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.  

The full essay is at "Greedy Grocers."

A Strong State vs. The Market Mechanism in China

Under Marxist ideology, the Chinese economy was a command-and-control economy eschewing the market mechanism. Mao's collective farms provide us with a good example. The economy of the U.S.S.R., also Marxist, was based on production quotas and fixed prices. They changed by fiat rather than by changes in demand. State owned, or socialist, productive enterprises were given quotas based on the prior year's production (plus more). This push replaced that of producing more to sell more. Any hint of a market brought with it the stench of Capitalism. So one would suppose that China marked a significant departure when the government announced in 2013 that it would expand the range in which the yuan currency would float. Yet in 2019 in the midst of a trade tussle with the United States, the Chinese state demonstrated just how dominant the state still was relative to any market system.  

The full essay is at "Strong State vs. The Market Mechanism."

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 is at "2012 U.S. Trade Deficit" 

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.

The full essay is at "Economic Imbalances between China and the United States."

The Triangle Fire of 1911: A Story of Greed, Control, and Sadism in Business

If the standard business calculations and even greed are not sufficient to account for what occurs in the business world, perhaps we need to dig deeper in order to get to more subterranean motives that are not typically thought to surface amid the business fauna and flora. Did Richard Fuld, the CEO of Lehman Brothers when it collapsed in 2008, tell his subordinates to keep buying real-estate-based properties and securities because he was greedy? Was it greed that relentlessly pushed him to over-reach as repeatedly found Lehman to be wanting in comparison with Goldman Sachs? Rather than cutting into Lehman's over-dissected cadaver to look for pathogens besides greed, I engage here in a "dig" vicariously near Washington Park in New York City, at the site of a horrendous fire in a garment factory that occurred about a century before the implosion at Lehman Brothers. 

On March 25, 1911, 146 garment workers burned in the infamous “Triangle Fire.” The vast majority of the people who died—the youngest being 14 years-old—were women. Onlookers at street-level watched helplessly as 62 workers jumped or fell to the ground—many aflame as they plummeted. Louis Waldman, who would be elected to the New York Assembly, describes the scene as follows:

“Word had spread through the East Side, by some magic of terror, that the plant of the Triangle Waist Company was on fire and that several hundred workers were trapped. Horrified and helpless, the crowds—I among them—looked up at the burning building, saw girl after girl appear at the reddened windows, pause for a terrified moment, and then leap to the pavement below, to land as mangled, bloody pulp. This went on for what seemed a ghastly eternity. Occasionally a girl who had hesitated too long was licked by pursing flames and, screaming with clothing and hair ablaze, plunged like a living torch to the street. Life nets held by the firemen were torn by the impact of the falling bodies. The remainder waited [on the ninth floor] until smoke and fire overcame them. The fire department arrived quickly but . . . [had no ladders]  that could reach beyond the sixth floor.”[1]

The Triangle Fire in 1911. Why did NYC allow the construction of a building whose top floors were beyond the reach of existing fire ladders? (Image Source; wikipedia)

As policemen looked on helplessly, I wonder if any of them remembered beating those same workers a year before when the entire garment labor force in New York City went on strike in order to unionize. Max Blanck and Isaac Harris, the company’s owners, had paid off the police (and hired prostitutes) to attack the striking women. Adding insult to injury, the police would arrest them and tell the judge that the women had attacked them. Tellingly, Blanck and Harris held firm on the union issue even as the owners of the other companies capitulated on that pivotal point.

Blanck and Harris steadfastly believed that ownership of a factory meant that only they had the right of control not only over the terms of labor, but also what goes on inside the factory.[2] Hence, they were able to retain the industry norm of locking side exits so foremen could inspect the worker’s and their bags for stolen materials. Even though this policy doubtlessly came from the two owners, they subsequently claimed that they had not known the side doors were locked on the ninth floor and thus were not culpable as they made their way to the roof and onto another from the tenth floor. Incidentally, the foreman on the ninth floor managed to leave without unlocking any of the alternative exits. The owners evaded a criminal manslaughter conviction by discrediting a credible worker-witness, but they would have to pay $75 per victim, which the insurance settlement more than covered with $60,000 to spare.[3] In short, the owners who had singularly resisted unionization actually made out rather well from having defeated their workers’ demand for a safer workplace.

To be sure, winning on the union point was not necessary for an agreement on safety, as the two owners agreed to reduce workweek hours and increase wages. I submit that greed and the resulting unethical policy and conduct may not suffice in getting to the bottom of this tragedy. Far less obvious than the mangled, bloody pulp on the sidewalk is the owners’ shared mentality. Although a level of industry competition fit for Adam Smith’s The Wealth of Nations motivated Blanck and Harris to incessantly strive to reduce costs, including the labor cost of production, a fixation on being in control certainly of their “stuff” and even other people—almost to the point of viewing the workers at work as part of the “stuff”—may have surpassed even greed as the underlying motivation or even obsession. Certainly the owners were unique in the garment industry then in the extent to which they refused to admit a union during the strike in 1910; unionization represented to them an affront to their total control.[4] In other words, Blanck and Harris may have had “control issues.”

Even so, “being the boss” may not get us far enough down in our archeological dig. In 1913, Blanck was arrested again for locking the door in his factory during working hours.[5] In retrospect, the discredited worker who had testified two years earlier on the Triangle factory fire must have felt some vindication, at least concerning Blanck’s association with the short-sighted policy. The fine of only $20 unlikely had much impact on Blanck in his second venture, the workers of which could have little faith in the gilded justice of the courts and the moneyed laws of the legislatures.

One of the floors on which Triangle sewers worked. (Image Source: YouTube)

For our purposes here, that Blanck “just didn’t get it” even after the horrific tragedy in 1911 points to a sordid mentality beyond even a rather extreme control-fixation coming out of an inner sense of insecurity or emotional instability. The sickness also manifests in Blanck’s (and Harris’s) decision in 1910 to start the violence by paying prostitutes and officers of the law to beat workers on the picket line as though the two owners themselves had been attacked. Can we really say that they were not somehow involved in starting the fire, even if indirectly through a foreman putting a lit match in a scrap bin on the eighth floor? After all, the owners and foremen made it out of the building relatively quickly, and they already knew how to subvert officers of the law (both police and judges) so respect for the law would not have been an obstacle. The prospect of a nice insurance settlement may have also been in the mix, even if the money were secondary to the fuming desire to inflict still more pain on the workers who had presumed even to question the bosses’ (right of) control. I suspect the owners viewed the workers as subhuman in a sense, certainly not worthy of respect as fellow human beings.

In short, a certain sadism may enter into the equation as the desire to see those whom the owners viewed as inferior suffer for having dared resist the total control and insist on a share as a unionized workforce. I suspect the owners viewed themselves as the parents (or adults) and their workers as their children (based on level of income and being immigrants) even though this family picture breaks down even as a metaphor when the workers leave work. As “parents,” Blanck and Harris must have been jolted in 1910 as they finally had to encounter the “daughter” they had always excluded from the family (i.e., labeling her as a “black sheep” and so informing, or forming, the other family members as if supporting actors). The system works for the family’s dominant coalition and its enabling stakeholders (e.g., owners, foremen, suppliers, police, and the courts) by shielding them from their own pathologies. By 1910, the “daughter” had grown up sufficiently in self-confidence to recognize the ruse and insist, even at the risk of starvation (i.e., being estranged from the only family/normal she had known), on a share in the control governing and structuring her relationships with those who by then had become well ensconced in monopolized control. Blanck and Harris (two gay parents?) must have felt humiliated as their conveniently labeled “problem child” began to relate to them as one adult relates to another. A warped perspective maintained over years from the sheer willfulness of an underlying pathology can withstand the onslaught of reality with remarkable stubbornness. Hence, Blanck maintained his “locked door” policy in the wake of a horrific showing of reality.

The force of a warped mind engaged in business can overcome resistance from even greed; turning strikers into resentful victims (and perhaps even burnt corpses) is not exactly good business (i.e., financially as well as ethically). Reducing business to its financial element, treating it as the basis of business, not only enables Blanck’s and Harris’s absolutist notion of private property (the analogue in government being absolute national sovereignty), but also discounts or dismisses outright putrid motives that may reach further down than greed in the recesses of the mind, where hypertrophic (exaggerated) subterranean emotional monsters can evade the light of day by as they slither about in the river Styx.

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1. Louis Waldman, Labor Lawyer (New York: E.P. Dutton & Co., 1944), pp. 32–33. If you are a writer or interested in improving your writing, the following sentence from the quote above provides a good example of what not to do. Waldman writes, “Life nets held by the firemen were torn by the impact of the falling bodies.” This sentence is in the passive voice (e.g., It was done by him). The passive can be used to emphasize a noun that would be the direct object in the active voice. Did Waldman really want to emphasize the life nets? “Falling bodies” fits better with the emphasis in the paragraph. Try this out for size: “The falling bodies tore through the life nets being held up by firemen.” Here, I want to emphasize the life nets more than the firemen, so I have used the passive voice in the subordinate clause. There is indeed a place for the voice, but only strategically rather than as a habit (often gained from using the device to evade responsibility rather sheepishly (e.g., “You will be asked to show I.D.” rather than “I/We will ask you for your I.D.”). Little people finding themselves with some power tend to find the allure of passive aggression too tempting to resist. Hence Maggie Smith’s line on Downton Abbey, “We give these little people some power and it goes to their heads like strong drink.” Notice the active rather than passive voice here as the Dowager Countess pushes back against the lower passive aggression. Part of my intent as a writer is to make the subterranean agendas transparent so we all know what is really going on rather than continuing to be beguiled by mere subterfuge primped up like some tropical bird.

2. Interestingly, 21 years later, Adolf Bearle and Gardiner Means would pen The Modern Corporation and Private Property in order to present their thesis that ownership (i.e., the stockholders) had become separated from control (i.e., the management) in the large-scale corporation-form of business enterprise. Blanck and Harris both owned and managed their company, and thus viewed the two as rightfully fused.

3. John M. Hoenig, "The Triangle Fire of 1911", History Magazine, April/May 2005.

4. “Triangle Fire,” American Experience, PBS (aired February 25, 2014.

5. Hoenig, “The Triangle”

Congressional Statements on Obamacare: A Crack in Representative Democracy

Even as democracy has many virtues, the political system is not without its own weaknesses. In times of economic crisis, such as Germany in the 1930s, stressors can “fan the flames” such that a few opportunistic people can exploit the vulnerability to the extent that the democracy itself collapses. The “rising phoenix” is often much worse than the original weakness. In this essay, I analyze how a congressional report on “Obamacare,” or the Affordable [health] Care Act, triggered a chain reaction that brought a weakness of representative democracy to the surface. Unfortunately, I do not believe many people thought it very serious (i.e., systemic implications); most Americans probably did not even notice the brief rupture on the skin of the U.S. body politic. For my “microscope slide” of the underlying “virus,” I have carefully selected a slice of the relevant “biomass” in which the pathogen can be most easily seen; it is hardly partisan in nature even though it tends to manifest as such. While you examine my “slide” below, I recommend that you ignore the partisan puss lest you miss the proverbial “fly in the ointment.” Once you have detected the rascal, you might want to ask yourself whether the lapse in representative democracy now rendered transparent is sourced in the people or their respective representatives.

On February 4, 2014, the Congressional Budget Office released a report that mentions in a “oh, by the way” fashion a novel twist in how Obamacare could be expected to impact jobs. Whether out of sheer gamesmanship or ignorance (of whom?), some of the public conclusions from Congressional leaders show more generally the gulf between what the public “is fed” by elected representatives and the actual content they claim is behind their interpretations.

Providing a succinct account of the “twist,” congressional budget analysts said that 2.3 million Americans “who would otherwise rely on a job for health insurance will quit working, reduce their hours or stop looking for employment because of new health benefits available under the Affordable Care Act.[1]

House Budget Committee Chairman Paul Ryan’s first statement on the report, however, concludes that the report proves that the health care law “will push 2.3 million people out of the workforce.”[2] At the time, many of Ryan’s Republican colleagues were making similar claims. I want to isolate the word push here, for it is logically incompatible with the report’s claim that people staying in a job only for the health-insurance benefit will no longer have to continue in the job to receive affordable health-insurance.

Notably, some influential conservatives were cautioning Republican members of Congress to be careful with their own nterpretations, lest constituents and even the public at large (domestic and even global) catch a glimpse of the proverbial “man behind the curtain.[3] Writing in POLITICO magazine on February 4th, National Review editor Rich Lowry notes that “we aren’t talking about jobs that are eliminated in the usual sense of discouraging employers from hiring, as some Republican talking points suggested.”[4] Yet this warning did not stop Rep. Lynn Westmoreland from referencing the CBO report on February 11th as Janet Yellen, the new chair of the Federal Reserve, faced a House committee. Adopting a factual tone, Westmoreland told the Fed chair that the Affordable Care Act "is estimated to cost more than 2.5 million jobs over the next decade." He then asked her whether she thought Obamacare would have an impact on "economic growth and job creation."[5] Lest I belabor the obvious, 2.3 million is less than 2.5 million, and, moreover, the report does not claim the jobs would be lost, as implied by "cost" and "job creation." 

Notice that Rep. Paul Ryan is using "props" (e.g., gray suit, button, flag, and the all-caps title) that add to the visual impression of authoritative fact rather than opinion, ideology, and interpretation. (Image Source: CNN)

Rep. Ryan had at least gone out of his way on February 5th during a hearing on the report to “clarify” his initial statement. “So just to understand this," he said, "it’s not that employers are laying people off, it’s that people aren’t working in the workforce, aren’t supplying labor to the effect of 2 and half million jobs in 2024, and as a result that lower workforce participation rate, that less labor supplied, lowers economic growth?” he asked CBO director Doug Elmendorf.[6] The easy pivot may have saved the Budget Committee chairman his credibility, yet Westmoreland's statement and question demonstrate that disinformation can have considerable staying power, even becoming the default, nonetheless.

I submit that the misinformation had been so glaring that even the general public, otherwise occupied with life, might notice the sheer distance between Ryan’s conclusion and what credible experts were saying of the report. Do we know what is really going on? If not, how can we make good judgments in voting?

In other words, the democratic premise of viable self-governance by a virtuous and educated citizenry may contain an inherent weakness in as much as the electors rely on their respective representatives for information translated for general consumption via interpretation. As the number of electors per representative increases (i.e., larger districts, especially if in an empire-scale republic of republics and citizens), the reliance increases, exponentially I suspect. For one thing, the constituents must rely increasingly on the media to transmit (and shape) their respective representative’s interpretations.

Furthermore, “official” misrepresentations by elected representatives can mask for many voters the value to the individuals who no longer have to work in a (second) job they hate, the companies for whom motivated employees are an asset, and even society itself (happier people). To be sure, a lower labor-force participation rate in a particular job category means higher wages (to attract potential workers), other things equal. Some employers may find that the increased commitment is not worth the more tangible monthly cost.

In fact, Obamacare may not even be the primary culprit behind relatively fewer people seeking employment.  According to The Washington Post, CBO’s analysis points out that “the upward pressure on [the labor participation] rate from improvements in the economy will be more than offset by downward pressure from demographic trends, especially the aging of the baby-boom generation.”[7] By implication, the downward pressure from Obamacare come in second, at best. As part of her congressional testimony on February 11th, Fed chair Yellen did not even mention the Affordable Care Act as a factor in the downward pressure; rather, she pointed to the aging population as the main contributor in the downward trend, with structurally and cyclically unemployed giving up playing a secondary role.[8]  

That the 66% participation rate held from 2004 to 2008 suggests that sustained increases in GDP can counter the huge aging factor as the unemployment rate falls. However, as shown in 2010-2012, both rates can fall concurrently, suggesting an impact from the long-term, or structurally, unemployed losing unemployment compensation and even finding further job-hunting to be futile.

Lest business managers fear a spike in wage rates, the report projects that the unemployment rate will decline only gradually, not dropping to 5.8 percent until 2017 and 5.5 percent in 2024. “Factors such as obsolescent skill-sets and the spread of automation that have fed into the persistently high long-term unemployment are expected to have diminishing effects on the unemployment rate after 2017.[9] We can expect, therefore, that the positions freed up by demographic changes and Obamacare will not go vacant for long; as pointed out above, it is not as though the positions themselves are to be sacrificed on the altar designated by the O-god.

In short, Ryan’s initial statement suggests not just that elected representatives are capable of putting out blatantly false “information” on a policy or new law (this is hardly a revelation), but also that electors may make electoral and public-policy judgments on the false assertions. Especially in a large, empire-scale republic like the U.S., the E.U., or India, the citizenry may have to rely so much on media-shaped sound-bites that the pronouncements are instantly stamped not only with legitimacy, but also as the default. In other words, an interpretation said into a microphone and then broadcast by the media enjoys the presumption of being true even if it is blatantly false. Falsity as truth coming from elected officials is not necessarily checked, since no other quarter in the public discourse has so much authoritative status. Furthermore, the media no longer speaks with one voice, so any “truth correction” may be eclipsed by rhetoric or assumed to be mere partisanship. In terms of representative democracy itself, the representatives may be able to exploit the inherent informational-difference that exists between them and their respective electors.

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1. Zachary A. Goldfarb and Amy Goldstein, “Health-care Law Will Prompt over 2 Million to Quit Jobs or Cut Hours, a CBO Report Says,” The Washington Post, February 4, 2014.

2. David Nather, “Both Parties Keep Cherry-picking CBO Report,” Politico, February 8, 2014. See also "ObamaCare Could Lead to Loss of Nearly 2.3 Million Jobs, Report Says," Fox News, February 4, 2014.

3. This reference is to the Wizard working the controls behind a curtain in the film, The Wizard of Oz.

4. Zachary A. Goldfarb and Amy Goldstein, “Health-care Law Will Prompt over 2 Million to Quit Jobs or Cut Hours, a CBO Report Says,” The Washington Post, February 4, 2014.

5. "Economy & Monetary Policy," U.S. House Financial Services Committee, February 11, 2014.

6. Zachary A. Goldfarb and Amy Goldstein, “Health-care Law Will Prompt over 2 Million to Quit Jobs or Cut Hours, a CBO Report Says,” The Washington Post, February 4, 2014.

7. Ibid.
8."Economy & Monetary Policy," U.S. House Financial Services Committee, February 11, 2014.
9..Zachary A. Goldfarb and Amy Goldstein, “Health-care Law Will Prompt over 2 Million to Quit Jobs or Cut Hours, a CBO Report Says,” The Washington Post, February 4, 2014.

Moody’s: Statist France Lagging in the E.U.

Bashing the French in a major article on their lack of business competitiveness, the Economist was the target of la colère en Paris in November 2012. Just after the magazine’s warning that France could be the next danger-zone for the euro due to relatively high labor costs and unemployment, Moody’s cut the state’s rating to Aa1 from Aaa and kept a negative outlook on the rating. Moody’s cited the state’s economic weakness and the risks to the finances of the state government “posed by” France’s “persistent structural economic challenges.” In this way, Moody’s analysis dovetails with that of the Economist. Both pointed to a sort of impotence in French industrial policy. Moody’s decision excluded factors from the broader debt crisis in the E.U., focusing instead on the French government’s continued “reliance on borrowing to finance generous social-welfare programs” even as businesses in the state were laying-off employees. In other words, Francois Hollande had not gone far enough in his policies to make a dent in the state’s deficit as well as the downward trajectory of French competitiveness in the E.U. Meanwhile, deteriorating economic conditions in the E.U. were effectively closing the window of opportunity on even a one-party government being able to enact substantive reform. I contend that the gap between what the Socialist party could do, given its absolute majority in the legislature, and what it was actually doing contributed to the criticism.

Changes in real GDP in the state of France. A general downward trend-line is apparent.     
Source: World Bank

The full essay is in Essays on the E.U. Political Economy, available at Amazon. 

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.

The full essay is at "Obama Caved to the Agribusiness Lobby."

1. Dave Jamieson, “Child Labor Farm Rules Scrapped by White House under Political Pressure,” The Huffington Post, April 27, 2012.

2. Ibid.