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Regulatory Failure    C. Robert Taylor    Auburn University    c.robert.taylor@auburn.edu
“We meet in the midst of anation brought to the verge  of moral, political and      material ruin.”
“We are not enemies tocapital, but we oppose the tyranny of monopolies.”         Granger, 1874
Farmers‟ Revolt led to Antitrust RegulationsSherman Antitrust Act in 1890Clayton Act in 1914Court ordered divestiture of m...
Evolution of Antitrust LawOriginal intent was “Free and Fair Competition”Courts decided that “fair” was difficult to defin...
Partial List of Regulatory           FailingsPermissive merger approval process since 1980 ledto   Too Big To Fail   Too B...
FOIA documents obtained by OCMgive Insight into Regulatory Failure  “The two comments used extensively for the  cost-benef...
USDA Chief Economist Joe           Glauber‟s           Testimony   Senate Ag Committee Hearing 6/28/2011   In implicit ref...
USDA Chief Economist Joe          Glauber‟s       Internal MemoFOIA document dated a week after hisCongressional Testimony...
FOIA DocsGlauber: “Informa data … is likelyskewed toward higher costs anddoes not reflect the benefits or costsin other se...
Competition Workshops:Cheap Talk about Fair Markets May 2012 Report by DOJ summarizing the Workshops   “The purpose of the...
Cheap Talk about Fair Markets The word fair (or unfair) is used 13 times in the 24 page DOJ report Scorecard    Cheap Talk...
DOJ Report on the       WorkshopsConclusion: “… we are better positioned to lendour expertise … to promote „free and fairc...
USDA/DOJ/FTCCan they do anything?   Greatly limited by     Too Big to Prosecute     „Cubicle arrest‟ of government investi...
Regulatory FailureFailure is not necessarily due to failure ofregulatorsFailure is often due to corporate control ofgovern...
Treat Symptoms         orTreat the Disease?  Regulatory Failure is a        Symptom
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Ocm regulatory failure 2012

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Ocm regulatory failure 2012

  1. 1. Regulatory Failure C. Robert Taylor Auburn University c.robert.taylor@auburn.edu
  2. 2. “We meet in the midst of anation brought to the verge of moral, political and material ruin.”
  3. 3. “We are not enemies tocapital, but we oppose the tyranny of monopolies.” Granger, 1874
  4. 4. Farmers‟ Revolt led to Antitrust RegulationsSherman Antitrust Act in 1890Clayton Act in 1914Court ordered divestiture of meat packer cartel in1920Packers & Stockyards Act of 1921Capper-Volstead Act of 1922 (giving ag coopslimited exception to antitrust law)
  5. 5. Evolution of Antitrust LawOriginal intent was “Free and Fair Competition”Courts decided that “fair” was difficult to defineMeaning of free competition evolved from the notionthat competition requires many buyers and manysellers to “anything goes,” greed is good, anddominance of a “free market” ideologyCase law evolved from the Populist view of free andfair competition to Judge Posner‟s (Chicago School)view that “the only goal of antitrust law should beto promote efficiency in the economic sense.”
  6. 6. Partial List of Regulatory FailingsPermissive merger approval process since 1980 ledto Too Big To Fail Too Big To Prosecute Too Big To Breakup?Government economists‟ reliance on studies byEconomic Hit Men—revealed in FOIA documentsobtained by OCMCompetition Workshops: Cheap talk about “fair”marketsLegislative Thuggery—defunding or threatening todefund Implementation of regs Competition investigations by USDA/DOJ/FTC
  7. 7. FOIA documents obtained by OCMgive 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. 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. 9. USDA Chief Economist Joe Glauber‟s Internal MemoFOIA document dated a week after hisCongressional Testimony …Glauber: “Draft CBA (cost-benefit analysis) readsmore like a summary of comments than a costbenefit analysis where each of the economicinputs (Informa and RTI) should be scrutinizedand adjusted. Accepting both studies w/o suchscrutiny is problematic and misleading.”“Even the discussion of the GAO study givesshort shrift to the studies that foundcompetitive harm and emphasized those thatshowed there was not competitive harm.”
  10. 10. FOIA DocsGlauber: “Informa data … is likelyskewed toward higher costs anddoes not reflect the benefits or costsin other segments of the industry?”Yet numerous FOIA documentsshow government economists‟reliance on the Informa study
  11. 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. 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. 13. DOJ Report on the WorkshopsConclusion: “… we are better positioned to lendour expertise … to promote „free and faircompetition‟ in agriculture”Report demonstrates that DOJ now understands-- maybe for the first time in history--thesubtle, complex competition issues in agricultureBut will they do anything?Can they do anything?
  14. 14. USDA/DOJ/FTCCan 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. 15. Regulatory FailureFailure is not necessarily due to failure ofregulatorsFailure is often due to corporate control ofgovernment 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. 16. Treat Symptoms orTreat the Disease? Regulatory Failure is a Symptom

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