A Concrete Example of What Cruz Calls 'the Washington Cartel'
Crony socialism involves government tax and regulatory favoritism to protect special interests from market competition, so they can make more money at public expense. Senator Cruz calls this operation of the Washington Establishment to benefit their favored lobbyists and special interests "the Washington Cartel."
That is an apt description, because crony socialism operates in practice as an anti-competitive Cartel, shielding those favored from open market competition. Here is a current example of the Washington Cartel operating crony socialism in practice.
Federal law requires consumers to have a prescription from a licensed optometrist before they can order contact lenses. But the practice of optometrists is to write those prescriptions for particular brands of contact lens manufacturers. That prevents consumers from shopping around among competing brands or manufacturers to get the best price, which makes contact lenses for the 40 million Americans who wear them unnecessarily expensive.
Europe and Japan avoid this issue by allowing consumers to purchase contact lenses without a prescription. Consumers do just fine with that in those countries, because they are grown-ups and know how to look out for themselves. They get specifications from an optometrist, or use their old ones, and call competing contact lens manufacturers in the marketplace for the best price.
Contact lenses are consequently cheaper in Europe and Japan than for the 40 million Americans who regularly use them, at a cost of $4 billion a year. Lobbyists for contact lens manufacturers and optometrists lobby Congress for regulatory restrictions so they can force consumers to keep coming back to them for new prescriptions and lenses in markets where the constrained competition that results keeps costs higher.
This is crony socialism in practice because it involves unnecessary government regulation favoring entrenched special-interest contact lens manufacturers and optometrists, to protect them from open market competition so they can make more money at patient expense. The public interest lies in maximum market competition to keep prices and costs for consumers to a minimum, so consumers can have convenient access to readily available, fresh, clean lenses at the lowest prices.
Congress did act to protect this public interest in competition in 2003 when it passed the Fairness to Contact Lens Consumers Act. That act required optometrists to provide patients with copies of their prescriptions, which they could use to shop around, including online and at discount retailers, like Costco and Walmart.
The response to the lower contact lens costs resulting from that act was the rise of the Coalition for Patient Vision Care and Safety, composed of Johnson and Johnson and other leading contact lens manufacturers, the American Optometrists Association, and related special interests. This is a textbook example of what Senator Cruz means when he uses the phrase "the Washington Cartel."
Their lobbying work has resulted in the introduction in Congress of a new bill, the Contact Lens Consumer Health Protection Act of 2016. That bill would require lens manufacturers to maintain dedicated phone lines and email addresses that can be used to verify lens prescriptions with optometrists.
The trick is, optometrists can control whom their patients get their contacts from by simply not responding to prescription verification requests from disfavored discount lens manufacturers. Don't think optometrists are not paid off by established manufacturers through rebates and kickbacks. Some optometrists favor their own lens manufacturers, in which they have ownership or other personal interests. Patients should be free to try discount manufacturers to see if they can be satisfied by the quality of the product at a lower price.
Senator Cruz's top congressional ally, Senator Mike Lee (R-Utah), is taking the lead in Congress supporting contact lens competition and patient choice and opposing restrictions undermining them. As chairman of the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights, he, along with ranking committee Democrat Amy Klobuchar (D-Minn.), recently wrote to the Federal Trade Commission asking them to investigate the issue and how the current law is working.
They wrote that under current law, "[t]he patient must receive a copy of the contact lens prescription regardless of whether the patient makes a request." They added that the prescribing optometrist "must provide or verify the prescription to any agent authorized by the patient, such as a third-party contact-lens retailer."
They conclude, "Without a copy of their prescription, consumers lose the ability to choose where to buy their lenses. Portability of a prescription is fundamental to a competitive market. Without effective compliance with the rule, consumers will be harmed."
Patients and consumers have effective champions to fight the Washington Cartel in Senators Lee and Cruz.
Peter Ferrara served in the White House Office of Policy Development under President Reagan and as associate deputy attorney general of the United States under President George H.W. Bush. He is a senior fellow for budget policy and entitlement reform for the Heartland Institute and a senior policy adviser for the National Tax Limitation Foundation.