The Height of Irony


From the New York Times:

ANKENY, Iowa — The attorney general, Eric H. Holder Jr., traveled to the heart of Midwestern farm country on Friday to declare that the Obama administration was serious about rooting out anticompetitive practices in agriculture.

I can’t figure out a single reason for the Attorney General to travel 1,029 miles, presumably out of his way, to investigate a problem whose roots grow from his home town (see image).

Further, Holder enjoys asking rhetorical questions:

“Is today’s agricultural industry suffering from a lack of free and fair competition in the marketplace? That’s the central question,” Mr. Holder said.

The answer is an obvious yes. Further, the Federal government is the institution which created and maintains this “marketplace”.

Anti-trust is a veritable black box of confusion, and the psychology of people who are “strongly pro-anti-trust” is filled with endlessly backward logic such that anything that doesn’t fit into their normative intuition of the way the world should work is, de facto, a monopoly. Because of their political and philosophical dispositions, this roles is almost always played by leftist-liberals. According to this worldview, monopoly literally exists everywhere.

  • Prices “too high”? “Monopolistic exploitation!”
  • Prices “too low”? “Price gouging!”
  • Prices exactly the same?! “Price fixing!”

A very good rule of thumb when trying to ascertain whether monopoly actually exists, or whether a version of monopoly peddled by confusion is at play, is to look at who is bringing the charge to bear. In this case, could it be consumers (which would point to the “exploitation” example above)? Looking at the inflation-adjusted percentage of income Americans spend on food each year, it is very unlikely.

Or, of course, you could just read the article to find out:

He spoke at an unusual public meeting called to discuss the concerns of some farmers and ranchers that a few large companies had come to dominate many agricultural markets, controlling the seed that farmers plant and the milk they sell and the livestock ranchers raise.

Ahh, so it’s the competitors themselves that brought the charge. That means either “price gouging” or “price fixing”. Judging by the nature of their complaint, I’m going to err on the claim (to the extent that it is a valid market outcome) being based on price gouging…which means that small farmers aren’t able to produce enough volume to compete with larger farmers for contracts in a reverse auction. This, of course, means the price is “too low” for less efficient producers. Remember, the point of economic activity isn’t to give producers something to do with their day, it’s to give consumers something to consume. Obviously consumers wouldn’t be complaining about lower prices (even though you always hear complaints about food being “expensive”).

Ironically, any accusation of anti-trust should be levied against the Federal government itself, who since at least the 1930’s, has structured subsides in ways which favor large farmers and heavily monopolistic competition. What does the Justice Department do instead? Impose costs on consumers.

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