Beak Capitalism, Part 3: Un-Clucking the System

SPEAKER_1 (0:03)

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Joe Weisenthal (0:11)

Joe, why did the chicken join the Revolutionary War?

Tracy Alloway (0:15)

I have no idea.

Joe Weisenthal (0:16)

Because it didn't want to be cooped up under British rule.

Tracy Alloway (0:18)

Okay, but setting aside the terrible puns, wasn't it really about taxes?

Joe Weisenthal (0:23)

Joe, Joe, why did the colonial chicken refuse to pay British taxes? Because it didn't want to put all its eggs in King George's basket. Should I keep going?

Tracy Alloway (0:32)

No, I'm good. I'm good. Thanks. I'm good.

Joe Weisenthal (0:34)

Okay, fine. To understand chicken and the current landscape of the US economy and the companies in it, it helps to go back in time and revisit a few key moments in US history.

Doha Mekki (0:46)

Going back to the founding, Americans were actually suspicious of the power of large corporations and one reason for that is that it used to be that the government would grant corporate charters, right? There's this history in the United States before general incorporation statutes, that corporations are really creatures of the state. So there was always the suspicion that if they grew to be too powerful, the kind of abuse that they could bring to bear on the lives of ordinary people was really extensive.

Joe Weisenthal (1:19)

Doha Mekki is the principal deputy assistant general in the antitrust division of the Department of Justice. That's a long title. It means she's the second highest ranking official there.

Tracy Alloway (1:30)

Today, the US government has a whole constellation of laws, acts and agencies all aimed at ensuring that America's economy remains fair and competitive. One of the most important is where Doha works, the DOJ.

Doha Mekki (1:42)

The antitrust division is one component of many at the Justice Department, and our specific mandate is to enforce the antitrust laws and essentially to guarantee and vindicate the economic liberty of all Americans. And we do that by enforcing the federal antitrust laws, the best known of which are the Sherman Act and the Clayton Act.

Joe Weisenthal (2:04)

You've probably heard of these before. The Sherman Antitrust Act of 1890 was famously deployed in the breakup of standard oil back in 1911, which is still probably the country's most well-known antitrust case. And the Clayton Act arrived soon after that. But America's approach to antitrust has constantly changed over time.

Tracy Alloway (2:24)

And chicken, with all its accusations of price gouging and unfair labor practices and just huge corporate concentration, seems to be a perfect poultry petri dish to experiment with some new ways of looking at antitrust.

Joe Weisenthal (2:40)

Welcome to Part 3 of Beak Capitalism, our ongoing exploration of the US economy through the medium of chicken. In this episode, we are asking how we can solve some of the problems that Big Chicken creates. Can we actually uncluck the system?

Michael Cades (3:15)

So, a little bit of history. Actually, the relationship between agriculture and antitrust goes back to the beginning. Farmers were one of the big supporters of the Sherman Act, the first antitrust statute passed by Congress.

Tracy Alloway (3:31)

Michael Cades is deputy assistant attorney general for the antitrust division at the DOJ. He works alongside Doha, but recently he spent a lot of time focused on agriculture, because it turns out the DOJ has a long history with the food industry.

Michael Cades (3:45)

And early on, the Department of Justice brought a number of cases against meat packers. And along about 1914, Congress looked at the way the Supreme Court was handling that act and was not happy. So they passed the Clayton Act, which was supposed to broaden the enforcement powers of the division. They also created the Federal Trade Commission.

Joe Weisenthal (4:05)

And the first thing the president asked the newly created Federal Trade Commission to do was study the meat packing industry.

Michael Cades (4:12)

Fast forward to 1920, the FTC issues a three-volume report documenting everything going wrong in meat packing markets, both collusion and deception. And at the same time, the Justice Department files an antitrust case that breaks up the packing industry. And yet Congress still wasn't happy. So then in 1921, Congress now under strong Republican and a fairly conservative Congress passes the Packers and Stockyards Act, which really said, look, we are concerned that the people who ranch and grow hogs are always going to be facing very large, powerful interests, and we want to give them extra protections. And so was the antitrust laws focused solely on competition, the Packers and Stockyards Act actually provided explicit protection for ranchers, hog growers, and eventually chicken growers from deception, unfairness, discrimination.