Yves here. This is a short but useful reminder of how the failure to enforce anti-trust laws leads to oligopolies. MBAs are taught how to make markets inefficient to increase corporate profits, and one of the most lasting ways is to achieve a dominant position, ideally in a concentrated industry. “Roll ups” which is a consolidation play, is a favorite among private equity firms (but they often stumble in integrating the companies).
The author describes how dominant players preserve their profits through aggressive lobbying in the food space, and why that is particularly troubling.
By Wenonah Hauter, the Executive Director of Food & Water Watch. She has worked extensively on food, water, energy and environmental issues at the national, state and local level. Her book Foodopoly: The Battle Over the Future of Food and Farming in America examines the corporate consolidation and control over our food system and what it means for farmers and consumers. Cross posted from Triple Crisis
There is one thing that my new book is about: corporate control of every aspect of our food system, from how it is labeled to the pesticides we are exposed to. The main thesis of Foodopoly is simple — We, the people, must reclaim our democracy. We must reestablish strong anti-trust laws as part of the progressive agenda if we have any hope of fixing our broken, corporate-controlled food system. And to do that, we need to organize and force our elected officials to create laws that result in a food system that works for consumers and farmers—not big agricultural, food processing, retail and chemical conglomerates.
How has consolidation enabled Monsanto, Tyson, Nestle, Kraft, Cargill, McDonalds and other food/ag/chemical companies to write our food policy, and why is about to get worse? The disastrous decision in the landmark Citizens United case now allows corporations to spend unlimited sums of money to buy the political system. This decision comes at the expense of citizens and democracy itself.
Foodopoly delves into the history of food and farm policy to explain how we got to the massive consolidation of the food supply. For example, only four gigantic companies process 80 percent of the beef we eat, and only four retailers sell 50 percent of the groceries (with one out of every three dollars spent on groceries in the U.S. going to Walmart). The top 10 fast food companies control 47 percent of all fast food sales. Together, these industries have commandeered local economies, and now it is clear that the era of family farmers and mom and pop stores has ended. What’s not as clear is the effect this has on our political system.
Make no mistake: when those companies enjoy near monopolies and vast market power — both domestically and globally thanks to crooked free trade agreements — their profits enable them to contribute large sums of money to groups that lobby Washington very effectively. At Food & Water Watch, our organizational budget to fight the corporate control of the food system annually is about $12 million. According to the Center for Responsive Politics, the food industry spent $40 million lobbying the federal government in 2011. And the biotech industry spent over half a billion dollars in campaign contributions and lobbying expenditures since 1999. Additionally, special interests spent $173.5 million lobbying on the 2008 Farm Bill.
Citizens United accelerates the corporate power grab of our democracy. Other issues affecting our essential resources are trade and the financialization of nature. This summer, President Obama will attempt to fast-track two trade deals — the Trans Pacific Partnership and the Transatlantic Free Trade Agreement —which are permanent power grabs by corporations and their financers. For Americans this means increased gas exports and increased imported foods, an undermining of our domestic laws and increasing corporate ownership of our natural resources. They will forever enshrine the very economic system that has lead to an ever greater imbalance in income and wealth, and increasingly frequent economic crises. And it will all be enforced by new international tribunals akin to the WTO.
The changes needed to reform our food system and strengthen our democracy can only happen when the people demand better from their leadership. We can’t shop our way out of this problem: we need to address the political reasons our food system is so broken.
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When I see people (investors) trying to commoditize water, I have to wonder about their intentions. Are they beneficial stewards, or greedy capitalists? They of course wish to be seen in the most positive light, but would they withhold the substance to ‘earn their share’, much like a natural resource austerity?
@JamesGRickards
http://www.worldswaterfund.com/IBM_Research_and_Waterfund_Release.html
It all really comes down to energy though, as I’ve read Saudi Arabia cannibalizes part of their oil to desalinate water for their population to drink. It seems to always come back to energy, and who controls it.
R Foreman: “When I see people (investors) trying to commoditize water, I have to wonder about their intentions.”
“Ze Americains, zey will buy anysing.”
— SNL skit
In short, there is no hope.
That is unduly pessimistic. There is more hope out there than you can possibly imagine. You just have to learn to give up on what’s already dead and gone and refocus your efforts on something worthwhile. When a leg has gone gangrene you cut it off and move on, or die with it.
JGordon, being optimistic?!
I must be dreaming, surely.
oligopolies and monopolies – Can anyone deny that the Too Big To Fail or jail are not a prime example of this disturbing trend? – can anyone deny that the TBTJ are the driving force behind all the market segment take-overs and concentrations that are killing democracies around the world. WTO, TPP, Citizens United, Glass-Steagall …and for years IMF and other organizations that have fueled speculative arbitrage across every boarder on this planet. Haiti used to be an exporter of food till it became cheaper to buy on the international market… Haitian farmers could no longer compete with the subsidised import ….out of business they went….prices then shot up and Haiti could no longer afford to eat —- Rinse and repeat at every opportunity and every resource.
The storms of human misery have long been building strength and raining down upon humanity. All famine are man-made. Tsunami of financial capital are erasing human progress and dignity, destroying all forms of cooperation, and placing most humans under a pernicious form of tyranny that the lords of financial capital wield with reckless abandon and willful harm
Off subject here, this is the second day that I haven’t received N.C., even though I’m on the list as a subscriber. Is there some reason for this?
The beef cattle industry in Texas, at least up to the point of processing, is still a decentralized, mom and pop industry in many parts of the state. Not sure NC would necessarily approve of Mom and Pop any more than it approves of mega conglomerate food companies, however. Mom and Pop tend to own guns and vote Republican and unacceptable stuff like that.
It sounds like you haven’t read NC very long.
just saying
Thank you for all your great work on this blog. I have one request. Please restrict the cutesy, warm and fuzzy animal stuff to one spot (as you mainly already do). If it were me, considering the serious, editorial place of gravatus you attest to be coming from, I would leave the cutesy, warm and fuzzy animal stuff out all together. Makes you look like a light weight, or worse. Sometimes you slip up, the guts of you “links” gets polluted by this maudlin animal kitsch and it is a real turn off. When you start posting cutesy, all warm and fuzzy animal stuff as the meat of your links section, it becomes a distraction, and just makes me think that everything you are doing is coming from a cutesy, warm and fuzzy bias, and I want to throw-up.
Maybe you should read another blog.
What you refer to as ‘cutesy’ is the ‘Antitdote du jour’ and is always in the daily Links thread.
For about one millisecond, the Antidote du jour reminds one there is still beauty in the world.
ditto
And the pics invariably show other species of creatures getting along and supporting life; most of our normal NC stories indicate humans lag behind in such skills.
The creature features remind us that we are all connected and our fates are linked.
Go away, then. No one is forcing you to read here. If you aren’t adult enough to pick out the articles you are interested in, seek info elsewhere, where you don’t have to be confronted with alternative viewpoints.
“i am NOMAD! illogical. non sequitur. you will be sterlized.”
Many readers say they enjoy the antidotes and some find them stress relievers; I think we had a link to a study on that, but I can’t find it.
In any case, it’s one of the signatures of the blog, so if your reaction is really that vehement, you might consider turning off images for that particular NC page. If you can’t do that, keep a bag handy. Otherwise, it’s a big Internet…
Research has found that looking at cute animals increases retention and concentration.
http://www.wired.com/wiredscience/2012/10/cute-image-concentration/
But it isn’t you, is it?
Antidote du jour reminds who is the real creator. Hint: It is not capitalism or any capitalist.
About anti-trust legislation:
From what I have heard, the courts have defanged and gutted the anti-trust legislation that we do have in the US. If so, how do we deal with that?
Nobody is greedy…, really…
Just who are the most greedy? Not the ‘evil’ capitalists as the socialist will make you believe. The majority fight a fierce battle to win market share. How? Efficiency and……prices… that’s it. They want to make more by charging YOU less. How greedy are they to think that increasing my purchasing power is good for me…
How about governments? Are they greedy? Well, the same proponent of socialism will tell you their goals are not profits, it’s not efficiency, it’s not increasing your purchasing power. So how do they benefit the regular joe?
They don’t…. they redirect capital from capitalists to a small group of thugs while throwing a few bones at those starving, all while making a mockery of society. But trust them, it’s for your own good.
But things are changing, professors and investors are realizing that QE, and government spending only helps the rich banks, a few companies, unions, a few wealthy thieves – the whole 3 to 4% of us. While the rest is con’ed into believing the world will end and that only the government is our savior. Wake up zombies.
and government spending only helps the rich banks flash
Even the non-rich banks (and credit unions?) are thieves of purchasing power in that they are privileged by government deposit insurance, needless borrowing by the monetary sovereign (e.g. US Federal Government borrowing) and access to a lender of last resort.
As for deficit spending by the monetary sovereign, it is necessary so the interest on bank loans can be paid in aggregate.
Of course they are. Any organization that expands the money supply, giving the same token over again?, is essentially stealing…
The question is – how do we employ capital to the most productive capacity of the economy? The one that will create more widgets and make us all better of.
Is it by having the government pay whatever suits their friends – or the private industry who has to compete to gain market share?
My money is on the privates… you?
“How about governments? Are they greedy? Well, the same proponent of socialism will tell you their goals are not profits, it’s not efficiency, it’s not increasing your purchasing power. So how do they benefit the regular joe?”
There is so much to say that I don’t even know where to begain.. so lets start with the useless disaster that happened in Detroit where they shut down perfectly functioning factories to move them overseas or to the cheaper south of the US which no real socialist would do and now the workers of Detroit who had no say in it are loosing there homes for a decision they didn’t make and even starving worse of all. How about having healthcare that doesn’t make someone broke and is worth a damn unlike those “bronze” plans some people will be forced to take. How about a fair share of the income the workers produce in the first place and not have there money used to build sweat shops in the 3rd world. And lower prices at what cost? Sure that can be done by paying a dollar an hour but is it worth it. In the end I see no need for someone to own a big business anymore than someone doesn’t need to own the city of Los Angeles or New York the workers are perfectly capable of voting on how things are run themselves since there is no place more un-free than the workplace maybe besides jail, and workers shouldn’t have to pay the price for a decision that management makes that could destroy millions of lives as the case with Detroit alone.
I am going to be brutally honest…
What destroyed Detroit was not corporations. Was it corporations that ran away tax payers? Quick question – how many people in Detroit belong to unions? Could it be a small minority?
What ‘fair’ share are you talking about? The one where someone working for minimum wage has to pay higher taxes than a lazy union member who also gets healthcare benefits. Why dont you go and ask them how they enjoy paying their fair share.
This is not a question of fair share – it’s a question of a bloated government protecting it’s power and reach, unions protecting their theft, and a few leech organizations protecting their tit.
Nobody cares about anyone, let’s stop the jokes already.
Since you decided to set the standard as brutal honesty:
You are apparently too thick to understand that unions (before GOVERNMENT in the name of Ronald Reagan went after them, the breaking of the air traffic controllers’ strike was a watershed) set a wage level that becomes a benchmark for private sector wages, including white collar wages. Unions were bargaining for all of us for better conditions, far more than you realize. The terms the struck became norms for big corporate employers.
Capitalism has become its own opposite. From 1945, when we should have addressed a bleak future, to now, when the future has arrived, we operated on pure optimism. Trade, especially free trade – the lifeblood of capitalism – has gone like this: Industry was salvaged by a brutal and expensive war, then exported via domestic corporations to the 3rd world (which defaulted on all its loans, but nevermind), then to producing so much crap the world was awash in garbage of both the new and used variety and running out of clean air, to now and the latest decision: It doesn’t matter if the world continues to exploit and develop new sources of fossil fuels, the decision has been made not to use the stuff. Phase out.
So consider the illogic of trading and shipping (via massively inefficient freighters and airplanes, etc.) whatever you can to keep your currency from inflating – why? When it is materially much more prudent, and even cheaper, to make what you need and merely import a few luxuries. Big problem for all big, stupid, sloppy corporations. And hence the move by the corporations to co-opt the lucrative social world of health, education, welfare, housing, agriculture and transportation. They want us to pay them to do it far more expensively. How clever.
There are only 2 things that make a company competitive…low price….or quality…. unless they are privileged by government protections.
So, if companies are fighting like cats and dogs to win customers with lower prices, where does the notion that it’s companies charging us more come from? Is it companies that manage the money supply or is it the federal reserve in combination with congress and the chief?
Supply and demand says prices drop as production increases relative to money supply.
Basically, it’s not capitalism and free markets, it’s the manipulators, the fed and your government.
Nobody is entitled to anything. For what’s given to you comes from somebody else.
I’m all for it if the corporations can cut costs, improve quality, protect the environment and provide employment. Their track record is a disaster. Remember the mantra of productivity is the achilles heel of corporations. It makes them worse that government services. Worse.
What you refer to depends on the eye of the beholder. In a country like China, companies have been booming, outpasing the growth in the size of government, and even with the terrible quality of life, they are looked at as saviours in many cases.
In a country like the US, where the size of the government reflects the debt bubbles of the latest years, growth is stagnant. Why would anyone want to invest in a place where the government protects a few connected dinosours? Where the government keeps the financial system levitating while consumers are debt slaves? Where individual responsibility is trashed and social theft is rewarded?
Capital investment in productive capacity/innovations is what makes a society wealthier. Choking it for the benefit of politicians, their friends, banks, the wealthy is sure not going to get us there.
Let it go already. Take the lesser pain now instead of death tomorrow.
Given the government’s, i can do whatever i chose to power, i’d pick the government as the most evil of the 2. Again, neither you, i nor the government creates anything – corporations do. They employ, create, innovate, hire and fire people, but they need capital. Take their capital, choke them, than don’t ask for anything better than what we have.
Corporations provide capital and an organization structure within which labor operates and that’s all. I worked 30 years in a GE factory and GE made nothing – I and a thousand or so of my fellow workers made everything that shipped (including tons of fuel for the 10 Fukushima reactors – but that is a different story). By fellow workers I mean shop floor, management, and technical staff (including Michael Jordan’s Father – but that is also a different story).
Corporations are financial structures – nothing more.
And… the size of government as defined by total employment has shruck since the recession. A slight increase at the federal level more than offset by local and state layoffs. If measured by debt, well that is what happens in recessions.
Jim
What ideological disconnect do you reside in… shezzz
Citizens United as granted by SCOTUS gives corporations the balance of power in the US of A. The last 40 years has been a road paved by corporations, for corporations, a world ruled by corporations.
Skippy… the best part is 25 Trillionish was just created to bail them out and the bill is sent to the workers – consumers of said corporations.
PS. who got even – richer – in the last few years after catastrophic failure… yeah… the creators of it… FFS…
Skippy,
The ideology from jeckil island? Was it corporates that created the fed monster, or your government? The same that destroyed the stock act while everyone watched 2 idiotic terrorists?
Are corporations not created by people like me and you? Aside from Government Motors and the other leeches, which corporate can survive without efficiency?
It all makes sense that the majority of today’s ‘men’ were smoking joints and taking hallucinogens in the 60s.. no?
Wat,
The large banks should have been left to collapse in 2008-2009. Many others would have also failed. Of course – skippy – government receipts would had also collapse. So it wasnt just for banks the congress and Obama did it. You think obama would have been president twice?
The government can only remain large by keeping the borrowing going or raising taxes. Second skippy – when was the last time they raised taxes?
Government spending is in the trillions yearly, next collapse will make 2008 look like a walk in the park, government dependency, gun bans are all part of the plan. Be careful what you wish for.
Flash I’ve worked in the belly of the beast (national – international), several actually, so don’t try your shtick on me.
Banks (jekyll island)? Hay just another corporation, didn’t you know.
BTW most are no better than Jefferson’s nail shack…
Skippy… anywho… their engaging in cannibalization of each other now… so grab some popcorn and enjoy!
I don’t think many of us have a choice. At least i’ve seen the light.
Those asking for more government will regret it until their days are over. I’ve got the popcorn…
“I’ve seen the light” = burning bushes + minus cognitive deficient, self inflicted imo.
The government is an ***institution*** how it is staffed, at who’s behest… is the question you should be investigating.
Skippy… Geoffrey Sachs disagrees with you.
BTW… Detroit was abandoned because of legacy issues… foremost was pollution and not unions or taxes, it was running from responsibility.
http://www.freep.com/article/20130405/NEWS05/304050136/Pollution-hazards-higher-for-Detroit-area-poor-report-finds
http://www.environmentreport.org/show.php?showID=595
Flash,
Considering the rediculousness of what you are saying, I have to guess you are a troll.I know we are not supposed to feed the trolls around here…but…
so,
the two things companies compete on is low prices and quality? Obviously not at the same time.
Walmart has some low prices, but has only done so by low quality crap.If people were to calculate how many times they have to buy the same thing(since the crap on the shelves doesn’t last for squat),it would not be considered “cheap”.If walmart had to pay the gov’t back for the services and benefits its workers pay,i.e. foodstamps,medicaid,etc.,they would have to charge more.Walmart of the post clinton era(when hillary was on the board),has benefitted from the nafta agreement, and all the gov’t sponsored handouts to business these trade deals engendered.
Or if you are talking about quality, well, I’m just at a loss,since all of these really big companies don’t provide quality.They are just existing in a landscape where there is no other option,since there is no real competition.Look at verizon,att,jpmorgan/chase.b of a/wells fargo/suntrust/etc…all these companies do the same as all the others, an no matter where you turn, “the industry” never deviates from the accepted pricing plan.and none offers better service.Any consumer is stuck with mediocrity.And those of limited intellect and observational abilities like yourself, won’t really be able to tell the difference, whereas everyone else just deals with it. But to your premise of big business, doing good…. well. WHAT a JOKE.
Flash, I would like to ask you to pull your head out of a rand novel long enough to LOOK AT THE REAL MARKET. What makes a company competitive in the REAL WORLD is its ability to distort prices, increase profits, and attract more capital. Producing a quality product at a low price would be the death-knell of any company stupid enough to attempt it.
Two examples
1) several mexican tuna companies are currently suing US tuna canneries demanding they remove the “Dolphin Safe” labels from tuna. Tuna is labeled “Dolphin Safe” because consumers demanded it be labeled such (IE they demanded higher quality fishing nets), however the Mexican companies, by denying consumers the ability to know which product is higher or lower quality, are seeking to sell lower quality (Dolphin unsafe) tuna at the price of higher quality (Dolphin safe) tuna. They (the Mexican companies) have determined that tricking consumers into buying a lower quality product for a higher quality price makes them more money then just producing a higher quality product.
2) Canadian ranchers are suing (getting a theme here?) to have labels removed from meat indicating its country of origin (another theme?) Their claim is that US consumers prefer US beef (IE consider US beef to be of higher quality) and thus they cannot charge the same price for their beef if consumers know it is not from the US. Once again we have actors in the market demanding consumers be denied information the consumers consider relevant to a purchase decision in order for the actors to charge a higher price for a lower quality (in consumers view) good.
If you start digging, this is present through out global markets. Suppliers routinely work implicitly or explicitly to deny consumers information necessary to purchasing decisions in order to sell a lower quality or less desirable product at artificially high prices.
Lets take an example from your favorite book shall we? Lets say instead of bothering to have the government seize Reirden’s recipe, Orlem Boil simply began labeling his generic steel as “Reirden steel”, lying to anyone purchasing it. Certainly this would have made him a lot of money, and if the metal failed Boil could simply lie again and blame Reirden’s formula. What could Reirden have done, without the government? He could not have sued without courts and a patent office. It was already published that his steal was defective, so Boils claim might have held up if consumers where miss-informed enough. Should anyone be allowed to violently attack anyone who they feel is distorting markets? Should we assume that not only workers but consumers are incapable of adjudicating their self interests? If only a tiny handful of people are able to decide what is in everyone’s self interest, how is that freedom? More importantly, how can a market based upon rational self interest function if 90% of people are either presumed to be incapable of being rational or are expressly denied the information necessary to act in their own interests? The only direction that can lead in is feudalism, a society where a small handful are free act and all others are forced to accept those decisions without question. Are you proposing we return to a feudal society?
Rands (and your) failure is the failure to recognize that far more money is made by distorting markets then by acceding to them. Second only to this is the failure to recognize that if all people are not free to act in their own interest, then whatever you make, it is not a free market, as individuals are being forced to buy or sell against their own interests.
link to Wenonah Hauter’s booktv interview on Foodoopoly:
http://booktv.org/Program/14159/quotFoodopoly+The+Battle+Over+the+Future+of+Food+and+Farming+in+Americaquot.aspx
Cultural Darwinism. Those who educate themselves will avoid banksters, processed and GMO food and fiat/TBTF/SIFI vulnerability. The sheeple will consume and contribute until they die off. When the corp/gov PTB realize their food source is dying off and costing them too much to maintain it will be too late to fix it.
Then it will become a more ideological struggle. Until then we “muddle through” and keep our eyes open and our mouths closed.
“(with one out of every three dollars spent on groceries in the U.S. going to Walmart)”
–Gosh, the whole country is a company town.
Does this book touch on the topic of how chemical companies treat air, ground and surface water, streams, rivers, estuaries, bays & oceans (Gulf Hypoxia) as economic free good?
If chemical companies were required to pay for clean up & restoration of polluted air, soil and water, conventional food would cost more than organic.
The cost of human heath, from farm workers to consumers is incalculable
@GeorgeK, thanks for bringing that point up, another important facet of a multi-faceted take-over of our commons.
It seems there are already more than the usual number of commenters throwing up mis-direction and other chaff. Interesting.
I’m living in a place without clean drinking water, so I drink a lot of bottled water; it’s perverse, when you think about it, especially when the water’s a Coca-Cola or Nestlé product. I look forward to drinking “Dasani classic” in 20 years’ time.
Centralization and concentration of resources are features of highly complex societies. Does it really matter as to whether it is self-appointed elite or an elite that arises from free market competition? Would left-leaning academic elites do a better job of running societies than right-leaning capitalists?
Is anyone familiar with the book, The Collapse of Complex Societies, by Joseph Tainter?
Centralization and concentration of resources are features of highly complex societies. Does it really matter as to whether it is a self-appointed elite or an elite that arises from free market competition that hold an increasing share of power? Would left-leaning academic elites do a better job of running societies than right-leaning capitalists?
Is anyone familiar with the book, The Collapse of Complex Societies, by Joseph Tainter?
I think one of the reason why some parts of Asia are doing well despite the challenges presented by civilization is that they limit complexity–they limit freedom, they limit diversity, and discourage individualism.
On the issue of consolidation. A few years ago I ahd the opportunity to ask Peter Jovanovich what he thought about the consolidation of the textbook industry. He believed it had made textbooks worse and less accurate. There is less reason to correct your textbook if the majority of classes are using them, because hey we really can’t afford to replace all these books right? And so the fewer books with contradictory content the better!
Consolidation and self governance policies were made ready for government implementation during the Bush Administration. They used Sandia labs (a consultant told me this in 2001) that they were working on some policy proposals to shrink the size of the Federal government. Self Governance was basically stating that the Feds didn’t need to monitor private businesses who contracted with the govt and this also was the time that auto-renew no-bid contracts began to be used extensively.
One reason we can’t break from these crappy policies in the private sector is becaus they have a stranglehold on the Govt policymakers. Citizens United is the last step that they needed to make sure that corporations could make all of the rules for commerce in and outside of the government.
Indeed, the Citizen United decision looms large, turbocharging the corporatists drive towards strengthening our plutocracy:
http://www.scribd.com/doc/33078217/The-Aristocracy-of-Monied-Corporations
and agriculture alternatives:
http://www.scribd.com/doc/34227688/Urban-Redevelopment-for-Agriculture
Water is a food and should be privatized, or so says Peter Brabeck, CEO of Nestlé.
quote:
“According to Nestlé CEO water is a foodstuff that should be privatized, not a human right. Nestlé CEO Peter Brabeck says that with the global population rising water is not a public right, but a resource that should be managed by businessmen.”
/unquote.
http://americanlivewire.com/nestle-ceo-says-water-is-food-that-should-be-privatized-not-a-human-right/
I’m not sure how you get your water in the house in the USA, yet in parts of europe quantities consumed are measured through an individual household meter.
The next innovation will be removing oxygen in the air, putting it in bags, and charging people to breathe.