The Rise of Phantom Capitalism
Choices are an illusion and would-be competitors are just the various masks of a single entity.
by Keatton Middleton (4-19-2023)
The economy is a fickle beast that forms an almost cyclical decline and rise over the course of 4-10 years. The peaks and troughs (declines) have varying strengths, but they always come to play. Why the cycles though?
Everything in our economy is meticulously planned. The Federal Reserve controls the rates, major conglomerates determine the prices (though demand and wages play a role, it’s not majority), and the citizens do what they’ve always done – buy things. However, these cycles have become erratic and incalculable. The Federal Reserve doesn’t care about unemployment, the conglomerates are filling their pockets, and the citizens are starting to gasp for air. While the Federal Reserve is a unique monopoly that deserves its own separate discussion, I simply want to focus on the market itself – or lack thereof.
The capitalism we aspire to live in is currently nowhere to be seen. Conglomerates are running wild, from power, utility, internet, media, food, and more. Consider the following graphics here & here – if you really want to feel helpless just consider the options you have for electricity. There are few things that I personally advocate for being operated by a government – but the fact that electricity is run by private companies that are LITERALLY operating as local or regional monopoly gives me all the proof needed to grant a rare exception, and should be governed at no more than the state level.
When you get on Hulu to watch a show and decide there’s nothing good to watch so you switch over to ESPN to watch a game or Disney so the kids can watch Bluey – your time and money went to Disney all 3 times. When you switch from Tide to Gain or Taco Bell to KFC or from Ice Mountain to Poland Spring (or Nestle Pure Life, Nestea, Ozarka, Deer Park, Acqua Panna, Perrier, S. Pellegrino, and many more owned by Nestle…) you’ve effectively made no changes to the market or demand. This phantom of choice before you has been consumed by a handful of companies that are simply too big to fail – which means they have little to no market risk. If that seems bad, hold on to your seat because it gets worse. If you buy off-brand products – you’re not hurting the big guys. In most cases, the off-brand packaging is just holding the name brand product whether it’s water, popcorn, cereal, bread, etc. Rarely is the product even really altered to create a noticeable difference to the consumer.
It all boils down to a major problem – our “free-market” isn’t free and we’re all absolute prisoners to it. You may be aware of laws preventing monopolies, but these cases aren’t monopolies. The vast majority of American consumables are operated by oligopolies, and they’re absolutely killing it right now. In fact, in the last 2 years, these oligarchies have shown their strength by raising prices 2-3x what their increased costs were raised. CEO’s and high-level executives know you don’t have a choice in what you buy so they’ll keep raising prices until people complain, then they wait a while and do it again. No worries though, our democracy will kick in and provide a solution.
Wrong. All that extra profit doesn’t just go to yachts and mansions. Senators, Representatives, Agency and Department directors, and even the President are all playing a delicate game of Battleship with the American public. Through media coverage, they can either watch or participate in narratives that either hurt or help their next play. As people voice their concerns over one thing, they use the opportunities to murky the waters of another. As of writing this piece, the most recent that comes to mind are the leaked documents regarding the war in Ukraine. A very controversial news story that had most of the attention swayed toward the leaker as fast as possible. Regardless of where you stand on the leaker – the leaked information is absolutely damning for the government. It shows that an agency that already fails to balance its budget, to the cumulative tune of trillions of dollars, is also failing to assist Ukraine in any meaningful way – if we should even be doing it in the first place. On its own, Ukraine will not fend off a BRICS-backed Russia. It took less than a year for us to go from leaving the Middle East (and abandoning nearly $1B in assets) to spending $75B on Ukraine (too much of which is unaccounted for).
Who stands to profit from this kind of spending? Don’t be confused by the companies that don’t seem like conglomerates, like Lockheed Martin, Boeing, or Pfizer (all top DoD contractors). Those companies all have major investors, like BlackRock – who has major stakes in all 3. Listen, I think if you can get rich, you shouldn’t be punished for doing it. But when a single company like BlackRock can have $10 TRILLION in assets, something is wrong. The total value of U.S. assets is $170 trillion, which means just 5 investment firms make-up nearly 16% ($26.5T).
I really wanted to write a silver lining to this situation but there simply isn’t one. The fact of the matter is that even small businesses are almost certainly purchasing their raw materials from conglomerates, and thus their prices, but not profits, are subject to the control of major market titans who manipulate the elected representatives into making them more money and sway citizens to think and buy whatever fills their pockets more. The best solution is finding a presidential candidate who loves America but hates our government – because those two entities and what they stand for are currently at odds.
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