ocm regulatory failure 2012
TRANSCRIPT
“We meet in the midst of a
nation brought to the verge
of moral, political and
material ruin.”
“We are not enemies to
capital, but we oppose the
tyranny of monopolies.”
Granger, 1874
Farmers‟ Revolt led to
Antitrust Regulations
Sherman Antitrust Act in 1890
Clayton Act in 1914
Court ordered divestiture of meat packer cartel in
1920
Packers & Stockyards Act of 1921
Capper-Volstead Act of 1922 (giving ag coops
limited exception to antitrust law)
Evolution of Antitrust Law
Original intent was “Free and Fair Competition”
Courts decided that “fair” was difficult to define
Meaning of free competition evolved from the notion that competition requires many buyers and many sellers to “anything goes,” greed is good, and dominance of a “free market” ideology
Case law evolved from the Populist view of free and fair competition to Judge Posner‟s (Chicago School) view that “the only goal of antitrust law should be to promote efficiency in the economic sense.”
Partial List of Regulatory
FailingsPermissive merger approval process since 1980 led to
Too Big To Fail
Too Big To Prosecute
Too Big To Breakup?
Government economists‟ reliance on studies by Economic Hit Men—revealed in FOIA documents obtained by OCM
Competition Workshops: Cheap talk about “fair” markets
Legislative Thuggery—defunding or threatening to defund
Implementation of regs
Competition investigations by USDA/DOJ/FTC
FOIA documents obtained by OCM
give Insight into Regulatory Failure
“The two comments used extensively for the
cost-benefit analysis (of proposed GIPSA Rules)
are.. “
Informa study prepared for NMA and submitted by
NCBA and NPPC
Elam study prepared for the NCC
“We rely on the Informa study for insights as to
how the industry may respond to a perceived
change in GIPSA authorities. Therefore, we
begin with those costs which Informa attributes to
cost increases …”
USDA Chief Economist Joe
Glauber‟s
TestimonySenate Ag Committee Hearing 6/28/2011
In implicit reference to the Packer and Integrator funded studies, Glauber said,
“people who have written (comments) show significant costs on the order of billions of dollars.”
“ … (there is) no question … that the designation on the rule will be changed to economically significant.”
http://www.youtube.com/watch?v=cFu5DY5I_EI
USDA Chief Economist Joe
Glauber‟s
Internal MemoFOIA document dated a week after his
Congressional Testimony …
Glauber: “Draft CBA (cost-benefit analysis) reads
more like a summary of comments than a cost
benefit analysis where each of the economic
inputs (Informa and RTI) should be scrutinized
and adjusted. Accepting both studies w/o such
scrutiny is problematic and misleading.”
“Even the discussion of the GAO study gives
short shrift to the studies that found
competitive harm and emphasized those that
showed there was not competitive harm.”
FOIA Docs
Glauber: “Informa data … is likely
skewed toward higher costs and
does not reflect the benefits or costs
in other segments of the industry?”
Yet numerous FOIA documents
show government economists‟
reliance on the Informa study
Competition Workshops:
Cheap Talk about Fair Markets
May 2012 Report by DOJ summarizing
the Workshops
“The purpose of the Workshops was to learn
how to best promote „free and fair
competition‟ in agriculture.” AG Holder
AG Holder, Ag Secretary Villsack and other
government officials made numerous
reference to promoting “fair” markets in press
releases and in each of the five workshops
Cheap Talk about Fair Markets
The word fair (or unfair) is used 13 times in the 24 page DOJ report
ScorecardCheap Talk—12 times
Truth-- once
“The antitrust laws focus on competition and the competitive process, and do not serve directly other policy goals like fairness … “
Attempt to give definition and meaning to what constitutes “fair” business practices under the PSA killed by corporate interests
DOJ Report on the
WorkshopsConclusion: “… we are better positioned to lend
our expertise … to promote „free and fair
competition‟ in agriculture”
Report demonstrates that DOJ now understands-
- maybe for the first time in history--the
subtle, complex competition issues in agriculture
But will they do anything?
Can they do anything?
USDA/DOJ/FTC
Can they do anything?
Greatly limited by
Too Big to Prosecute
„Cubicle arrest‟ of government investigators
Agency capture
Revolving door
Infiltration by economists with a free market
ideology
Legislative thuggery
Antitrust cops forced to back away from investigations
International political sensitivities
Very real threat of funding cuts
Bipartisan problem
Regulatory Failure
Failure is not necessarily due to failure of
regulators
Failure is often due to corporate control of
government
Extreme economic & political power imbalance
Shows up in market transactions
Shows up in cubicle arrest of regulators
Shows up in threats of funding cuts if investigations
are initiated by antitrust cops
Shows up in rules of the market game being twisted
in favor of corporate interests
Treat Symptomsor
Treat the Disease?
Regulatory Failure is a Symptom