« Msilitnacrem | Main | Boudreaux on Law and Legislation and Liberty» Russell Roberts
December 10, 2006
Milking Us
Don Boudreaux
For all those who imagine government to be a caring promoter of the public interest -- an agency motivated chiefly by the desire to do what's right and best for citizens -- an institution above the greedy money-grabbing of business people -- a venue in which philosophically and scientifically engaged adults discuss and debate the nature of the good society and act with due diligence to be good stewards of the power that they possess over the rest of us -- an organization that can be trusted with the authority to engineer us to ever-greater heights of happiness and security and nobleness, this report from today's Washington Post will help to dispel such delusions.
Here's the crux:
In the summer of 2003, shoppers in Southern California began getting a break on the price of milk.
A maverick dairyman named Hein Hettinga started bottling his own milk and selling it for as much as 20 cents a gallon less than the competition, exercising his right to work outside the rigid system that has controlled U.S. milk production for almost 70 years. Soon the effects were rippling through the state, helping to hold down retail prices at supermarkets and warehouse stores.
That was when a coalition of giant milk companies and dairies, along with their congressional allies, decided to crush Hettinga's initiative. For three years, the milk lobby spent millions of dollars on lobbying and campaign contributions and made deals with lawmakers, including incoming Senate Majority Leader Harry M. Reid (D-Nev.).
Last March, Congress passed a law reshaping the Western milk market and essentially ending Hettinga's experiment -- all without a single congressional hearing.
"They wanted to make sure there would be no more Heins," said Mary Keough Ledman, a dairy economist who observed the battle.
Hettinga, who ran a big business and was no political innocent, fought back with his own lobbyists and alliances with lawmakers. But he found he was no match for the dairy lobby.
"I had an awakening," the 64-year-old Dutch-born dairyman said. "It's not totally free enterprise in the United States."
Indeed not. But, everything is relative. The U.S. is not the Soviet Union, or even France. Still, we Americans should be aware of the venality, the meanness, the duplicity, and the downright vilenss of the pompous power-hungry pols who specialize in being elected to Congress.
Posted by Don Boudreaux in Politics, Regulation | Permalink
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Comments
And the big business interests who pay those politicians?
Posted by: Robert Bell | Dec 10, 2006 11:00:37 AM
"And the big business interests who pay those politicians?"
The politicians are supposed to be the voice of the people not of big businesses that collude to crush competition and innovation.
A majority of politicians are ignorant in economics and morally bankrupt.
Posted by: Grzesiek | Dec 10, 2006 11:11:33 AM
"And the big business interests who pay those politicians?"
If the politicians didn't have the power to crush us like bugs, big business' influence wouldn't matter. Just leave me (and everyone else) alone to live our lives in peace. Why is that so hard?
Posted by: Adam | Dec 10, 2006 11:43:59 AM
Adam, is it not so hard to see that even someone as well read and independent as yourself needs protection from yourself so that you'll make 'wise', 'guided' 'choices'?
Sheesh, your best interests are being looked after and yet you're taking the arrangement for granted, totally...Gift Horse, meet Mouth; Mouth, this is Gift Horse.
Posted by: Lowcountryjoe | Dec 10, 2006 12:07:25 PM
wonderful!
Posted by: Kmele | Dec 10, 2006 2:07:39 PM
You amaze me! You loathe the venal pols, yet you give a free pass to the loathsome, greedy corporations who really control the government. That is a one-sided and naive viewpoint. You are right, the ones getting milked are the consumer and the maverick business people who try to buck the system. But that Dutchman is no saint; he was using the same venal approach - using lobbyists, etc. - to influence politians for his own financial gain. And he has the gall to lament the lack of a truly free market system. Yes, how truly naive and nervy.
I'm of the view that no child should be deprived of a glass of milk with his or her breakfast. It's loaded with healthy calcium and vitamin D for strong bones, or is that just milk-industry advertising hype? Government should provide the wholesome milk for free to those poor families that can't afford it. Surely, you must agree with me on that basic provision.
Posted by: Trumpit | Dec 10, 2006 6:13:12 PM
And cereal, orange juice, and toast to make it complete – just part of a health, nutritious breakfast. Why stop there, though…I want them to have Poptarts and Eggos too. In fact, I want WIC vouchers that will pay the rent, put gas in cars, offset the cost of a cellular phone plan; everything! Well, everything but pay for a K through 12 education: we cannot do that.
Posted by: lowcountryjoe | Dec 10, 2006 7:40:39 PM
Trumpit's proposal that the government pour milk into children is obviously a racist attack on those minorities prone to lactose intolerance.
Posted by: triticale | Dec 10, 2006 7:54:21 PM
Two of capitalism's depressing faults are:
* The majority can and usually always wins at the expense of the minority.
* Cartel monopolies are formed and our politicians rely on their funding. We have returned to the world of Big Bosses in our governments.
Posted by: Super Mike | Dec 10, 2006 8:14:47 PM
How much do you wanna bet that we would have been hearing a lot of whining if the story had gone as follows:
"Today California senators destroyed a 70-year-old Dairy Association which serves as a market advocate for milk producers."
I bet there'd be all sorts of carping and hollering about how "politicians will be the death of us all". While I agree that an honest politician is an oxymoron, I'd really appreciate a bit less shocked hyperbole when it comes to these kind of "big business=good, politicians=bad" kind of stories.
IMHO, in the example presented, both the government and the businesses are rotten. All of them.
Posted by: faultolerant | Dec 10, 2006 8:34:19 PM
It could just be that:
* the minority feel that the value of the goods or services brought by them to the market place are not as highly sought after -- and, therefore, priced lower -- as the minority hope/wish/demand them to be.
* the cartel monopolies wouldn't lobby politicians if those same politicians lacked the powers to tax their constituients so heavily and effectively create winners and losers -- through legislation -- within the so-called 'capitalist' system. 'So-called' because today's economic system is somewhere between a quasi laissez-faire and a centrally planned economy. Today's businesses are foolish if they are not spending money to curry favors from politicians that will stiffle competition and lessen their tax burdens. Even if a business believes that its after tax, net profit will rise by a single penny because of an expendature it is considering giving to politician, it will be a sound investment. So, the real fault lies in the fact that the American people have bestowed so much power to government (particularly at the federal levl), that even Alexander Hamilton has to be rolling over in his grave.
Posted by: lowcountryjoe | Dec 10, 2006 8:47:21 PM
Super Mike,
Replace "capitalism" with "democracy" in your comment and I completely agree with you.
Posted by: Gooner | Dec 10, 2006 8:48:46 PM
I bet there'd be all sorts of carping and hollering about how "politicians will be the death of us all". While I agree that an honest politician is an oxymoron, I'd really appreciate a bit less shocked hyperbole when it comes to these kind of "big business=good, politicians=bad" kind of stories.
You bet they'd be hollering, carping, and even howling. For private afairs=good, government interfering in afairs which should be decided by the market place=generally bad. If property rights are adhered to and and no direct injury is caused in the market place, the government has not business in deciding outcomes such as these. Have you not picking up on what the principled views of classical liberalism means yet?
Posted by: lowcountryjoe | Dec 10, 2006 8:59:14 PM
The absolute best line in that article is the last one. "This is still a great country. In Mexico they would have simply shot me."
Posted by: asg | Dec 10, 2006 10:50:00 PM
Businesses don't want a free market with perfect competition, because in such a market there is little profit.
Profit happens when there is not a free market. When there is a cartel, and barriers to entry prevent competition from outside of the cartel.
Politicians want to get elected.
Neither the businesses nor the politicians seem to care about the geater good, just their own greedy interests.
Posted by: Half Sigma | Dec 10, 2006 11:35:08 PM
In his documentary "Free to Choose," Milton Friedman is particularly good at not taking shots at anyone within the system he was criticizing. Welfare recipients, for example, were only doing what was in their best interest by not working. Back in the HEW system of 1980, welfare recipients were penalized for taking a job to the point where that job would actually make less money then the welfare payments.
In that same manner, I don't hate big business or politicians for the cartels they engage in. Nobody here, not a single one, would turn down getting 20 dollars at the cost of 5 dollars. The problem is not the business man seeking his own interests by paying a little in campaign contributions for a lot of profits. It's not even the politician who gains more votes than he loses by passing such legislation for campaign contributions.
The problem lies squarely with the system of governance, and the American people which elect such a system. American people need to realize that government will anywhere and everywhere become a disease of corruption, cartels and inefficiency and that we should only tolerate government when an overwhelming market failure happens that outweighs those costs.
Posted by: Matthew | Dec 11, 2006 12:54:51 AM
"For all those who imagine government to be a caring promoter of the public interest -- an agency motivated chiefly by the desire to do what's right and best for citizens ..."
What naive morons ever thought that?
"Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master." (George Washington, 1732 - 1799)
Posted by: Conrad | Dec 11, 2006 1:36:58 AM
I wonder what The Pompous will do after this:
http://djomama.blogspot.com/2006/12/first-world-government-junk-bonds-on.html
I expect that after that Fat Lady has sung, we'll find out what real markets are all about.
Posted by: jomama | Dec 11, 2006 9:13:40 AM
Half Sigma is Half Right.
"Politicians want to get elected.
Neither the businesses nor the politicians seem to care about the g(r)eater good, just their own greedy interests" is certainly true; they see it as self-preservation, looking out for Number One.
BUT
"Businesses don't want a free market with perfect competition, because in such a market there is little profit.
Profit happens when there is not a free market."
... is twisting the facts a bit. Profit happens when you create the product (or service) that appeals to a customer base, priced mithin reach, and produced at a low cost. Many or most businesses do well without government-created monopoly.
Posted by: True_Liberal | Dec 11, 2006 9:38:41 AM
"Profit happens when you create the product (or service) that appeals to a customer base, priced mithin reach, and produced at a low cost. Many or most businesses do well without government-created monopoly."
Without government enforcing intellectual property rights, every other business would just do the same thing and profits would quickly go away.
So the goal of every company is to work within the system to find its own monopoly.
Posted by: Half Sigma | Dec 11, 2006 11:45:42 AM
Half Sigma,
I think the goal of innovators is to make their profits in the early stages of the business cycle, then hang on as long as possible with market share in the later stages, while applying the profits to some new profitable innovation. But many a business exists just to grind out a small profit in the latter stages of the business cycle. Not a lot of intellectual property concerns in a chinese restaurant, for example, but a whole lot of families are living off the income from such establishments.
Posted by: Randy | Dec 11, 2006 12:27:19 PM
We're having a similar situation with the Canada Wheat Board, which is fond of jailing farmers who don't subscribe to their monopolist behaviour.
Posted by: doolz | Dec 11, 2006 1:00:05 PM
Randy, there is also the marketing way to establishing dominance. Only Apple can make an iPod, even though Sony has a device that's just as good as the iPod, but the Apple owns the iPod trademark.
In any even, we see the goal of all businesses to have products that its competitors deon't have. The power of the monopoly depends on the extent to which people accept substitutes. Apple can't really double the price of the iPod becuase Sony and other companies' substitutes are too close. But Microsoft can charge huge money for Microsoft Office because using the substitute imposes large switching costs.
Posted by: Half Sigma | Dec 11, 2006 1:10:04 PM
Free market advocates such as the proprieters of this site are not advocates for business or politicians. Market advocates only stand up for the market and free competion. As Milton Friedman said "Many a capitalist is hardly a fan of free enterprise." Only "Free" markets can protect us from the greed of corporate bosses and politicans. Democraticaly elected leaders who enact laws to grant favors to certain business interests are still the big problem here. Its doesnt matter about the ethics of business men so long as the government does not have the power to intervene in markets. Free markets are what make businesses do good things for, us not governments and their regulators.
Posted by: John Pertz | Dec 11, 2006 1:51:41 PM
Without government interference, businesses would work towards the sole goal of creating monopolies and cartels so they can make profits without having to worry about pesky competitors.
Without government to protect property rights, I doubt the U.S. would have become the most powerful economy in the world. We would be like Somalia.
We need government to keep markets free but not to create cartels and monoplies in exchange for campaign contributions.
Posted by: Half Sigma | Dec 11, 2006 4:37:46 PM
Half Sigma,
Just how “free” is a government regulated market?
The profits of monopolies and cartels in a FREE market (absent any government regulations or prodding), send an important signal to potential competitors - do this – get rich. This post demonstrates that principle nicely. What significant power to coerce do monopolies and cartels really poses absent the meddlesome pen of some policy maker? (not asking rhetorically)
Posted by: Kmele | Dec 11, 2006 5:23:50 PM
Half Sigma said:
"Without government interference, businesses would work towards the sole goal of creating monopolies and cartels so they can make profits without having to worry about pesky competitors."
Please take the time to read the Marxist historian Gabriel Kolko's book "The Triumph of Conservatism." In the book he offers a tremendous amount of evidence of a contrarian thesis to your point of view, which is that the government is nothing more than a tool for industry rationalization. Kolko uses the term "political capitalism" to describe the corporate influence of the government during the so called "progresive" era begining with Teddy Roosevelt. The begining of the book is an expose of the incredible amount of competition that existed in all of America's major industries before the government began its period of corporate governance. Competiton or the anarchy of the free market system is the worst form of conditions for corporations. Therefore the progresive era was nothing more than an era of conservative rule where corporations used the congress and the executive branch to have legislation enacted in their favor in order to stave off fierce competiton from their competitors. In my view, the extreme religous view that many on the left and right hold that the government is a check against corporate greed and power is extemely childish and there is no real evidence to support such a foolish claim.
Posted by: John Pertz | Dec 11, 2006 6:08:41 PM
I had a Marxist instructor in graduate school who delighted in pointing out that businesses were the first ones to usually go to the government asking for protection or relief. He was quite surprised when I agreed. I informed him that free market capitalism means that the government does not intervene in any way pro or anti business.
The hypocracy of corporate capitalism is pervasive. From the steel industry whining about unfair competition, to the plight of the airlines and US auto manufacturers, all of whom are protected in some form by quotas, tariffs, or some other regulation, designed to " level the playing field".
Posted by: desanto | Dec 13, 2006 2:19:03 PM
Any chance Mr. Hettinga will go to court and prevail?
Posted by: Kent Gatewood | Dec 13, 2006 3:51:27 PM
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