Build Back Better (or broke) died because of two senators holding positions they had staked out earlier in 2021. The Democrats thought surely they could change these two minds. Not so far.
Sen. Joe Manchin (D-WV) opposed the massive spending in the bill—the tendency of the bill to give away money with no work requirements or any means tests. He also had misgivings about social engineering that would drastically change our economy and culture.
Manchin was open—and still is—to increasing tax rates. Though repealing the Trump/Republican tax cuts was not in that bill, Manchin would be okay with partially rolling them back.
Sen. Kyrsten Sinema (D-AZ) was the reason the Democrats couldn’t raise tax rates. She did not feel Americans should pay more taxes, and her position is stronger now, given higher inflation rates and fuel prices hammering all levels of production. Only members of Congress and big city dwellers riding subways and trains can fail to understand the plight of people in the rest of the country.
Though most of the beef industry has come together in opposing mandates turning cattle market control over to the government, it’s not over yet. There are members of Congress who think mandates would “solve” the industry’s marketing problems. There are still cattlemen’s groups who agree.
No word yet on how Congress can repeal the laws of supply and demand. It can distort, muffle and stifle market signals from consumers.
The beef industry got a mention in President Joe Biden’s State of the Union speech but not for supporting America’s free markets. Biden is still stuck on the faulty idea that the number of companies in an industry is the key determinant of competition in an industry.
He and his advisers either seem unfamiliar with beef industry market dynamics, do not understand basic free markets or are laser-focused on antitrust notions. There’s been an administration antitrust push from the beginning. It’s their hammer—and everything looks like a nail.
The issue revolves around claimed “control.” If there was no competition in the industry, if the big packers “controlled” the market, the price of cattle would not move unless they permitted it. There would have been no then-record prices for cattle in 2014 and 2015. Packers would not have lost hundreds of millions of dollars in many of the years of the 21st century or shut down plants if they “controlled” the market. There would have been no major move in cattle prices at the end of 2021 and the beginning of 2022.
The fact that supply and demand moved the market, that the worm turned in recent months with tighter cattle supplies giving leverage to feeders again, demonstrated that the market works over time. The dynamics of the industry are that there are hundreds of thousands of cow-calf operators and a couple thousand major feeders at one end of the beef chain. They make independent decisions that affect the number of cattle available—and sometimes they make more cattle available than the market demands.
At the other end of the beef chain are consumers who want quality and consistency, but most have limited budgets. That puts price pressure on the chain. Cost is a serious consideration to consumers and therefore to the production chain and particularly to packers. The size and scale of the big packers are intrinsic to the beef industry’s ability to compete pricewise with the pork and poultry industry—and alternative center-of-the-plate entrees.
Putting the government in the position of determining the numbers at any level of the production chain ruins the whole model of letting consumers tell the production chain what they want and what they are willing to pay.
The importance of getting and responding to those market signals is absolutely critical. Our ignoring those signals is what severely damaged beef demand in the ’70s and ’80s and truly took the industry into a nosedive of constantly selling less beef for less money.
The industry refocused on consumer demand, figured out ways to meet it and has gotten very good at it, which is why our beef demand today—from consumers here and around the world—is the best it’s been in over three decades domestically and ever in the rest of the world. We tamper with those basics at the extreme peril of our industry. Improve around the edges, sharpen our delivery, do what we do better, faster and cheaper—but forget who’s boss, and we will nosedive again like a bomber headed for the drink. — Steve Dittmer, WLJ columnist
(Steve Dittmer is the author of the Agribusiness Freedom Foundation newsletter. Views in the column do not necessarily represent the views or opinions of WLJ or its editorial staff.)
