
Comment #224566

Loyal Opposition:

I disagree with you for the following reasons:

1.Currently Wal-Mart dictates to the manufacturers what price they will pay for a particular item. They approach “ACME INC” and say that if you want your widget on our shelves, you will supply to us at X number at Y price. If not, your product and brand will not be on our shelves. If ACME does not want to lose the business of the world’s largest retailer, they have to comply. Wal-Mart has all of the leverage in this deal. Many manufacturers will cut both quality and cost to remain on Wal-Mart’s shelves. Now “Local INC” who has a total of five stores cannot get Acme and negotiate nearly the same deal. The price fix is in, but it is the retailer doing it in conjuction with the manufacturer so Taft-Heartly is not violated. The result is the same though, Wal-Mart in a monopolistic fashion undersells and destroyes the competition.

2.Due to this, Wal-Mart is the one that does not want manufacturers setting the prices. It would destroy their leverage in negotiations, and force them to compete not just on prices, but on service as well. They just may have to hire one person full time and open that second register. Please keep in mind that this is NOT a conventional profit margin versus volume issue. For that to be the case, Wal-Mart and Local Inc. would both have to have access to the same products at the same prices that THEY pay and would have to compete on what they were willing to offer retail for. But as it is, Wal-Mart dictates a lower buying price so that Local Inc. if selling at cost would still be more expensive.

3. This is not, IMHO, a case of government price control. It is a case of letting a producer determine what a product should sell for and should allow them enough leeway to sell a quality product at their own reasonable profit margin as dictated by the market.

IMHO the delima is that in order to level the playing field, prices at Wal-Mart would go up. That would be a major inconvience for most, and in today’s world, convienence trumps fairness(I am guilty of this myself).

Posted by: submariner at July 1, 2007 8:21 PM
Comment #224587

Ryan Eckberg, Those that do not know history are doomed to repeat it. The “Free Market” without restrictions, while sounding good as a theory, is nothing more than gilded age monopolistic crap.

Posted by: j2t2 at July 2, 2007 2:44 PM
Comment #224594

BillS & j2t2,

Your appeals to history to disprove free market theory are futile. There has never been a truly free-market economy. Therefore, it is impossible for you to disprove the theory based on any evidence.

On the other hand, we have a large history of government regulation to appeal to. Take for instance our current dairy industry regulation. The US government effectively creates a price floor for the country’s dairy supply (which is 25% higher than the average world price for milk, 50% for cheese, and 100% for butter) by imposing quotas and tariffs, subsidizing production, purchasing “harmful overproduction” (which is just a dairy farmer taking advantage of the government’s “benevolent policy”), and outlawing the sale of dairy products under the set prices.

Now who does this hurt? The consumer, that entity whom you champion. Not only does his tax money go towards subsidizing milk production and purchasing extra milk to be wasted, but he pays a premium at the grocery store, as milk prices now approach $5 a gallon here in NJ. Who does this help? The lazy, scared milk producers who are happy to accept the forced sacrifice of their customers and fellow countrymen so that they do not have to compete with foreign producers who somehow are able to produce dairy products more efficiently when they are not given the incentive by their government to lag in technology, pay exorbitant prices, and sell any unsold product to the government as if that product were actually going to be used.

This is just one example of the effects of government regulation, of whose history we have plenty. Regulation promotes stagnation, overpricing, wasting of products, and malevolent monopolies sanctioned by the law. The free market promotes competition, technological advances, price reduction, efficiency, and an increased standard of living for all.

Posted by: Ryan at July 2, 2007 6:02 PM
Comment #224599

Ryan,

Neat trick. However, if there has never been a free market, then you have no evidence to say that it would be better than what we now. Indeed, you discount all potential abuses and glorify all potential benefits.

It might be more productive to stick to specifics. You’d probably find lots of support about the milk issue.

Posted by: Gerrold at July 2, 2007 8:52 PM
Comment #224624

Ryan
I did not try to disprove free market theory. That is like trying to disprove gravity. The results are clear. What I was pointing out is that for free market to work and even to remain freemarkets there must be rules.I mentioned common carrier rules and explained why they came about. Another example are laws against insider trading.If we did not have that government interference in the stock market who in their right mind but insiders would invest their money there? We need some rules to keep the engine of the free market working. Monopolies choke free markets,hence the Sherman anti-trust act etc.


As for milk price supports,that program came about for a reason. Its an attempt,albeit not a good one, to stabilize an important food source.It came out of the depression but the basic market rules have always been in play. It takes a substantial investment in money,hard work and time to build a dairy.There is little return for years.If too much milk hits the market the price drops.Dairies fold. At some point enough dairies go out of business for the price to raise again.Nice free market adjustment.And then the price rises again as fewer dairies control the market.You might think,no problem,others will just build more dairies. Trouble is ,again,dairies take investment of money,hard work and time. There are now fewer people willing to risk doing it as the price may well fall again and there is a time lag. Those milk cows that were producing before have long since been turned to hamburger and it just takes time to bring others along.Inthe mean time dairy products become out of reach for most Americans and the nations health suffers.That is pretty much what happend in the depression. The reason it has not happened since is because of those price supports.

Posted by: BillS at July 3, 2007 2:14 AM
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