USA – Politics and child like mentality

The U.S. Attorney General was at all five hearings.

So were the Secretary of Agriculture and all the top anti-trust officials at the Departments of Justice and Agriculture.

It was unprecedented: At five public hearings in five places across the country in 2010, two cabinet secretaries and all the top antitrust cops on the federal payroll were in one room listening to farmers and consumers talk about competition — or the lack of it — in the business of agriculture.

These officials were fulfilling a promise the Obama administration made soon after coming to office.

The promise was that the markets for food would be free for producers and consumers — that violations of antitrust laws would be confronted in the courts.

That was the promise. Now, two years later the Department of Justice has issued a report on those five hearings, the ones that consumed so much time from two cabinet secretaries.

What’s in the report? Mostly cheap talk, and little action.

Let me explain.

Five public workshops to explore competition issues in agriculture were held in 2010. Hosts were the U. S. Departments of Justice (DOJ) and Agriculture (USDA).

Topics for the five workshops (and locations) were: General Issues of Concern to Farmers (Iowa); the Poultry Industry (Alabama); the Dairy Industry (Wisconsin); the Livestock Industry (Colorado); and Marketing Margins (Washington, DC).

U.S Secretary of Agriculture Tom Villsack, U.S. Attorney General Eric Holder, Assistant Attorney General and Head of the DOJ Antitrust Division Christine Varney, and the Grain Inspection, Packers and Stockyards Administration administrator Administrator Dudley Butler attended all of the workshops.

(Conspicuously and inexplicably absent was the Federal Trade Commission (FTC), which has antitrust authority over the fertilizer industry as well as general antitrust responsibility in the retail food sector.)

Attendance of two Cabinet members other top antitrust cops at a public agricultural meeting, much less at five such meetings, is not a normal occurrence. In fact, I’ve never heard of anything like it.

Attorney General Holder stated that the purpose of the workshops was to learn how to best promote “free and fair competition” in agriculture.

Assistant AG Varney observed that “agriculture is an essential part of the American economy” and “well functioning agricultural markets are not only a matter of economic efficiency, but a matter of national security and public health.”

DOJ recently released their report on the Workshop. You can get the full report here.  What does the report say?

Here are a few excerpts.

A clear lesson of the workshops … is that antitrust enforcement has a crucial role to play in fostering a healthy and competitive agricultural sector.

A number of participants (including Division staff and leadership) stressed the importance of vigorous antitrust enforcement and detailed the ways that anticompetitive mergers and conduct can harm producers, consumers, and others. …

These discussions confirmed that a healthy agricultural sector requires competition and, consequently, vigorous antitrust enforcement.

But what does the report really say? Here are my impressions.

Understanding the issues

A clear understanding of complex and often subtle competition issues unique to agriculture and the food system is reflected in the report.

That, in and of itself, is unprecedented progress, and a necessary first step.

Cheap Talk About Fair Markets

AG Holder, Secretary Villsack and other government officials made repeated reference to promoting “fair” markets.

The word fair also permeates the report, and in official news releases and testimony by administration officials.

Antitrust law was originally intended to establish “free and fair competitive markets.” But early in the history of U.S. antitrust law, the courts decided that “fair” was difficult to define so they essentially deferred to economists’ notion of economic efficiency, which has nothing to do with fairness.

It seems to me that the courts shirked their responsibility, particularly since the role of our legal system is justice, not economic efficiency.

A hundred years of case law and economics has completely removed the concept of fairness from the nation’s antitrust laws.

Recent efforts to define what constitutes fair business practices under the Packers & Stockyard Act—the proposed GIPSA Rules—were killed by powerful agribusiness interests in a compliant House of Representatives.

Actually the report contradicts the fairness rhetoric by Cabinet and other government officials.

It says, “The antitrust laws focus on competition and the competitive process, and do not serve directly other policy goals like fairness …”

So all the talk about fairness in the workshops and in the report is nothing more than political rhetoric, commonly known as cheap talk.

New legislation will be required to define fair business practices, and new legislation ain’t gonna happen as long as powerful corporations control the legislators.

Too Big to Prosecute

Included in antitrust law is a process by which the antitrust cops — DOJ and FTC — can block mergers and acquisitions by large companies.

(A loophole in antitrust law is that it does not apply to firms that acquire bigness and market domination through internal growth, such as a Wal-Mart.)

That’s theory. Practice, however, seems to be that bigness is just fine, thank you.

Over 30 years of permissive merger policy by DOJ and FTC has led not only to banks and agribusiness firms “too big to fail,” but also to corporations that are “too big to prosecute” for antitrust violations…



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