To Choke a Cartel

A cartel in itself is not illegal, but there are  illegitimate acts that could render the alliance as similar or akin to an organized crime.  Like a group of entities, juridical or natural, in a concerted and monopolistic act, in defiance of existing rules regulations and laws connived or is conniving to arbitrarily or artificially fix the price of products or services under their control, contrary to the genuine dictates of economic and market forces with undue profit as the goal.

Illegitimate cartel surprisingly and commonly operates through the basic economic law of supply and demand, exploiting the same through machinations like hoarding. The latter is the intentional withholding of available goods for sale in a period of time to trigger an artificial shortage.The intention to create a shortage in commodities like rice may also be intended to hide a surplus which otherwise will cause a significant drop in commodity price. The situations that could project a shortage and scarcity were used to encourage and urge importation perhaps on commission basis if done via legitimate channels. In all cases the objective is to create an opportunity to manipulate prices using the artificial situation as justification.

When the demand is fixed in relation to increasing supply, the prices tends to go down, a situation that the cartel is in the lookout because of its negative effect on their bottom line and financial obligations. The solution is to control the downward trend in price, if not to increase them through the introduction of mechanisms that will create artificial urgency and eventually scarcity. The latter propel increase in demand and individual’s tolerance to buy at a price higher than its true market value under normal condition. The direct and negative effect would be inflationary and decrease in the purchasing power causing decrease in consumption of other legitimately priced products that otherwise could have contributed to the GNP. The premeditated inflation dislocates the basic individual finances especially at the low income socio-economic bracket which indirectly results to lower family health care allocation and student subsistence among many others. Basic needs are compromise just like in a real inflation. In relation to the withholding of goods mentioned earlier aside from hiding a surplus by projecting simulated scarcity a cartel may also engage in smuggling to eliminate most of the middleman and associated cost that otherwise would be incurred under a legitimate  process like taxes, duties, etc.. Naturally the latter will reduce the cartel's inventory cost, thus enlarging the profit. 

Another concerted activity of deception is tainting a superior product with an inferior one's and selling them at the price of the former. Products with similar feature/s, texture or consistency are mixed to a new product name, portraying and misrepresenting it as new, or of latest hybrid and pricing it accordingly. The misrepresented products has no identical market source against which its price can be validated. The pricing of these products can only be limited by the sellers conscience and the buyer's purchasing power. This modus operandi is common in a commodity like rice.

One means that could choke a cartel is to put a counterweight to balance the law of supply and demand. The abnormal supply of prime products in relation to the demand be it artificial or not, must be progressively offset with goods or services of equal quality, and at par with the customary consumption habits. It must be done only on the retail level from alternative and ready sources, such as, government stocks from secured government warehouses and depot until such time that the prize normalizes according to the authentic co-relationship between supply and demand. To do this, there must be an independent government stock under a national stock corporation, a government owned and controlled corporation that will be tasked to store a reasonable level of prime consumable goods like oil, rice, corn, water, sugar and other basic essential items. At its dispensation the authorities should be able to distribute the same on areas affected by short supply in the most expedient time not only to counter the manipulation in the market as discussed earlier, but also to ensure sustainability in case of real shortage brought about by a multitude of reasons like international or local disaster, war, pandemic and other unforeseen circumstances, any of which is directly affecting production and/or distribution. The would be corporation’s main role is to maintain a level of stock essential to national survival and continuity for a certain period of time, as may be determined by the appropriate authorities and technocracy. Product blending and mixing should be regulated and/or prohibited especially for grains like rice and corn.

The illegal acts of the cartel in connivance with the authorities in certain instances are forms of economic sabotage that should be regarded as a crime.Prosecution of economic manipulators must be pursued with utmost vigor together with the imposition of stiff and heavy penalty. This will require top quality enforcement personnel that possesses the adequate knowledge and technical know-how to discriminate genuine market forces activity from artificial manipulation. A dedicated economic enforcement and intelligence bureau may be created to detect and handle cases of crimes against the economy.

Likewise a dedicated special economic court should be created to handle the prosecution of cases for expediency and quick dispensation of justice. Economic sabotage is a crime against humanity. It threatens individual survival. It is an issue that is neither trivial nor temporary. It haunts not only the under-develop but progressive nations as well. It is often a neglected front that must be face squarely and decisively.