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mostlysignssomeportents · 7 months

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For 40 years, Big Meat has openly colluded to rig prices

On October 7–8, I'm in Milan to keynote Wired Nextfest.

Noted socialist agitator Adam Smith once wrote, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick, or in some contrivance to raise prices."

Smith was articulating a basic truth: when an industry grows concentrated, it grows cozy. Cultural differences between dominant firms are homogenized as top executives move from company to company, cross-pollinating attitudes and approaches. Ambituous, firm-hopping workaholic top brass make all their friends at the office, and so their former colleagues from one or two jobs back remain in their social circles.

Once an industry consists of half a dozen firms, the people running those companies constitute an incestuous financial polycule. They are executors of one anothers' estates, best men and maids of honor at one anothers' weddings, godparents to each others' kids. They play on the same softball teams and take family vacations together.

It would be heartwarming if it wasn't so costly to the rest of us. Remember Smith's maxim: "the conversation ends in a conspiracy against the publick, or in some contrivance to raise prices." Class solidarity among corporate executives forms a united front to screw us in every conceivable way, from corrupting our politicians to maiming and cheating workers to gouging buyers.

That's the basis of American antitrust law. When Robert Sherman was stumping for the passage of the Sherman Act, America's first major antitrust law, he thundered "If we will not endure a King as a political power we should not endure a King over the production, transportation, and sale of the necessaries of life. If we would not submit to an emperor we should not submit to an autocrat of trade with power to prevent competition and to fix the price of any commodity":

https://pluralistic.net/2022/02/20/we-should-not-endure-a-king/

Or rather, that was the basis of American antitrust law – until the Reagan era, when the fringe theories of the Nixonite criminal Robert Bork were elevated to a new orthodoxy. Under Bork's conception of antitrust, monopolies were evidence of excellence. If a company puts all its competitors out of business, that must mean that it is "efficient."

In Bork's fantasy world, the only way a company could attain dominance is by being so beloved by its customers that every competitor withers away. Governments that bust monopolies aren't protecting the public from "autocrats of trade"; they're overthrowing the winners of an election where you "vote with your wallet" to pick the best company.

But Bork and his co-fantasists couldn't quite manage all that with a straight face. They grudgingly admitted that a certain kind of bad monopolist could hypothetically exist, one that used its "market power" to raise prices or lower quality. Only when these offenses against our "consumer welfare" occurred should the state step in to protect its people.

This may sound good in theory, but in practice, it was a dead letter. The consumer welfare test isn't as simple as "If prices go up after a merger, punish the company." Instead, the government had to prove that the price raises came from "market power," and not from an increase in energy or labor costs, or some other "exogenous factor," like Mercury being in retrograde:

https://pluralistic.net/2022/11/10/you-had-one-job/#thats-just-the-as

And wouldn't you know it, it turns out that the mathematical models prescribed to distinguish greed from unavoidable circumstance inevitably "prove" that the monopolist wasn't at fault. Surely, it's just just a coincidence that the priesthood that understood how to make and interpret these models were Chicago School Economists who sold model-making as a service to companies that wanted to raise prices.

Pro-monopoly economists insist that this isn't true, and that their theory still has room to prosecute bad monopolies and cartels where they occur – more, they say this is already happening. In particular, they insist that "greedflation" can't be real, because it would require the kind of conspiracy that Smith warned of, and that their sickly antitrust enforcement is sufficient to prevent:

https://pluralistic.net/2023/03/11/price-over-volume/#pepsi-pricing-power

This strains credulity. After all, the CEOs of giant companies in concentrated industries openly boast to their shareholders about how they've used the covid and Ukraine invasion shocks to hike prices to increase their profit margins – not just cover their additional costs:

https://pluralistic.net/2023/01/23/cant-make-an-omelet/#keep-calm-and-crack-on

While excuseflation is new, open, naked price-fixing by industry cartels is not. Take the meat-packing industry, dominated by a tiny handful of giant corporations whose executives literally ran a betting pool on how many of their workers would get covid each week while working in their cramped, unventilated factories:

https://www.bbc.com/news/world-us-canada-55009228

These companies have seen their margins soar – up 300% over the lockdown – while their payments to ranchers and growers cratered:

https://www.reuters.com/business/meat-packers-profit-margins-jumped-300-during-pandemic-white-house-economics-2021-12-10/

All this might leave one wondering whether there isn't something a little, you know, "conspiracy against the publick"-y going on in Big Meat?

Let me tell you about Agri Stats. Agri Stats has been around since 1985. Every large meat packer pays to be a "member" of Agri Stats, and they each submit weekly, detailed statistics about every aspect of their business: all their costs, all their margins, broken out by category. Agri Stats compiles this into phone-book-thick books that each member gets every week, telling them everything about how all of their competitors are running their businesses:

https://www.agristats.com/history

The companies whose data appears in this book are anonymized, but it's trivial to re-identify each supplier. Tyson execs hold regular "naming process" meetings where they go through new books and de-anonymize the data. A Butterball exec confirmed that he "can pick the companies for rankings with 100% certainty."

As David Dayen writes in The American Prospect, these books are incredibly detailed: "bird weights, freezer inventory, and 'head killed per operating hour.'" Within the cozy meat cartels, Agri Stats acts as a clearinghouse that allows every business in the industry to act in concert, running the entire meat-packing sector as a single company:

https://prospect.org/power/2023-10-03-lawsuit-highlights-why-meat-overpriced/

As interesting as the list of Agri Stats members is, the groups that don't get to see Agri Stats' "books" is just as important: "farmers, workers, or retailers." Agri Stats also offers consulting services to its members. As an exec at pork processor Smithfield put it, Agri Stats advice boils down to four words "Just raise your price."

Agri Stats ranks its members based on how high their prices are – they literally publish a league table with the highest prices at the top. Meat packers pay bonuses to their execs based on how high the company's rank is on that table. Agri Stats meets with its members throughout the year to discuss "price opportunities" and to advise them to "exercise restraint" by restricting supply to keep prices up. When one Agri Stats member considered leaving the cartel, Agri Stats wooed them back by telling them how to make an additional $100k by raising bacon prices.

The reason Dayen is writing about Agri Stats now is that the DoJ Antitrust Division has brought an antitrust suit against them. This is part of a wave of antitrust actions brought by Biden's DoJ and FTC, who, along with his NLRB, are shaping up to be the most pugnacious, public-interest force against corporate power since the Reagan administration:

https://www.meatpoultry.com/articles/29124-doj-sues-agri-stats-for-complicity-in-meat-market-manipulation

All this enforcement isn't a coincidence. It comes from an explicit rejection of neoliberalism's core tenets: inequality reflects merit, monopolies are efficient, and government can't do anything. In Biden's DoJ, FTC and NLRB, they're partying like it's 1979:

https://www.eff.org/deeplinks/2021/08/party-its-1979-og-antitrust-back-baby

What's amazing about the Agri Stats conspiracy to raise prices is that it's been going since the Reagan administration. It's a smoking gun proof that "consumer welfare" never cared about price-fixing and robbing the public (can a gun still smoke after 40 years?). There was never a time when consumer welfare antitrust cared about consumer welfare. It was always and forever a front for "a conspiracy against the publick," a "contrivance to raise prices."

Big Meat has been robbing America for two generations. Some of those stolen funds were used to corrupt our political process. The meat sector gets $50 billion in public subsidies and still gouges us on prices and rips off its suppliers:

https://www.ewg.org/news-insights/news/2022/02/usda-livestock-subsidies-near-50-billion-ewg-analysis-finds

Which means that it's possible that we're simultaneously being ripped off with meat prices and that meat prices are artificially low. Try and wrap your head around that one!

The do-nothing, pro-monopoly neoliberal antitrust is a virus that spread around the world. The EU's antitrust laws were reshaped to mirror American laws after the war through the Marshall Plan, but since the late 1970s, European lawmakers and enforcers have ignored their own laws (just like their American counterparts) and encouraged monopolies as "efficient."

This Made-in-Europe oligopoly, combined with energy and grain shocks from Russian invasion of Ukraine, created the perfect storm for European greedflation. As food prices spiked across the EU, Austrian hacktivist Mario Zechner set out to investigate Austrian grocers' pricing. Using the grocers' own APIs, he was able to compile and analyze a dataset of prices at Austrian grocers:

https://www.wired.com/story/heisse-preise-food-prices/

When Zechner open-sourced his project, collaborators showed up to expand the project across other EU countries, and an anonymous party donated a huge database of prices stretching back to 2017. The data reveals clear collusion among the grocers, who raise prices in near-lockstep, and use gimmicks like cyclic price drops to hide their collusion:

https://github.com/badlogic/heissepreise

Not every grocer has an API, and even the ones that do have APIs could easily block Zechner and co from accessing their data. When that happens, they could – and should – turn to scraping to continue their project. They should also scrape grocers elsewhere, including in Canada, where grocers rigged the price of bread:

https://pluralistic.net/2023/09/25/deep-scrape/#steering-with-the-windshield-wipers

Because Big Meat's "conspiracy against the publick" isn't unique to meat. It's in all our food, it's in all our goods, it's in all our services. The fact that the meat industry was able to rob American buyers, ranchers and farmers for two generations under a 200' tall neon sign that blinked "AGRI STATS AGRI STATS AGRI STATS" night and day is frankly astonishing.

But there's never just one ant. If the meatheads running Big Meat were able to do this in broad daylight since the NES years, imagine what all the other industries were able to get up to in the shadows.

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2023/10/04/dont-let-your-meat-loaf/#meaty-beaty-big-and-bouncy

My next novel is The Lost Cause, a hopeful novel of the climate emergency. Amazon won't sell the audiobook, so I made my own and I'm pre-selling it on Kickstarter!

#pluralistic #meat #monoopoly #price fixing #antitrust #austria #mario zechner #scraping #adversarial interoperability #greedflation #price inflation #market power #david dayen #agri stats #meat packers

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inkstaindusk · 5 months

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i got too excited about your short mention of a potential rinniki snippet with 51 so if you don't mind writing for additional prompts, could i request 51 with rinne and niki? (also, very intrigued by the rinne and aira snippet you wrote for 4! i'm so curious about it)

Yeah no problem, I just thought the dialogue would fit them lol And thank you, I had fun writing the Rinne and Aira prompt! I think they should be forced to interact more 51. “If we die, I’m going to spend the rest of our afterlife reminding you that this was all your fault.” “That’s cool, I wouldn’t mind having company while being a ghost.” send me prompts!

Niki always knew that someday someone would send people to get rid of Rinne once and for all. He just hadn’t expected to be there when it happened. Or that Rinne would stick them in a closet while hiding from the angry—gangsters? He’s not really sure. He didn’t get a good look before he was grabbed and forced to run.

The closet isn’t very comfortable. It’s narrow as is, made tighter by the shelf shoving itself into Niki’s back. Then there’s Rinne, who’s doing an impressive job of not touching Niki too closely in an impressive show of self-control. Despite that, he’s still very close. Niki is used to being close to Rinne, but not when forced by a compact room and people out to kill them.

“I can’t believe you made me an accomplice,” Niki huffs, squirming to get just a little more comfortable. It doesn’t work. This may be as good as it’s going to get. “I should just open this door and let them get you. Maybe they’ll let me off easy.”

“You’d do that to your own fiancé?” Rinne gasps. This is usually the part where he’d put his hand over his heart, but the hand is already technically there, arm smushed in between their chests.

“Since when were we engaged?!”

“Well, you never said no.”

“I never said yes either!”

A few shouts sound from outside, muffled enough to know they’re distant but still too close for comfort.

“Who even are these guys?” he asks, squinting at the door. There’s a light overhead, but for the sake of being inconspicuous, it’s switched off—not that there’s anything to see in here other than each other and various cleaning supplies. It takes him a second to realize the door locks from the inside and he’s relieved that Rinne seemed to have taken care of that already. He won’t tell him that though. No need to give him any real credit for a situation he put them in.

Rinne tilts his head in thought. “You know, I’m not really sure?”

Niki should have left him on that street all those years ago.

The shouts get louder and they both freeze. They don’t stop getting louder, becoming gradually clearer until it’s obvious that they’re basically right outside. Someone begins swearing. Niki holds his breath as he hears loud thumps and bangs, all way too close to the door, and then the doorknob begins to jiggle.

Niki hopelessly tries to think of how to get out of this alive, but it’s no use. He’s stuck.

“If we die,” he hisses as the shaking gets more aggressive, “I’m going to spend the rest of our afterlife reminding you that this is all your fault.”

“That’s cool, I wouldn’t mind having company while being a ghost,” Rinne responds automatically. His other arm—the one not stuck between them—has already slipped around to Niki’s waist, ready to pull him if needed.

The door opens.

Niki squints as the light enters the closet and blinks until his eyes adjust. Instead of a group of people ready to kill them, Kohaku stands on the other side, staring at them with an unimpressed scowl.

“What the hell are you two doing?”

(Note: When Rinne and Niki look past Kohaku’s shoulder, they see a bunch of unconscious bodies. Also, Kohaku totally picked that lock.)

#enstars #rinniki #rinne amagi #niki shiina #enstars lb #drabbles #amagi rinne #shiina niki #anya tries to write #asks #agried #prompt answers

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