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Robbie Gennet

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There Is No Free Market

Posted: 07/06/11 05:22 PM ET

In order for a market to truly be "free," it can't be manipulated or augmented via subsidies and tax breaks. The term "free" means "not physically restrained, obstructed or fixed; unimpeded" and is unambiguous by nature. Without a qualifier like "partially," the term "free" infers total and unequivocal lack of restraint or manipulation. So how can Republicans in Congress espouse the "free market" while fighting to keep massive subsidies, loopholes and corporate tax breaks in place? Doesn't this dichotomy strike anyone as hypocritical? Or has the term "free market" lost all meaning and relativity amidst the New Corporatism usurping our government?

I could list all the various tax breaks and subsidies given to various industries and corporations, but suffice to say it would take far too many pages to do so. The info is easy to Google, and the overall picture is just as instructive in making the point. Just take a look at a few industries that do not operate in a "free" market: agriculture, banking, pharmaceuticals and oil. These industries operate in a highly manipulated environment. U.S. taxpayers dole out roughly 12 billion dollars a year in subsidies to oil companies, and yet the U.S. federal corporate income tax rate of oil giant Exxon Mobil in 2009 was effectively zero. How much would Exxon's record profits be without any subsidies and tax breaks? And would the price of oil or gas be any higher than it is today? While gas prices have gone up, so have oil company profits:

Exxon Mobil's profit in the last quarter of 2010 was $9.25 billion, compared with $6.05 billion in the same period a year before. In 2010, Exxon Mobil made a $30.46 billion profit in 2010 compared with $19.28 billion in 2009. Revenue for 2010 rose from $310 billion in 2009 to $383 billion in 2010.

How about agriculture, which also affects our nations entire food supply? Aid from the government adds up to over 180 billion dollars a year, with the largest share going to corn (for feed, food and ethanol) followed by cotton, wheat, rice and soybeans. Considering the billions subsidizing ethanol alone, this has as much to do with our energy policy as it does our food and agriculture policies. With all those billions in manipulation, this market is most definitely not free. And how about pharmaceuticals? Even without generous subsidies and tax breaks, the Bush-era Medicare Drug plan's blocking of negotiating drug prices based on bulk (like the Veteran's Department is able to do) is a clear manipulation of free market policy. And yet so-called "free market" Republicans were behind it's creation and passage. As blatant as it is, this bald-faced hypocrisy does not seem to matter to their Tea Party supporters.

With banking, do we even need to list the litany of bailouts and breaks that our government has given to the financial industry? Wall Street is one of the least free markets in the world. And yet, conservatives venerate the concept of the "free market" as if such a thing actually exists. One wonders what the marketplace would really be like if all the subsidies, tax breaks and bailouts were to suddenly cease? If our economy and country are based on the affordability of commodities like energy and food, are all the tax breaks and subsidies actually making them less affordable? And would a market truly free of those manipulations make them more or less so? Unless proponents of free markets put their money where their mouth is, we may never find out.