Oct 15, 2021Liked by Matt Stoller

This is what we get when a certain cult of economics coincides with the interests of plutocrats. In fact there are two cults arising from the same source: belief in 19th century equilibrium economics.

The first cult is the Austrian/libertarians. The second and more dangerous one is the neoclassical/New Keynesians whose roots are in Jevons, Walras, and Menger. They're more dangerous because they control most of the elite university economics departments and the Fed is lousy with them.

Man, I hate neoclassical economics so much. It is all utopian horseshit and the infuriating irony is how much they like to talk about "free enterprise" and "markets", when they are all university academics who have never had to make a payroll in their entire fucking lives. They don't know shit about business.

And their Austrian/libertarian cousins are worse. They worship "the Businessman" but their godfathers von Mises and Hayek never started a business, never hired an employee, never made a payroll, never competed in the marketplace and spent their entire professional lives scrounging for sinecures and professorships, getting paid to talk about business while never actually fucking DOING business.

They were like pre-Copernican astronomers refusing to learn Kepler's Laws of Planetary Motion. When you reframe their ideas—neoclassicals, Austrians, and libertarians alike—you realize THEY are the utopian idealists.

They accuse Keynesians and socialists as being unrealistic idealists but in fact it's their irrational belief in equilibrium that prevents them from seeing the world as it really is. They WANT equilibrium economics to be real because the theory is supposedly elegant but in fact it's just wrong, like Ptolemy's geocentric model of the solar system.

Consider this: https://www.nytimes.com/2021/10/01/upshot/inflation-economy-analysis.html

An economist at the fed, in 27 pages, basically says, "What we thought was true because our Monetarist blinders told us it was true, is in fact wrong, and our models can't predict fuck all."

And thirteen or so years ago fraudster Greenspan actually admitted his ideas about unregulated corporate officers behaving rationally and protecting shareholders were wrong. So there you have it: a neoclassical cleric (a Fed economist) and America's Grand Libertarian Fool both admitting what they believe is bullshit.

But because their bullshit implicitly condones monopoly they'll get cultivated, funded, and appointed at all the right places. And not one of these motherfuckers predicted what happened in 2008, despite their DSGE models. Consider a Bernanke speech from May 2007 (https://www.federalreserve.gov/newsevents/speech/bernanke20070517a.htm). He says at one point:

"All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system." Uh, say what, now? Fool.

And a few months earlier (https://fraser.stlouisfed.org/title/statements-speeches-ben-s-bernanke-453/long-term-fiscal-challenges-economy-8955) he demonstrates conclusively that he doesn't actually know how our financial system works, how the Treasury pays for things, and what "deficits" really are.

But guess who did see 2008 coming? Institutionalists, heterodox economists, MMT economists (in particular Steve Keen), and a few actual traders in the markets.

We should never, never, never, never listen to any neoclassicals or libertarian economists about anything. Bernanke, Greenspan, Summers, Mankiw, the fools at Mercatus Center, CATO-Heritage-AEI charlatans...the lot of them.

Imagine if Apollo 11's orbits and trajectories had been calculated by Ptolemaic or Copernican astronomers/mathematicians.

Well, that's what is hegemonic in American university economics departments and the Fed.

I really do despise neoclassical economics.

Fuck, lunch is over. Back to work.

Expand full comment

I looked up the economist mentioned in the article, Koontz. His 1991 Ph.D. dissertation is titled "Meatpacker Conduct, Oligopsony Power, and Live Cattle Price Dynamics". https://webdoc.agsci.colostate.edu/cv/srkoontz.pdf

Note the word "oligopsony." If you're familiar with Stoller's work you know what it means. If not, note it is analogous to an oligopoly. So you have the dichotomy monopoly-oligopoly vs. monopsony-oligopsony.

A monopsony is when you have a single buyer for a product, or when one buyer has effective control by being the largest buyer. The meaning of "oligopsony" follows from that.

In other words, this asshole has known since at least 1991 the problems a monopsony will create for producers (the ranchers)...but he doesn't fucking care because he is bamboozled by the efficiency fairy (or he gets consulting fees).

The explanation is probably superfluous in this newsletter's comments, but just in case.

But wait, there's more. One of his dissertation advisors is Michael A. Hudson, who wrote this https://legacy.farmdoc.illinois.edu/irwin/archive/books/Futures-Regulatory/Futures-Regulatory_chapter6.pdf in 1985

which was funded by...you guessed it...the American Enterprise Institute.

Koontz's dissertation is even cited as a source for a 1990 Senate subcommittee hearing titled Economic Concentration in the Meatpacking Industry. https://books.google.ca/books?id=u0DrSMR3bm4C&pg=PA145&lpg=PA145&dq=Stephen+R.+Koontz+university+of+illinois+ph.d.&source=bl&ots=y3Uc_qF5dd&sig=ACfU3U2s41u1yaDTy__efBMuHglV9is3qw&hl=en&sa=X&ved=2ahUKEwio9KD9sc3zAhWSm-AKHZlrAs8Q6AF6BAgQEAM#v=onepage&q=Stephen%20R.%20Koontz%20university%20of%20illinois%20ph.d.&f=false

You can't make this shit up.

These neoclassicals and libertarians KNOW their cult produces monopoly and monopsony, but they don't fucking care because none of them actually run businesses. They get paid by think tanks and universities.

They are all frauds. All of them.

Expand full comment
Oct 15, 2021Liked by Matt Stoller

Thanks for this. It's not just about monopoly pricing, it's about the threat industrial ag represents to the health of the land, the animals and ourselves when smaller, more innovative and flexible farmers are forced out of business. Not to mention that, though ranchers can't afford to be sentimental, downright cruelty is a feature of suits farming by spreadsheet.

Expand full comment
Oct 15, 2021Liked by Matt Stoller

It has been clear for decades that economists are nothing more than shills.

Economics, as is practiced by the leading economists, is neither science nor credible.

Expand full comment
Oct 15, 2021Liked by Matt Stoller

Terrific piece, Matt. Thanks for tackling both ag monopolization and economists, both of whom I've been trying to bring down a few notches for years! Anthony

Expand full comment
Oct 15, 2021Liked by Matt Stoller

Having seen 'Inside Job' I've been distrustful of all economists working at policy levels, and this article supports my skepticism. I'd be curious to see how the $$$ got moved around at the University level that bought these guys off.

I have to commend them though. They built in those escape hatches within the footnotes you quoted which pretty much maintains their patina of credibility, but at the same time gave the packers and more importantly the politicians enough in the body of their work to point to that justifies this disgusting setup.

It reminds me of that opinion rendered by the Intel community over the Hunter Biden laptop. The authors said 'we don't know if we're right, but this 'could' be a Russian op' and that was enough for Legacy Media to shelve the issue.

As a kid back in the day we'd call BS b/c they're talking out of both sides of their mouths.

I'd love to see the grant monies paid to these economic 'scientists' in the back room. I'll put $$ down that you'll see the same dynamic that was uncovered in 'Inside Job'.

Lastly, when I was an undergrad, we used to laugh at the Sociologists, Economists and Psychologists. All three disciplines suffered from 'Science Envy'. They all wanted to be held in as high esteem as the 'Hard' sciences (Chem/Phys/Math/Bio and the mother of all Eng).

Despite the Nobels, for Econ, it's not.

The so called 'soft' sciences are more schools of Philosophy than 'science'.

And look how actual science has degraded over the last year and a half. Hard questions being avoided or misrepresented (see Rogan) is but one example.

Expand full comment
Oct 25, 2021Liked by Matt Stoller

The collusion between the packers is even worse than indicated in this Article. If you want to see it in action all you need to do is attend any Cattle Auction (Cash Market) and watch what happens. Not only are the "Buyers" in collusion w hand signals, nods, and breakfast conversations but the Owners of the Auction Houses are often involved as well. They all know each other and seem to key off the moves of the other buyers and Auction house owners. I have been buying and selling my own cattle for years and have been literally robbed by this collusion on several occasions. Its a scandal and these monopolies and systems of collusion need to be broken up and reformed. If not the American Rancher, folks invested in maintaining the environment and quality, will be exterminated and all the beef you get will be from the Cruel, anti-natural, chemical laden industry that is BIG BEEF

Expand full comment

I'm sending this on to a rancher who has a significant EeewTube following on his well-versed and agri-socioeconomics-oriented channel, 'Yanasa TV.' And who fell under the Reagan mythos/spell. (Swelling music, flags a'fluttering, rich-getting-richer, uh-huh.) He seems fairly bright, (he is) and like so many Americans, just needs to get out more. (That's an inside/outside joke, he does most of his vids outdoors accompanied by an obnoxious rooster much of the time.)


And no, this is NOT an endorsement of ANY Presidents or their significant wanna-be opposites who lost in the years following R.R.

Expand full comment


Expand full comment

Matt will find that the Koch brothers started moving into the university economic's departments while the government withdrew funds. I live two blocks from a university where all the business departments have the names of the local oligarchs. The board is loaded by Republicans and they're part of the "state policy networks" and ALEC, etc. David mentioned Austrian economics--which also fits well with the Ayn Rand cult in Washington. ;)

It's all connected with the dark money network of the Koch's.

Expand full comment

My uncle is a cattle rancher, my cousin is a brand inspector, and I used to do cowboy work back in the day. Thank you for your reporting. I will be sure to share this with them.

Expand full comment

I guess all those articles proclaiming the death of Economics were wrong or premature. The Grey Lady deserves to die; Economics never was a 'science' and the sooner we get wise to that, the better for reality to rule our thinking.

Expand full comment

Read a history book. When the time comes, it will be easier to nationalize a monopoly than thousands of family businesses.

Expand full comment

The cattle prices crash chart end in Nov-2020.... is there a more updated one that shows the most recent gap trends?

Expand full comment

You mentioned the barriers to starting a processing facility. But you seemed to gloss over it, as if it were made up by economists or some school/cabal of economists. Seems like the most potent question is: if this massive profit opportunity exists, then let’s open one. The same cabal might say that profit would incite market entry unless there is some reason entry is not possible (capital, not as good an opportunity as claimed, profit margin doesn’t always equal good returns). So, why can’t it happen and can you address those? Will I be threatened or killed if I start one? Will unions shut me down? Will no one sell to me? Also, you get blips of profit in the short run, but what about big picture long run? Computer chips weren’t a good business, but now they are a great business and that sends the signal to the right part of the bottleneck… but it takes time. No one can predict the future. Third, some of the companies you mention that are doing so well don’t seem to be doing so well. If the management is serving shareholders so well and has a free pass to take money from customers and suppliers, then why aren’t these companies massively more valuable? Lastly, seems like something similar happened in lumber last year too.

Expand full comment

Interesting. For years, French dairy farmers have been complaining of low milk prices / prices too low for them to live beyond bare subsistence level. Many of them have claimed that competition is too strong in a VERY strongly regulated European agricultural market. Often, they bring up 'the Danes' as being a big source of problems: said Danes 'invested in their production [and processing?] facilities and outcompete the French on the Europewide market".

The same goes for fruit and vegetables, which French farmers claim are subject to big greenhouse-based producers in Spain.

Makes me wonder if concentration isn't the main main problem in Europe.

Expand full comment