Greedy Grocers: Exploiting Customers and Workers with Impunity

Adam Smith theorized that price competition on products and labor would allow the self-interests of the buyers and sellers to result in unintended beneficial consequences. For one thing, price gouging would not happen because, assuming low barriers to enter the market to sell, competitors would quickly drop their prices and gain market share. That grocery prices did not fall after the supply-shocks, including in shipping and hiring workers, ended with the end of the coronavirus pandemic in early 2023 is a pretty good indication that the grocery (and meat producer) industry was not competitive. Oligarchic markets—those in which just a few, often times very large, sellers exist—are devoid of the competitive mechanism that would otherwise maintain prices that are fair to buyers. That is, not only do competitive markets efficiently allocate goods and services at prices that connect supply to demand; such markets can also satisfy the ethical virtue of justice as fairness. Smith was not shy in admitted that a government willing to stand up to big companies is necessary to keep a market from slipping into the decadence of an oligopoly and especially a monopoly. I contend that both Americans and their elected representatives were blind, perhaps conveniently so given the power of large companies in American governments, both during the coronavirus pandemic, which ran from roughly 2020 to 2022, and even afterwards as Kroger and Albertsons colluded at the expense (literally) of their respective customers and workers.  

On February 26, 2024, about a year after the coronavirus pandemic ended in the United States, the Federal Trade Commission “sued to block the largest proposed supermarket merger in U.S. history—Kroger Company’s $24.6 billion acquisition of the Albertsons Companies, Inc.—alleging that the deal is anticompetitive.”[1] While testifying to a Federal Trade Commission attorney ,  Andy Groff, Kroger's senior director for pricing, said the grocery giant had raised prices for eggs and milk beyond inflation levels. In an internal email to other Kroger executives, he had written, "On milk and eggs, retail inflation has been significantly higher than cost inflation."[2] Of course, the company’s strategy was to try to discredit Groff rather than assume responsibility for having taken advantage of the pandemic. It was telling, however, that at least at Albertsons, including its Safeway division, the practice of weekly discounts shown on the shelves was greatly diminished. So, we can add ending discounts to price gouging to understand the true sticker shock that customers encountered.

The price gouging alone was “not at all surprising," Drew Powers, the founder of Illinois-based Powers Financial Group, has said. Economists had “long indicated that the grocery sector, which is composed of only a few chains like Kroger and Walmart, was benefiting from supply chain disruptions during the pandemic, allowing the companies to hike prices beyond what was necessary to retain profits. According to Alex Beene, a financial literacy instructor, "Supply chain issues, rising shipping costs, and increased wages certainly played their part in the higher prices we're currently seeing. However, the admission some prices were elevated simply because businesses knew they could doesn't help the case for those arguing price gouging isn't an issue."[3]  

Perhaps even more disturbing, but much more subtly, Kroger and Albertsons did not lower prices after the unique economic context of the pandemic had ended. In fact, both companies saw record profits into 2024 and a generally increasing trend from 2010 that belies any claim to have needed to raise prices during the pandemic to stay in business. In fact, the profits during the pandemic were greater than in 2018-2020, and record profits as of January 31, 2024. Not coincidentally, the grocers provided customers with just a slight reduction in prices of food items in 2024 even though the huge increases during the pandemic had been said to be specific to it. This demonstrates that the industry had ceased to operate in a competitive market. The following graphs from Metatrends.net of gross profits for the years (January 1) 2009 - (January 31) 2024 tell the tale, a picture being proverbially said to be worth a thousand words. 

Kroger (left) and Albertsons (right) Gross Profit ($)

That Albertsons increased prices excessively during 2022 can be inferred from the fact that the company's net income that year increased 51% from 2021 even though the pandemic was still occurring. In July, 2024, Newsweek stated the following: “Companies across multiple industries have been posting record profits since the [coronavirus pandemic] while consumers have faced the highest inflation in recent history. The math can only point to companies raising prices above the general level of inflation. As the old saying goes, 'Never let a good crisis go to waste.'"[4] And never let the end of a crisis be the end of the party, for the excuses can run their natural course if the herd animals (and their leaders) are gullible (and corrupt) enough.

That a grocery-store worker filed a class-action lawsuit against both Kroger and Albertsons in Colorado on November 25, 2024 for having colluded “against striking employees to keep pay and benefits down” may indicate that the giant chains took advantage of workers too.[5] The suit alleges that “the two competitors reached an illicit agreement not to poach employees or customers during a 2022 work stoppage.” This “gave Kroger an upper hand against its employees’ union during contract talks,” and Albertson too would likely benefit as it had the same union.[6] The word most erroneous here is competitors, and if Kroger and Albertsons were not competing for employees or customers, then it would have been easy for both managements to raise prices, essentially creating inflation (i.e., above costs and a reasonable profit), in taking advantage of the pandemic turned into a rationale for higher prices and then of societal expectations that price increases would happen and be legitimate.

That Kamala Harris ran for U.S. president in 2024 with only vague promises to help consumers with high food prices rather than a bold promise to wipe off the Sherman Anti-trust Act to apply it to break up both Kroger and Albertsons is so glaring that it could (and should) be asked whether, or to what extent, that industry, as well as the concentrated meat-producer industry, was made financial contributions to Harris’ campaign. Even President Biden’s decision to oppose the merger of those two companies ignored the likely possibility that the grocery (and meat-producer) industry was already too concentrated (i.e., oligopolistic) for price competition to have lowered food prices after the pandemic.  Both the president and the vice president (i.e., Harris) were too snug with the status quo, and perhaps relatedly too influenced, financially and otherwise, by the grocery (as well as meat-producing and even restaurant) industry. That the profits of Kroger and Albertson grew not only during the pandemic, but also in its wake, especially as compared with the pre-pandemic numbers, should have been an obvious indication that Adam Smith’s apotheotic competitive-market model could no longer operate due to the enormous sizes and few number of grocery chains in the United States. Enough voters may have been angry at Biden and Harris for not using the judiciary to restore competition—only acting to oppose the merger—to vote for Harris even though Trump would not likely apply anti-trust law even to the merger. A similar rationale concerning Biden and Harris actively supporting Israel militarily even after the UN’s top court had ruled that the occupation violated international law can be applied for why Harris lost. Enough of the American electorates wanted boldness in place of status-quo timidity that they were willing to vote against Harris and even for Trump even while disagreeing with his bold policies, such as on stopping illegal immigration.

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1. “FTC Challenges Kroger’s Acquisition of Albertsons,” FTC Press Release, February 26, 2024.
2. Suzanne Blake, “Kroger Executive Admits Company Gouged Prices Above Inflation,” Newsweek, August 31, 2024.
3. Ibid.
4. Ibid. 
5. Dave Jamieson, “Worker Sues Kroger and Albertsons, Alleging Collusion Against Union,” The Huffington Post, November 26, 2024.
6. Ibid.  

The Screen Actors Guild Strike: American Capitalism Is Inherently Unbalanced

On July 14, 2023, Hollywood actors joined the writers in going on strike against the studios, which had changed the business model in ways, according to the Screen Actors Guild (SAG), that were leaving the vast majority of actors out financially. At the time, AI (artificial intelligence) was the red-hot buzzword, promising unheard of advances but also baleful clouds on the horizon. The president of SAG sounded the alarm on not only the threat of AI given the studios' new business models predicated on ubiquitous streaming and digital technology, but also the more long-standing and ingrained American corporate system of Capitalism wherein upper managements get away with not sharing the surplus of corporate wealth due to an inherent or institutional conflict of interest. Indeed, Fran Drescher, the president of SAG, was not far from calling into question the taken-for-granted assumption in Capitalism that residual profits should go to stockholders exclusive. Questioning that default (as well as claiming that CEOs get to set their own compensation by controlling their respective boards of directors) would have made Drescher's announcement of a strike truly revolutionary. She was so close. 

Regarding AI, even Drescher's position can be perceived as short-sighted even though it was an improvement on the studios' new business model. The ability of studios to use the likenesses (images) of actors who have been bodily scanned (creepy) in one project for use as computer-generated “acting” in future movies in which the actors themselves are neither compensated nor participate was among the issues to be arbitrated in which the studios and SAG were far apart. To an actor, the loss of control over one’s image can complicate or even detract from one’s efforts to construct a public image. To be sure, not being paid for such extended likenesses being used was noxious to the actors even though no additional work on their part would be required. This just means, however, that royalties, or residuals, rather than pay for the use of the images would be appropriate, and thus fair. Furthermore, rather than being able to pressure actors on a project to agree to their respective likenesses being used in perpetuity, studios should be required to get permission for the specific uses (rather than a general permission) at the time of each future project. Actors would not feel that they might lose their existing work if they refuse to give a general permission in perpetuity. Even such an arrangement, incorporated into the studios' new business models, might not last long. A student of AI suggested to me that just as non-profit organizations have open-source libraries of written works, such organizations in the film industry might make available, royalty-free, images of volunteers that start-up film companies, students, and even Hollywood studios could use. Extras, or background actors, could conceivably be used only in shots in which mere images won't do. 

Of greater significance, SAG’s position extended to challenge a basic tenet of Capitalism itself. Were the strike a true inflection point, as Fran Drescher, the president of SAG claimed, the union had an opportunity to make the dogmatic, or arbitrary, tenet transparent if for no other reason that Drescher was aware and critical of the long-held assumption that had long before become embedded as a “necessary” plank in the economic system.

I contend that it is arbitrary to set the owners of a corporation as the receivers of the residual from the surplus of revenues over expenditures (i.e., profit), whereas banks and labor get only a fixed amount classified as expenses. All three groups can be thought of as providing inputs, or resources, that a management can use to make a profit. From this perspective, it seems arbitrary to say that only one of the group has a right to the residuals from the profits. The philosopher John Locke claimed that a person “mixing” one’s labor with land gives rise to a property right on said land. Centuries later, the U.S. Supreme Court ruled that a maker of wedding web-sites could refuse to have same-sex couples as clients because she had expressed herself in her work. It seems rather obvious that screenwriters and actors are also in an expressive profession. In “mixing” their self-expressive labor in a film, writers and actors can be said to have an ownership interest in what is typically referred to as art. Painters, after all, sign their paintings. It is possible that the writers and actors of a film have more of a claim on the profits than do the studios. In depicting the strike as occurring at an “inflection point,” the president of SAG had the opportunity to make such a claim, thus challenging the monopoly on profits hitherto enjoyed by the owners of the studios.

In announcing the strike in 2023, Drescher called attention to the large gap in compensation between the CEO’s of the studios and 99% of the members of the SAG union who were struggling financially. To be sure, the inclusion of “extras,” or background non-speaking roles that are on a per-project pay basis, means that the 99 percent were not depending on acting as a full-time job. Even so, the astounding pay of “A-list” movie actors may give people outside of the industry the misimpression that acting constitutes a wealthy profession.

The impression left by films grossing hundreds of millions of dollars that studios are wealthy is more accurate. The studios plead poverty, the SAG president exclaimed in astonishment, and yet somehow they have the money to pay tens of millions of dollars to their CEOs. In fiscal 2022, for example, the CEO of Disney made $24 million just before the company laid off 7,000 employees.[1] Drescher could have added that Netflix co-CEOs earned $43.2 million and $39.3 million in 2020—when the company raised the monthly price of its subscription.[2] Doubtless the management claimed that the company had no choice but charge customers more. It is interesting that managements can so easily put their companies in convenient straightjackets.

The union president must have sensed an opportunity to challenge the greed of American CEOs more generally as evinced in the increasing inequality between their compensation and the average of their respective workforces. “High seven figures, eight figures, this is crazy money that they make,” she said.[3] Implying that a basic shift in wealth distribution between upper managements and workers was justified, she stated, “What’s happening to us is happening across all fields of labor. . . . When employers make Wall Street and greed their priority, and they forget about the essential contributors that make the machine run, we have a problem.”[4] A basic problem in the American system of Capitalism.

The ratio of CEO compensation to that of the average worker in the U.S. in 2020 was 299.[5] Just one year later, the ratio was nearly 400, according to Statista. Even as the coronavirus shuttered or hampered many businesses, which meant mass layoffs, CEOs made out well nonetheless. Some CEOs made a thousand times that of the average worker. The annual ratios in the E.U. were much lower than in the U.S. That CEOs of American corporations had typically reached complete control of their respective boards of directors, which are technically to function in part as a check on their managements, presents not only accountability issues more generally, but also a situation in which the CEOs can set their own compensation and that of their managerial cadres. At one major corporation in 2023, the stockholders voted to deny the management’s proposed compensation package. Astonishingly, the resolution was nonbinding and the board approved the package anyway. This points to the existence of a major structural flaw in corporate governance in the U.S.

In pointing to the greed of CEOs of American companies in general, Drescher expanded her union’s agenda beyond the immediate financial interest of the members. She was making a societal contribution in claiming that the huge disparity of wealth between managements and workers was by then so large that an inflection point had been reached wherein SAG would try to set an example for other unions to follow in objecting to the arbitrary feature of American Capitalism wherein CEOs do not have to share the surplus of corporate wealth. She could have gone a step further by taking the opportunity to question the underlying assumption that stockholders should get the residual of profits that are not retained or invested. Even though the business model of studios had changed due to AI, the greed of American CEOs and their ability to set their own compensation packages had existed for some time and was finally too much for workers to take. That is to say, it was time for an enduring yet arbitrary (rather than necessary) aspect of American Capitalism to be changed. The system had been broken for some time, and the advent of AI meant that the harm would soon become even more unbearable.

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[1] Samantha Bergeson, “Fran Drescher Blasts Bob Iger’s Strike Comments: ‘I Would Lock Him Behind Doors,’” IndyWire, July 14, 2023.
[2] Todd Spangler, “Netflix’s Ted Sarandos to Earn $40 Million in 2022, Read Hastings Pay to Top $34 Million,” Variety, December 31, 2021.
[3] Bergeson, “Fran Drescher Blasts Bob Iger’s Strike Comments: ‘I Would Lock Him Behind Doors.’”
[4] Ibid.
[5] Moira Ritter, “CEOs Made 299 Times More Than Their Average Workers Last Year,” CNN.com, July 15, 2021.

The 2012 U.S.Trade Deficit: An Analysis

Coming in at 2.7% of GDP, the U.S. trade deficit fell to $107.5 billion in the third quarter of 2012—down 9 percent from the second quarter’s $118.1 billion, which was 3% of the economy at the time. The current account includes merchandise, services, and investment flows. The surpluses in services and investment were out-done by the deficit in merchandise to produce the overall trade deficit. According to the New York Times, the “improvement in the current account in the third quarter reflected a decline in the deficit on goods and a small increase in the surplus on services, led by a gain in foreign earnings made by financial services, insurance and professional services provided by companies in the United States. The surplus on investment earnings narrowed to $50.8 billion, down from $52.1 billion in the second quarter.” Most of the decline in the deficit on goods reflected a decline in the foreign oil bill, according to Paul Ashworth at Capital Economics.

Analysis:

Lest we get bogged down in the purportedly significant differences between 2.7% and 3.0%, $107.5 billion and $118.1 billion, and $50.8 billion and $52.1 billion, respectively, we might take note of the rather stark difference between goods on the one hand (i.e., sustained deficits) and services and investment (i.e., sustained surpluses). Although it was no doubt true that the economic slow-down in China and the debt/austerity-induced recession in the E.U. were reducing demand for American exports, a basic imbalance between exports of American-made and imports of foreign goods is clear from the numbers year after year. Indeed, in 2006 the current account deficit had reached a record $800.6 billion—suggesting that something fundamental was “out of whack.”

                                               This graph isolates the deficits in goods imported/exported.   source: thismatters.com 

The question may be whether Americans were importing too many foreign goods or were too uncompetitive in making goods. Regarding the former, being able to buy a relatively inexpensive television made in China is not in itself a bad thing, particularly to the consumer. The question is perhaps whether the price was artificially low, due for instance to a relative lack of environmental regulations, lower labor costs, or government/bank subsidies. However, even if due to these factors, a low price is undoubtedly welcome to any consumer.

Regarding American competitiveness, was it hampered by labor and environmental standards or simply by unmotivated workers and bad management? Whereas American consumers benefit from cheap imported products, no such benefit can be found in the U.S. to any sector from a relative inferiority in competitiveness.

There is, however, the argument that an “advanced” economy oriented to professional, business and financial services rather than manufacturing can enjoy a higher standard of living if the services are more premium than the goods would be. The pristine notion of the “knowledge economy” captures this point very well. That not all Americans are willing or even able to participate at this level suggests that the term could never completely cover an entire economy. Hence, it is necessary even in an “advanced,” or “high tech” and “professional,” economy to tackle the problem of competitiveness in manufacturing.  Does it come from high regulatory costs (which can be viewed as part of a demand by Americans for a certain “standard of living” writ large), a lack of product development, or an inefficient labor or management force?  Whereas wanting a decent wage-floor or environment as a condition of manufacturing has merit—the cost being that society may have to support people who would otherwise be working in manufacturing—a dearth of ingenuity, bad employee attitudes, and inept management have no such positive aspect.

I was born and raised in a medium-sized industrial city in the “rust belt.” Furniture was the first industry, following which machine tools were the dominant manufacture until competition from Europe took out most of the factories. Speaking a few years ago with a European who had been sent over to oversee a factory that had been taken over by a European company, I was not surprised when he admitted, “the workers here just are not good. They are not motivated and they don’t pick up on the training very good.” Years before that, I had watched a program on the American public broadcasting network about a man’s effort to prepare inner-city black people for job interviews. Midway through his talk, the man admitted to the folks attending, “from your attitude even here, I have to admit I can’t see how anyone would hire you, so I don’t see any reason to continue here.” The man ended the workshop at that point. Doubtless his decision prompted little if any self-criticism from the participants. A bad attitude is perhaps almost impossible to correct from the outside—even with the inducement of money!—given the nature of a bad attitude. Regarding people under thirty, perhaps a year or two at a military “boot-camp” might break down the attitude’s intransience and build up self-confidence and self-respect, not to mention basic civility. Absent such a strategy, perhaps the segment of the American population unwilling (or able) to become part of the “knowledge economy” is inevitably lost—not being able to compete even on a factory floor. The cost to the rest of society goes well beyond money.

While visiting Miami, I witnessed repeated incidents on the buses from the mainland to Miami Beach of black men shouting and even hitting each other, as well as bumping into (and even falling on!) tourists. The black drivers ignored the shouts (including a drunk black man loudly and repeatedly calling a pregnant white woman a “fucking bitch”) and even fist-fights. Even with tourists begging the drivers that the aggressive passenger be dismissed from the bus, the drivers just drove on. In two cases, the drivers asked the men being hit if they wanted to press charges. They replied that they did not, so rather than get the aggressor off the buses or call the police, the drivers simply started driving again. This happened twice in the last 24 hours of my visit!  Near the beginning of my visit, I myself was pushed against the open bus door of a bus at a rail station while I was attempting to board a bus because I had not allowed all of the black passengers to enter first. The black driver refused to call the police or even tell the aggressive black man who had squeezed me to leave the bus. The driver simply replied to me—as I was pinned to the open front-door—“no, I won’t call the police. You shouldn’t have gotten on then. That’s how it is here.” I should have called the police! I was so stunned at the violence and systemic cover-up that I simply wanted to get to my destination. Just after I took my seat, a nice older black woman asked me where I was from. I told her that I had grown up in Illinois. “It must be worse in Chicago,” she remarked. “No,” I countered, “it is worse here. The blacks there are better.” In spite of being the only white person on the bus, I went on. “Even with the blacks killing each other in south Chicago, the people are better there.” She asked if north Chicago was white and the south part black. “No, the north part of the city itself is integrated, while I think the south is black. I was referring to the north—the blacks there are much better than the ones here. Here—I can’t leave soon enough.” Silence . . . complete silence. It then occurred to me that the entire bus—which still had not left the tri-county rail station—had been listening to this white guy talk about blacks very directly.

As it happened, a month or so later I was in Chicago taking a bus when a black man tried to enter the bus by pushing three old white women in line in front of him. The driver, who was also black, saw the attempt and quickly said, “Hey, what do you think you are doing? Get back out of the bus and let those women on first. Who do you think you are?” Then the driver turned to us in the bus and remarked, “It’s all about him, isn’t it?” The offender must have been startled, for he merely replied, “But it is cold out.” The driver pointed out that it was cold for the women too. The three women ended up sitting near me, and I told them (and the front half of the bus) about what I had witnessed in Miami on the buses there—and that it really was better in Chicago and even warmer despite the cold—even in terms of people moving past each other in the isle. “In Miami, the driver would not have intervened and you all would have been pushed out of the way of the guy who was behind you in line. Even complaining to the driver would have had no effect, and the man would have gotten away with it—whereas here that attitude is an exception. It was therefore countered, or pushed back, and therefore not allowed to become the default.” I don’t know whether the driver heard my compliment.

While it is easy to point to the bad attitude of many of the black passengers in Miami, I contend that the incompetence and attitude of the bus drivers there were just as problematic, and my anecdote from a bus in Chicago demonstrates that the attitude need not be enabled rather than challenged. The fact that the drivers in Miami all reacted the virtually the same way suggests that the decadence is systemic there. Put another way, the rudeness and aggression had become the norm and thus could not be checked. Perhaps this is why the drivers simply ignored even the violence—though this is hardly a viable excuse.

In terms of passive aggression, I witnessed drivers of buses going between downtown and Miami Beach regularly and knowingly cram too many passengers (even tourists!) on the buses and then demand that the extra passengers (who had already paid) shout back into the bus for others to step back so the extras could “get behind the yellow line.” To allow passengers known to be beyond capacity on board and then put them in an impossible situation while refusing to take control of the bus by making an announcement for people standing to move back evinces not only incompetence, but also an almost-sadistic mindset. On several occasions, I saw order itself fall apart on buses there as frustrated passengers—even tourists!—openly challenged the unjust and incompetent drivers on this very point.

Leaving Miami, my overall conclusion was that that county should not be part of the United States of America because of the rudeness, aggression and even the break-down in order—all tacitly sanctioned by county managers and employees. The rudeness, by the way, was nearly everywhere, rather than just on buses. I could not imagine any of the aggressive passengers or enabling drivers lasting more than a few days working in a factory, and the bus company managers (who knew of the incidents, according to local passengers) were doubtless virtually unemployable in the private sector too.

In short, the serial merchandise trade-deficits may point to an America that even many Americans do not know exists. That is, the structural imbalance may reflect a decline in American society—both in terms of labor and management—that manifests in a significant number of Americans compromising manufacturing or even being virtually unemployable. Put another way, I suspect that the condition in the American factory was at least as of 2012 part of a much more serious problem wherein even the social contract itself was under threat, or at the very least the American empire was in decline.

Source:

The Associated Press, “US Shirks Trade Deficit As Oil Falls,” The New York Times, December 19, 2012.

The Receding Chinese-American Economic Paradigm in 2011: Imbalances within Mutual Benefit

“For decades,” according to The Wall Street Journal, “plentiful Chinese labor kept down costs of a range of goods bought by Americans.” Then, roughly in 2010, the Chinese government began supporting higher wages to reduce labor unrest and boost domestic consumption while reducing reliance on exports. Partially as a result of this, the world saw higher prices for commodities in 2011; oil was another factor as protests in the Middle East increased political risk in the calculations of future supply (amid speculation). A shrinking workforce in China was also putting pressure on the labor cost. Even though relatively cheap labor was still in the interior of the country, higher transportation costs mitigated the cost advantage. The prevailing paradigm was showing cracks. To be sure, it certainly had them.

In that paradigm, inflation was “damped pretty dramatically in the U.S. because it exported work to China and other places at 20% or 30% of the cost,” Hal Sirkin of the Boston Consulting Group said. Imports into the U.S. from China had increased China’s foreign currency reserves to over $3 trillion in the first decade of the twenty-first century; two-thirds of the reserves were U.S. dollars. The Chinese government used some of those dollars to purchase U.S. Treasury bonds; those purchases in turn relieved pressure on U.S. interest rates to increase. The continued cheap credit made it more possible for American consumers to purchase Chinese imports. It was a marriage of Chinese workers and American consumers, with both governments happy to oversee the nuptials.

Although in some ways good for all parties, the positive feedback loop made it difficult for China and the U.S. to have balanced economies. China relied too much on exports—with a supportive yuan currency making them artificially cheap for Americans—while the U.S. was enabled to accumulate trillions in additional federal debt without much self-discipline.  Therefore, from the rising labor costs in China and the related emphasis on domestic consumption (and a slowing appreciating yuan), inflation in both China and U.S. could be expected. It is no coincidence that the price of gold was quite high as the paradigm began to shift.

As the paradigm began to shift, it could be expected that should the Chinese foreign currency reserves be reduced, less foreign demand of U.S. Treasury bonds could eventuate, which in turn would put pressure on U.S. interest rates to increase. The rates could increase anyway to thwart the import-led inflation even if there is not excessive money supply. In other words, it could be expected that the imbalances in the slipping paradigm would give rise to corresponding imbalances afterward.

It is perhaps all too easy for us to tolerate imbalances as long as there is an overall equilibrium. China’s increasing dollar reserves and the U.S. Government’s increasing debt could co-exist with a tacit agreement wherein both Chinese workers and American consumers would benefit. Mutual benefit is not, however, a sufficient justification for tolerating fundamental imbalances either within a country or in the global economy.  For a sustainable economic paradigm, mutual benefit is necessary but not sufficient; they system as well as its parts should be in balance. To insist on this amid mutual benefit requires self-discipline because part of the benefit is spent in the restoration and playing out of balance. It is thus perhaps not an accident that the paradigm of imbalances amid mutual benefit was dominant for decades; the system itself might tell us something about modernity and ourselves.

Source:

Shai Oster, “China’s Rising Wages Propel U.S. Prices,” Wall Street Journal, May 9, 2011, p. A2.

Obama Caved to the Agribusiness Lobby

Faced with political pressure from Republicans and farming groups, the White House decided in April 2012 not to go ahead with rules that would have prevented children from “operating heavy machinery, handling tobacco crops, working in grain silos or performing other jobs considered potentially dangerous.”[1] The Labor Department issued a statement indicating it was withdrawing the rules due to concern from the public over how they could affect family farms. “The Obama administration is firmly committed to promoting family farmers and respecting the rural way of life, especially the role that parents and other family members play in passing those traditions down through the generations,” the department announced.[2] I contend that this rationale was a ruse intended to cover up the true source of the political pressure. Family farms were actually exempted from the proposed rules.

"Although family farms were actually exempted from the proposed rules, many opponents cast them as an assault on family farms and rural traditions, saying the White House wanted to keep children from doing even small chores. In fact, the rules would only have affected minors who were formally employed and on farm payrolls.”[3] To get at why Republicans would have stressed the family farm ruse, it is necessary to go to the funding—for motivation tends to follow it.

From 1996 through at least 2012, agribusiness has given much more to Republicans than to Democrats.[4] The disproportionate giving gave Republican lawmakers a financial (and political) incentive to protect agricultural corporations from regulations they do not want. Because the family farm has a much better reputation in society, it makes political sense that Republicans (and even the farm groups) would claim to be protecting the family farm when the real intent is to keep agribusiness free of unwanted regulations. What is surprising is not the subterfuge; rather, the surprise lies with the Democrat in the White House who caved into the agribusiness interest in spite of where that sector was directing its political contributions. Given the political maxim that perception can become reality, it is likely that the family farm subterfuge worked and Obama felt he had to acquiesce to it or be viewed as against the rural family in the midst of his re-election campaign.

See Related Essay: “Oil and Gas Companies: Citizens Buying Government”

1. Dave Jamieson, “Child Labor Farm Rules Scrapped by White House under Political Pressure,” The Huffington Post, April 27, 2012.
2. Ibid.
3. Ibid.
4. Dan Froomkin, "Corporate Campaign Contributions Show Some Industries Giving Up Appearance of Bipartisanship,”  The Huffington Post, April 26, 2012.