"Justice v. Realtors"

Real Estate and T-shirts... Last week's Dispatch, First Brokers, Then Investment Bankers (Oct 4), generated dozens of e-mails blasting Alan Murray and the Wall Street Journal for slamming the real estate industry.

But did you notice the WSJ editorial two weeks earlier (Sep 14, 2005), "Justice v. Realtors," urging states to crackdown on the "real-estate cartel" by repealing "laws that sustain the Realtor racket to the detriment of their own citizens..."?

These are the laws recently passed by legislatures (see Dispatch "Realtor Racket": Are Commission Rebates Legal?, Aug 16, 2005) seeking to limit competition from discount realtors. And these are the same politicians that frequently laud "free markets" and "free trade" as core American values. Hmm.

The reality, of course, is that few economic players really want to operate in a truly "free" industry. Just read Pietra Rivoli's fascinating new book, The Travels of a T-Shirt in the Global Economy: An Economist Examines the Markets, Power, and Politics of World Trade. A professor at Georgetown University, Rivoli traces the international journey of a $5.99 T-shirt bought at a Walgreen's drugstore in Fort Lauderdale.

From growing the cotton in Texas, to weaving the cloth and stitching the garment in China, to importing the T-shirt into the U.S., no market is "free." All are strongly influenced by government policies. (Her T-shirt will only become part of a free market when it finally arrives at a used clothing market in Tanzania!)

"While my T-shirt's life story is certainly influenced by competitive economic markets, the key events in the T-shirt's life are less about competitive markets than they are about politics, history, and creative maneuvers to avoid markets."

Comparatively speaking, the real estate industry is very lightly regulated. And that's a good thing for all of us collectively. Hey, I love brokers, but the WSJ has a point.