Views » May 8, 2009 » Web Only

Piggish Capitalism

By David Sirota

Even if you don’t dig on swine, it has become impossible to avoid them. If you’re not pummeled by television reports about Wall Street oinkers, you’re bombarded by talk-radio rants about congressional pork and newspaper dispatches about swine flu.

The bacon-flavored themes probably aren’t purposefully repetitive, but that’s OK because these seemingly unrelated story lines share a common bond: They are each part of what might be called piggish capitalism—an economic theory that mixes subsidization, consolidation and deregulation and that now endangers us all.

Take the pandemic scare: The Associated Press says scientists suspect swine flu began in a Mexican town that “has been protesting pollution from a large pig farm” partially owned by the Smithfield company. That’s the same Smithfield that used three decades of lax anti-trust enforcement and corporate welfare to become one of the few mega-corporations now controlling global agribusiness.

Whether or not swine flu is ultimately attributed to this company is less important than the justifiable reason factory farming is a suspect. As Pew Charitable Trusts documented in 2008, researchers have long warned that industrial agriculture means high concentrations of waste, overuse of antibiotics and “continual cycling of viruses and other animal pathogens in large herds”—all factors that increase the possibility of diseases like swine flu.

Yet, Congress has repeatedly rejected bills to mandate vigorous health inspections, stop agribusiness consolidation and halt subsidies underwriting that consolidation, meaning these companies are now so huge and unchecked that they can pose a worldwide threat when livestock-borne disease strikes. It’s easy to understand why: A virus that might have been constrained by small herds in our family-farm-dominated past can now exponentially metastasize in our factory-run present. Thus, Wired magazine’s article noting that “scientists have traced the genetic lineage of the new H1N1 swine flu to a strain that emerged in 1998 in U.S. factory farms, where it spread and mutated at an alarming rate.”

Unregulated, taxpayer-subsidized oligopoly spreading risk…Sounds familiar, right? It should, because at the very moment agribusinesses were vertically and horizontally integrating themselves, so too were financial firms.

In 1999, five days before Congress rejected a proposal to temporarily halt agribusiness consolidation, President Clinton signed a landmark deregulation measure that “ushered in an era of aggressive bank mergers,” as Reuters reports. The result was what critics like Rep. John Dingell, D-Mich., predicted at the time: Wall Street created “a group of institutions which are too big to fail” and that “taxpayers are going to be called upon to cure.”

Mass producing mortgage-backed securities that were quickly infected with subprime mutations, these financial factory farms became so enormous and unregulated that they spread toxic assets throughout the entire economy. Like the swine flu outbreak, risk might have been confined in a diversified industry of small firms, but that risk went global because the behemoths that created it now dominate the entire financial sector. And when losses mounted, the government made banks whole with trillion-dollar bailouts.

Incredibly, our government hasn’t learned from these crises. Regulation-wise, there have been no serious initiatives to replace factory farms’ voluntary self-inspections with mandatory government probes, and new financial rules have yet to move in Congress. Additionally, the much-vaunted bank “stress tests” have been shrouded in secrecy, which experts say created the potential for rampant insider trading. Likewise, in terms of pork-barrel subsidies and mergers, agribusiness handouts and consolidation continue unabated. Meanwhile, the White House seems loath to break up financial firms, preferring instead another bank bailout—even as analysts warn that such bailouts fuel merger mania.

Pigs may, in fact, be the smartest domestic animal. But when charged with managing capitalism, they clearly have trouble comprehending the simplest lessons.

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• Reader Comments

  I love reading Sirota’s stuff.  The gentleman is a perfect idiot.

  The 1918 flu pandemic was the worst in history, killing 50 million worldwide.  And predating “lax anti-trust enforcement and corporate welfare”, “global agribusiness”, and “factory farming”.

  I defy you to explain how “overuse of antibiotics” can possibly “increase the possibility of diseases like swine flu”, since swine flu is a virus and antibiotics have no effect on viruses.  While you are at it, document all the bad effects of “overuse of antibiotics” in this context.  Your left thumbnail will be entirely adequate for this purpose. 

  Swine/bird/human flu shifts and mutates across multiple diverse species.  Air travel restrictions may reduce flu distribution, but no one has come up with an air traffic control system for wild birds.  And the value of air travel and tourism, for example, far outweigh the negligible dangers of the current infection.  On average, over thirty thousand people in the USA die from flu each year, and the total USA deaths from the current panic is exactly two.  So, why is Sirota panic-mongering?

  And “scientists have traced the genetic lineage of the new H1N1 swine flu to a strain that emerged in 1998 in U.S. factory farms, where it spread and mutated at an alarming rate.”  Read Sirota’s sentence three times and see if it makes any sense at all.  If I understand him correctly, after eleven years of spreading and mutating at an alarming rate, we now have an extremely minor outbreak.

  And then Sirota produces the obligatory condemnation of “piggish capitalism”.  His prime exhibit for “piggish capitalism”? Subprime mortgages, one of the periodic Marxist disasters that Democrats inflict on the American economy.  The previous Marxist disaster was LBJ’s War on Poverty that had a $6.6 trillion price tag over a thirty-year period and that was a total waste and a monumental example of corruption and bad results.

  Capitalism works quite well, thank you, as may be observed by the steady growth of the economy from 1945 to 1965 (interrupted by LBJ’s Great Society when the markets went flat for seventeen years with three recessions culminating in the Carter Catastrophe), from 1983 to 1995 (Interrupted by the Bubba Bubble and the resultant recession), and from 2003 to 2007 (interrrupted by the Democrats mortgage follies).  The secret of capitalist success is simply keeping thieving Marxist hands out of our cookie jar. 

  Now Obama is loud and clear that he does not want capitalist growth, he wants Marxist equality.  This will be the damnedest disaster ever inflicted on the Republic.

  Posted by scorp on May 8, 2009 at 8:36 PM

  Scorp,

  While you are right-on, regarding the use of antibiotics on a virus, my doctor has cautioned against my taking too many of them since they may lose their effectiveness on a truly serious case of pneumonia (which I am prone to get.)

  I must agree with the piggishness in D.C. and Wall ST.

  The massive bailout and protection of bank bond holders is, IMO, one of the biggest travesties — EVER.

  Too big too fail? How does allowing mergers and buyouts fix that?  Bonuses for the talent too big to fire? It’s like sendin a “Thank You” gift to a prostitute who gave you the clap!

  Obama’s unread-before-passing budget is so pork infested, I’m reasonably sure more people have died of heart attacks upon reading/hearing about it than swine flu will ever get.

  Swine flu as a threat? So far, three deaths in US — approximately the number of people who have choked to death this year on a peanut butter sandwich. I’d like a comparison to the number a bicyclists run down by drivers with a phone growing out of his ear. Now there’s a threat I’ve been scared by.

  Along with the deregulating which brought this on financial boondoggle were regulations and legislation favoring banks and their boards.

  Fannie mortgage loan limit was raised to $400,000 and Exec and board pay tied to dollars loaned. The idea that homeownership is a “right” added $millions to the most"likely to become nonproductive” loan list.

  AAA ratings by Moodys and Standard & Poors coupled lately with the FSAB lifting of mark to market every three months on loans has suddenly made banks “profitable”.

  The only real stress test is the stress on the belief system of the American public.

  My list of friends and family who have been trampled since the rush to globalize, right-size, down-size, maximize core profits, incentive-ize with stock options… has taken a big jump since The Great Bank Fraud & Mortgage Shell Game.

  This latest phase is perhaps the saddest since it has devastated the life savings of several elderly friends (anyone older than I). These are folks who never considered “welfare” would be a part of their lives. People who survived the 1929 Depression and WWII. They are used to giving, not accepting. These members of “The Greatest Generation” have had their self-respect stolen by the very nation they risked everything for.

  It has now reached people in their late 80s and 90s. They are totally baffled by what has happened to what they thought were the safest, most conservative places to put their income producing savings.

  The hypocrisy of the Fed, Treasury and financial “experts” during this fraud is pathetic.

  Posted by whattheheck on May 11, 2009 at 2:45 PM

  Boy, scorp, is out of control: “I defy you to explain how “overuse of antibiotics” can possibly “increase the possibility of diseases like swine flu””

  Sirota clearly DOESN’T in any way assert that connection. scorp is just linking two separate statements. (Faulty head wiring?)

  And look at how much space this blowhard takes!

  Posted by Dr Cornelius on May 11, 2009 at 5:33 PM

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