Posts Tagged ‘monopsony’
“A buyer with disproportionate power”*…
Imagine the farm that raised the chicken that produced the meat that sits in your sandwich: a few workers, thousands of birds, tens of thousands of pounds of white and dark meat, work that starts before dawn and ends after dusk, uncertain revenue, slim profits. There are thousands of these small farms in the United States, and they benefit from millions of dollars of taxpayer support each year.
Chicken is America’s favorite protein, after all. Family farms are one of its most prized institutions. And farming is tough business. According to one estimate, a new, hangar-like chicken house costs something like $300,000 to build, and more to maintain and upgrade. “A farmer has to invest over $1 million just to get set up—a lot of debt to carry when you’re paid on average between 5 cents and 6 cents per pound of chicken produced,” Sally Lee of the Rural Advancement Foundation International-USA has found. Even when a chicken-growing operation is established, financial success is far from a sure thing. Given those realities—and given the American love for and support of the family farm—generous taxpayer subsidies seem not just sensible, but vital.
But a government report released this spring calls into question whether all those family chicken farms are really family chicken farms, and whether those taxpayer dollars might be better spent elsewhere. The Small Business Administration’s inspector general looked at poultry growers, and found that many of them are tied-and-bound contractors—so controlled by their agreements with giant food corporations that they no longer act like independent entities. Why offer them taxpayer support meant for the little guy?…
What your chicken dinner says about wage stagnation, income inequality, and economic sclerosis in the United States: “The Rise of the Zombie Small Businesses.”
For a consideration of the effects of corporate concentration on wages: “More and more companies have monopoly power over workers’ wages. That’s killing the economy.”
* Monopsony: 1) (economics) A market situation in which there is only one buyer for a product; also, such a buyer. [from 1930s] 2) (economics) A buyer with disproportionate power. -Wiktionary
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As we cogitate on (real) competition, we might recall that it was on this date in 1947 that fabled computer scientist Grace Hopper (see here and here), then a programmer at Harvard’s Harvard’s Mark II Aiken Relay computer, found and documented the first computer “bug”– an insect that had lodged in the works. The incident is recorded in Hopper’s logbook alongside the offending moth, taped to the logbook page: “15:45 Relay #70 Panel F (moth) in relay. First actual case of bug being found.”
This anecdote has led to Hopper being pretty widely credited with coining the term “bug” (and ultimately “de-bug”) in its technological usage… but the term actually dates back at least to Thomas Edison…
Grace Hoppers log entry
“A government that robs Peter to pay Paul can always count on the support of Paul”*…
Since 1979, inflation-adjusted hourly pay is up just 3.41 percent for the middle 20 percent of Americans while labor’s overall share of national income has declined sharply since the early 2000s. There are lots of possible explanations for why this is, from long-term factors like the rise of automation and decline of organized labor, to short-term ones, such as the lingering weakness in the job market left over from the great recession. But a recent study by a group of labor economists introduces an interesting theory into the mix: Workers’ pay may be lagging because the U.S. is suffering from a shortage of employers… its authors argue that the labor market may be plagued by what economists call a monopsony problem, where a lack of competition among employers gives businesses outsize power over workers, including the ability to tamp down on pay. If the researchers are right, it could have important implications for how we think about antitrust, unions, and the minimum wage…
… not to mention anti-trust laws. The full story at: “Why Is It So Hard for Americans to Get a Decent Raise?”
* George Bernard Shaw
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As we concentrate on concentration, we might spare a thought for Charles Erskine Scott (C. E. S.) Wood; he died on this date in 1944. An author, civil liberties advocate, artist, soldier, attorney, and Georgist, he is best known as the author of the 1927 satirical bestseller, Heavenly Discourse.
Wood settled in Oregon, where he defended Native American causes, represented dissidents such as Emma Goldman and wrote articles for radical journals such as Liberty, The Masses, and Mother Earth. His friends included Chief Joseph, Emma Goldman, Eugene Debs, Ansel Adams, Robinson Jeffers, Clarence Darrow, Childe Hassam, Margaret Sanger and John Steinbeck. His daughter, Nan Wood Honeyman, was Oregon’s first U. S. congresswoman.
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