"It's Not Totally Free Enterprise In The United States"
Got Milk Cheap? No? Then Read This Post To Find Out About The People To Blame.
By Pejman Yousefzadeh Posted in Economy | Featured Stories — Comments (39) / Email this page » / Leave a comment »
This is the kind of story that just infuriates me (read on, I beg you):
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."
It's just amazing. An individual decided to go into business and compete with the milk cartel by selling milk for less. Instead of engaging in honest competition, the milk cartel tried to rub him out economically. And they got Congressional allies--including the incoming Senate Majority Leader--to help them. And with no public hearings, to boot.
Oh, do be sure to read the whole thing. And note the following:
On the evening of Nov. 2, 2005, lawmakers and several dozen lobbyists squeezed into the conference room of Sen. Dianne Feinstein (D-Calif.) to seek common ground in the milk dispute. [Congressman Jerry] Lewis brought Hettinga and [former Congressman and lobbyist Raymond] McGrath. Reid came with [Anderson Dairy vice president David] Coon. Shamrock Foods' [chairman Norman] McClelland was with {Senator Jon] Kyl."Jerry, if it wasn't for you, we'd have taken care of this a long time ago," Reid said, according to several participants.
Lewis bridled. It seemed as if Reid was calling him a "liar," he said. If that was so, he might as well leave, he added.
Hettinga told the group how he had built his plants, arguing that the other dairy farmers "didn't pay me when I started the business, why should I start paying them when the business is successful?"
At the end, participants said, Reid was plainly exasperated. "I'm not listening to any more of this," he said. "I'm out of here."
So Harry Reid barely displayed the sufficient patience to listen to Hein Hettinga's pitch against being rubbed out and then left in a huff before Hettinga could even finish his discussion. This is the incoming Senate Majority Leader, gentle readers. Don't you feel good about his adherence to the principles of capitalism and fair play for the small businessman?)
In a better world, this kind of gross abuse would be prominently noted and would receive sustained attention and generate sustained outrage. Let's see if we live in a better world, then. Let's have people contact Senator Reid and the other politicians involved in this anti-capitalist scam--and yes, there are Republicans involved and guilty of aiding the cartel as well though the only people that Hettinga could get to fight for his rights were other Republicans--and demand to know why it is that they felt they could force consumers to pay higher prices while being deprived of the benefits of any competition whatsoever--all without any Congressional hearings (that last point just cannot be repeated enough).
I trust the workings of Adam Smith's invisible hand more than I trust the workings of politicians involved in backroom deals to destroy free enterprise piece by piece. I trust a system that gives consumers choice, the benefits of competition and the resultant lower prices more than I trust politicians working in the darkness to prevent consumers from enjoying and benefiting from the basic benefits attendant to a genuinely capitalistic system. If the politicians involved think differently, then they should be forced to make their case in public and with the glare of publicity upon them. We'll see just how brave they are at sticking to their principles in those circumstances. And by the way, the next time Harry Reid decries "price gouging" at the gas pumps, you should be sure to ask him about this:
. . . "Milk suppliers in southern California were gouging the public on price (20 cents a gallon higher than N. California) for years and were unresponsive to our call for lower prices. It was a brazen case of price gouging and profiteering by the strongest, largest market suppliers simply because they could."[. . .]
In California, the Hettingas were taking on the two biggest players in the U.S. milk industry: Dean Foods Co., the largest processor of dairy products, with $10 billion in annual sales and five California plants, and Dairy Farmers of America, a co-op that controls nearly a third of the nation's liquid milk.
In Southern California, the co-op sells to Dean Foods, which in turn sells to retailers. As Hettinga's milk began reaching Costco stores, there was a snowball effect as other milk suppliers were forced to lower their prices, Costco's Benoliel said.
Dean Foods recently said that Hettinga was unfairly exploiting a "regulatory loophole" and that his actions led to lower milk prices for California dairies.
Hettinga's operation was "damaging to the marketplace," said Elvin Hollon, director of economic analysis for Dairy Farmers of America. "Nobody ever envisioned there would be such large handlers" outside the pool.
"So," Hollon said, "the regulations had to change."
Apparently, people like Senator Reid live in an Orwellian world. A world where some forms of "price gouging" are better than others.
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"It's Not Totally Free Enterprise In The United States" 39 Comments (0 topical, 39 editorial, 0 hidden) Post a comment »
I suspect its something left over from the New Ripoff oops deal. But I couldn't find specifics.
comes down to whose ox is being gouged.
John
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Ethnic humor is part of human nature. The Dutch tell Belgian jokes. The Belgians tell French jokes. The French tell English jokes. The English tell Irish jokes. The Irish tell Irish jokes.
had an observation on this article, and regulation causing deaths in the third world. (But don't get him started... http://www.redstate.com/blogs/qlangley/2006/dec/09/what_to_get_for_the_p...
)
I meant what I said and I said what I meant. An elephant's faithful 100 percent.
there has never been free enterprise in this nation.
However, there have been times when government intervention was much less pronounced.
BTW another person to blame for milk price supports? Outgoing senate snark Lincoln Chafee.
"Nothing works like freedom, Nothing succeeds like liberty"
Kyle
What do you mean, "there has never been free enterprise in this nation?" You've gotta explain that one, sir.
"In matters of style, swim with the current; in matters of principle, stand like a rock."
--Thomas Jefferson
Again, not all big conglomerates and corporations are against regulation of their industry because regulation makes it more difficult for the little guys to get in on the action as the regulations add to the price of doing business. What's worse here is that they are actually making the little guy pay them part of his profits. The behavior of these politicians is abhorrent.
____________________________________________________
Halls of Justice Painted Green, Money Talking.
Power Wolves Beset Your Door, Hear Them Stalking.
In case anyone was curious.
Regarding the law mentioned in that article, I believe it passed the senate with unanimous support.
In the house the vote breakdown was:
YEAS:
Republican: 162
Democratic: 122
Independent: 1
NAYS:
Democratic: 71
Republicans: 57
Signed into law of course by President Bush.
The sponsor was Jon Kyl (R-AR), and Reid (D-NV) and Feinstein (D-CA) were the co-sponsors.
http://clerk.house.gov/evs/2006/roll069.xml
http://thomas.loc.gov/cgi-bin/bdquery/z?d109:SN02120:@@@L&summ2=m&
Not too much ideological consistency on either list. Pelosi right next to Pence on the Yeas, Kucinich and Tancredo on the Nays.
Maybe lobbyists do have too much influence...
How do you determine 'ideological consistency' from a single vote?
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It is much more important to kill bad bills than to pass good ones. -- Calvin Coolidge
My point was that one could not predict how a representative would vote on this particular piece of legislation on the basis of that Representative's typical ideology. The next step then is to see what did predict the vote--and I suspect it might have something to do with the dairy lobby.
Your baseless, implied accusation of corruption is uncalled for, and you owe those you attacked a retraction and apology.
--
It is much more important to kill bad bills than to pass good ones. -- Calvin Coolidge
This diary is ok as long as it sticks to calling out Harry Reid?
The sad reality is that these sorts of unknown laws are passed all the time with the blessing of most Congresscritters. Republican or Democrat, it doesn't much matter.
"There are those who look at things the way they are, and ask why... I dream of things that never were and ask why not." George Bernard Shaw
This was a bipartisan effort, sad to say; I would have written about it if Pej hadn't, and I wouldn't have been kind to either Kyl or Reid about it.
The Fuzzy Puppy of the VRWC.
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Even those who learn from history are surrounded by those doomed to repeat it.
This isn't about partisanship. This is about my refuting the Known Fact™ that lobbyists buy votes.
I think most people know that there are enough people, Democrats and Republicans, who agree with protectionism that such a slander is baseless.
I hate the bill, but I'm not going to go around insinuating that the opposition on this issue is corrupt.
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It is much more important to kill bad bills than to pass good ones. -- Calvin Coolidge
Because I simply was pointing out that I find it interesting when Kucinich and Tancredo (and Delay, among others) are on one side of the issue (in my opinion, the right side) and Pelosi and Pence are on the other side.
There doesn't appear to be any partisanship here--just bad legislation that favors a specific interest group. I never said or even implied that votes were bought.
I do think lobbyists influence legislation. I think that is in fact their job.
Yes, I read it, but you didn't read mine. I just disclaimed any partisanship as an issue here.
If you're not trying to bootstrap campaign finance regulation justification here, I apologize though.
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It is much more important to kill bad bills than to pass good ones. -- Calvin Coolidge
It is my contention that anyone who voted for this law is corrupt or stupid. I fail to see any plausible excuse for protecting big companies against a start up competitor.
And it disheartens me to see that the Rs were every bit as guilty as the Ds. If I were their mama, I'd get a belt. They have sullied the good name of my party.
I meant what I said and I said what I meant. An elephant's faithful 100 percent.
but I've probably got a different standard than you, Neil. That said, I really would like to know why Kyl and Shadegg supported this legislation. One is my Senator and the other is my Rep.
I think this is a prototypical example of special interest legislation that gets passed all too often with no oversight. We make a big deal out of NAFTA, etc and then we see supporters of international free trade vote for this crap.
I'm really disappointed in both Kyl and Shadegg.
_______________________________
If "pro" is the opposite of "con", what is the opposite of "progress"?
I'd find your prediction of more value if you actually tracked down the data on who the dairy lobby gave to and how much, rather then simply implying that those who voted a particular way did so in return for cash.
Here's a link of Dean Foods Political Action committee campaign disbursements in 2004
http://www.tray.com/cgi-win/x_pacdonations.exe?DoFn=&CmteID=C00340083&sY...
And here's one for Dairy Farmers of America
http://www.tray.com/cgi-win/x_pacdonations.exe?DoFn=&CmteID=C00001388&sY...
The roll call is linked above.
Now, this is hardly conclusive, as we're talking merely two PACs in one election cycle. And looking at the PAC patterns, these are classic "non-ideological PACs--more or less, they give money to incumbents. Thus, not surprisingly, they give roughly 60% of their PAC money to Reps, 40% to Dems.
From opensecrets.prg
http://www.opensecrets.org/industries/background.asp?Ind=A04&cycle=2006
"Their chief concern is protecting the government support system, which dates back to the Depression that guarantees farmers minimum prices and the government’s purchase of surplus milk products. The Dairy Farmers of America, the world's largest dairy cooperative with nearly 23,000 members in 48 states, is regularly among the sector’s top donors. The DFA has pushed for legislation that would place quotas on imported dairy proteins. U.S. dairy farmers say increased imports of milk protein concentrate—the substance used to make nonfat cheeses and other dairy products—has led to low farm-level price."
Reid is down for $15,000 total from the two PAC's. Kyl is not listed for either one. That is not to say that some favors were not exchanged somewhere else - you vote with me on this and I'll support you on that. That's the sausage making machine at work.
That should be an AZ, not an AR by Kyl's name. I always mix up those two.
Dean Foods recently said that Hettinga was unfairly exploiting a "regulatory loophole" and that his actions led to lower milk prices for California dairies.
I used to say that there is no such thing as price-gouging. I want to amend my usual statement: There is no such thing as price-gouging, unless the government prevents competition from entering the market and therby lower prices.
Hettinga's operation was "damaging to the marketplace," said Elvin Hollon, director of economic analysis for Dairy Farmers of America. "Nobody ever envisioned there would be such large handlers" outside the pool.
Aw, poor baby! You got comfortable in your soft, warm, government-sponsored bed; then, when competition reared its ugly head, you went crying to your political allies like a little boy to his mommy!
GET OVER IT!!! Senator Reid and all the others who helped destroy Mr. Hettinga's business should be ashamed of themselves. Further, they should go to every one of their constituents and explain, in detail, why they are artificially raising the price of milk.
Finally, Mr. Hettinga should sue in Federal court to have the law overturned. The government has no business controlling prices in this manner. It serves no public interest and is a relic of a grand economic policy that lengthened the Great Depession in the United States.
"In matters of style, swim with the current; in matters of principle, stand like a rock."
--Thomas Jefferson
was on the side of God and the angels on this one. Can't say the same for my Senators or President. Sigh.
I meant what I said and I said what I meant. An elephant's faithful 100 percent.
Farmers can also get together and collude and fix prices, OPEC style. They control how much is planted every year and destroy a chunk of the harvest to jack up the prices. They are doing this now with commodities like potatoes now, and it is perfectly legal... but only because they are in agribusiness. That whole industry is as rotten as rotten can be from the top to the bottom.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
I'm basically in agreement here, but I find your exclusive focus on the politicians involved a little strange. There are corporations and businessmen involved in lobbying government to eliminate competition here. It's a little odd that they are described simply as a "cartel". They are a cartel of course, but these are also Americas capitalists and businessmen at work. The "anti-capitalist scam" in question is being perpetrated by capitalists.
And it's those decision makers that bear the blame. There's nothing wrong with a corporation, group, or union trying to use the process to its advantage. They aren't the ones that set up the system. If they don't make use of it to protect and enhance their businesses, someone else will and it just might be to their disadvantage. You would have to be crazy to be in agribusiness and not be involved in politics, what with how involved the Federal government is in that business. At this point, you'd have to be crazy to be in any kind of successful business and not be involved in politics. At a minimum, you have to keep current on your protection payments. If you don't, you end up like Wal-Mart and Microsoft. They make their payments now.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
Politicans are responsible for everything, nobody else is responsible for anything?
There's nothing wrong with a corporation, group, or union trying to use the process to its advantage. They aren't the ones that set up the system.
Au contraire, mon frere. It is precisely the corporations and unions and "groups" who lobbyed Congress to set up the system in the first place. Congress did not just dream up this idea, or any other similar idea, all on their own. They do these things because some combination of businessmen and citizen "activists" tell them its a good idea and will lead to all kinds of wondeful benefits.
I'm sorry, but people get a government which reflects themselves. If our politicians are a little bit easy and a little bit sleazy, well, look in the mirror.
The politicians are the ones that are supposed to be acting in our interests. Only one group is violating their duty, and it certainly isn't the corporations and unions.
It is precisely the corporations and unions and "groups" who lobbyed Congress to set up the system in the first place.
The politicians are the ones who did it, for whatever reason. Whether it's jobs or "economic development" at home, campaign contributions, super bowl tickets, or because their magic eight ball told them to do it, it doesn't matter. The buck stops there. If you go around asking who wants free money, there will be plenty of takers and when you run out, you can't really blame the problem on those who took the free money. The person who gets the blame is the guy who gave it away.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman
I don't go all the way and claim that no-one else is responsible, but this is an abuse of the political and legislative process we are talking about. Lobbying is just asking someone to do something for you.
Lobbyists ask politicians for favours. It is the politician who grants those favours, and that is the real offence.
If I say to you, "Jon, I would really like some free money", and you reply "sure, Quentin, I will steal some from that guy over there and give it to you", I may not be exactly spotless, but you are the real villain, no?
Quentin Langley
Editor of http://www.quentinlangley.net
Your analogy is off.
If you say to me, "Jon, I'd like you to take money from that guy over there and give it me, in return for which I'll give you money", then you are in fact committing a crime, more than one in fact.
Granting someone a favor is of course not an offence.
I was thinking along those lines when I wrote that post. I think my analogy, and yours, are both slightly off, as analogies tend to be, and the actuality lies somewhere in between.
In your analogy, I would indeed be committing an offence, but the principal offence remains yours.
As for granting someone a favour - well, it might be an offence, and might be non-criminal but offensive. It depends on the favour. If you are an elected politician, granting favours to selected groups is a breach of trust, and offensive to me, whether you take money for it or not. Though it is usually only criminal if you are bribed into doing it.
Quentin Langley
Editor of http://www.quentinlangley.net
What an education in the sleazy world of politics, back-stabbing and money.
It makes you wonder, and I often do, how many similar things
are happening in other industries.
_Don't tread on me._
This is truly disgusting. And here I was thinking that Kyl would make a good candidate for president.
This article sounds just like a scene from Atlas Shrugged. When the railroad owners set-up the "Anti-Dog-Eat-Dog" agreement to shut down one operator who was "unfairly" doing too good of a job.