Ocm regulatory failure 2012
- 1. Regulatory Failure C. Robert Taylor Auburn University c.robert.taylor@auburn.edu
- 2. “We meet in the midst of a nation brought to the verge of moral, political and material ruin.”
- 3. “We are not enemies to capital, but we oppose the tyranny of monopolies.” Granger, 1874
- 4. 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)
- 5. 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.”
- 6. Partial List of Regulatory Failings Permissive 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
- 7. 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 …”
- 8. USDA Chief Economist Joe Glauber‟s Testimony Senate 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
- 9. USDA Chief Economist Joe Glauber‟s Internal Memo FOIA 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.”
- 10. 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
- 11. 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
- 12. Cheap Talk about Fair Markets The word fair (or unfair) is used 13 times in the 24 page DOJ report Scorecard Cheap 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
- 13. DOJ Report on the Workshops Conclusion: “… 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?
- 14. 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
- 15. 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
- 16. Treat Symptoms or Treat the Disease? Regulatory Failure is a Symptom