Source: Steve Dittmer | AFF Sentinel
The Most Successful & Well-liked Become Targets for Leftist Politicians
So President Biden’s solution to one inflation “problem” is GM.
No, not the GM that used to stand for General Motors but during the Obama bailout became Government Motors. This time it’s GM for Government Meat.
Yes, the Biden administration wants to get into the meat business: providing capital for new meat processing plants, subsidizing inspection costs and developing “alternative markets” for beef, while beating up on existing plants, helping them get sued, turbocharging P&S Act enforcement (again) and deciding how fed cattle should be bought and sold.
More of “I’m from the government and I’m here to help.” By throwing money at things we don’t understand.
All, of course, building on their success in managing the West Coast ports, managing the pandemic, managing the southern border, handling the labor shortage in America, evacuating Afghanistan, etc. etc.
The White House had their economic chief Brian Deese attack the meat industry a few weeks ago, blaming most of the food price inflation on the meat and poultry industry. Not too shocking when you find out he formerly was at John Podesta’s Center for American Policy, advised Hillary Clinton’s campaign and Barack Obama’s campaign. No wonder he is one of Biden’s business attack dogs.
The other ominous thing about Deese and his Yale law degree is that he also is adviser to Biden on climate, conservation and energy policy.
But the administration wasn’t finished with Deese’s first attack. While deflecting blame for price increases to the big packers with one hand, it held out the left’s usual balm for any ailment -- more money. That’s regardless of whether it’s being thrown at anything that could really help or is just dollar window dressing for the economically shallow or industry ignorant.
As usual, with the lack of economic understanding or knowledge of the industry, the administration falls back on the tried and true numbers game: since there is only four big meat packers, there is no competition, they can price their product at any level they want and can pay cattle producers almost nothing in return.
President Biden sounds like a President Bullard, repeating so many of the same complaints that it is spooky.
In other words, a major packer with billions invested in plants and labor forces and decades of experience can’t possibly compete against another big packer. It’s too weak. The tendency for a major corporation is always to lay down and go away, right? After all, that’s what Ford did, and IBM and Boeing did. Right?
If big companies are so helpless, why do other companies and shareholder activists try to go after whichever is Number 1? Why would anyone want them?
Of course, because they aren’t helpless and because other companies and the activists want to be the ones using that power. Do you send a midget to fight a behemoth or do the behemoths fight each other in a fairer fight? Cowboy’s who’ve been in a fight with a 1,200-lb. horse or angry cow already know that they better have some edge or get run over.
There is that constant refrain, that misused word -- “control.” Some ag organizations, activists and outsiders with little economic understanding constantly throw that term around. Having earned a slice of market share doesn’t mean a company owns that market share. It means it has, over time, earned, maintained and improved its execution enough to keep it in what are mostly changing, challenging environments. They can manage their inputs to some extent and try to keep marketing their products and services to keep customers happy at a profit.
But control for the Big Four packers doesn’t mean they own and operate all their market share percentage of the ranches and feedyards in America, any more than Deere, Case IH and Massey Ferguson own, farm and control all the farmland in America or American and Delta own the air travel business. That’s the stuff claimed by naïve activists with no understanding of economics, business or human events.
This is not the 19th and early 20th century, when near monopolies could actually occur. We have been free of monopolies for decades -- until Google or whatever they’re calling themselves and Facebook or whatever they’re calling themselves this year, came along and managed to create near monopolies by being good at what they did in a niche no one knew existed, much less regulated.
The only long-time monopolies in between those eras of history were government-regulated monopolies, like electric, gas, water, phone and television licensing.
The Detroit automakers were an oligopoly until they lost their way and the German and Japanese auto companies saw a quality and performance gap and plowed right through. If a company thinks they “own” market share, they are ripe for takeover or being by-passed.
A big chunk of Biden’s “plan” to fix the beef industry is making money available to groups that aren’t running packing plants now to build new ones.
Next time: The Importance of Small Processors, More of Industry Reality vs. Misperception
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