Ruminations on Trade and Trade Wars: As of June 1, 2018

by Gilles Stockton

Gilles Stockton

Is this political grandstanding or is there an actual change in trade policy because It is hard to say if we are in a trade war with China or if it is just a lot of talk. We apparently imposed tariffs on Chinese steel and aluminum and China in turn has put tariffs on agricultural products. Now we learn that the tariffs will also apply on steel and aluminum from Canada, Mexico, and Europe. This talk of tariffs and trade war is not good news for producers of soybeans, corn, wheat, and pork, but so far, its seems to be more of a skirmish than a war.

Two weeks ago it was reported that China will not impose tariffs on US agricultural imports in return for our country allowing ZTE, a huge Chinese tele-communications firm, to purchase US produced components for which ZTE was previously banned because they violated sanctions on Iran and North Korea and spied on US customers. Apparently as part of this agreement, China will strive to import more agricultural products from the US in an effort to reduce its annual 376 billion dollar trade advantage over the United States.

But everything is up in the air again as the White Houses announced last week that we will impose 25% tariffs on a number of high tech Chinese imports. It is really not clear if we are in a “trade war” with China or not but there are underlying issues that need to be resolved. We, as a nation, have never had a substantive debate over the pros and cons of the trade agreements. Public debate has been difficult because the partisans of laissez-faire free trade refuse to debate. They brand anyone questioning the trade agreements as naïve moronic protectionists not worthy of consideration. But now after 24 years of experience with NAFTA (North American Free Trade Agreement) people have a lot of questions. Especially questions about how the trade agreements are structured and who wins and who loses.

Trade Deficit

According to the Free Traders, a half a trillion in annual trade deficits does not matter because trade is always good. They say that if China, or another even lower wage country such as Bangladesh, is willing to sell us stuff for less than we can manufacture it at home, it is like they are giving us free money. We should jump on the bargains and tell ourselves that the Chinese and/or Bangladeshis are chumps for selling things so cheap.

This misses something important because not everything one buys is actually useful. Much is simply “stuff,” purchased because it is in fact very cheap, but has no “intrinsic” productive value. Buying “stuff” you don’t really need can make you feel good but it is like throwing your money away.

“Productive” purchases on the other hand are an investment. A new truck, or tractor, or machine tool, or household appliance can potentially make you money or save you valuable time. If you habitually throw your money away, eventually you will have less money. If, on the other hand, you systematically invest your money in productive purchases, in the end, you will have more money. This is true for both individuals and for countries.

Unfortunately, our culture is addicted to shopping and this explains much of the trade deficit – we see this both in record levels of personal indebtedness and the ballooning national debt. Our political leadership structured the trade agreements to favor imports over exports.

We were repeatably promised that the outsourcing of our manufacturing capability would not matter because we will be the leaders of the “the new global economy.” That of course has proven to be not true. Our country and our people are steadily falling behind because we failed to make the educational investments needed to prepare our younger generation, or make sure that there were good jobs waiting for them.

A big problem with our government’s approach to the trade treaties is that we make no distinction about strategically important industries. We have simply outsourced the whole lot on the premise that the market will sort it out. China, however, is very strategic in its approach to trade. The term for this predatory capitalism is neo-mercantilist. If they can’t steal the technological advances outright, they insist that technology transfers be part of the cost of being granted access to the Chinese labor force and markets.

Meanwhile our wholesale embrace of outsourcing has resulted upon the US becoming dependent upon global supply chains, which when disrupted, cause wide spread economic harm. And, of course, we totally abandoned the people who once worked in those industries. By some accounts the net effect is 2 to 3.5 million jobs lost to China and another million to Mexico. The actual total is way more and hard to count because imports also creates jobs. The problem is that the “new American economy” does not pay as well as the “old.”

Strategic Industries.

This is still a dangerous world. War and environmental disasters are too common, and any country that becomes too dependent upon global supply chains is risking the lives and wellbeing of its population. There are such things as strategic industries, and our country should protect those industries from excessive and predatory competition.

Our national defense capability should of course be a protected. The viability of steel, aluminum, copper, and other metals industries is obviously important because metal is needed in so many manufactured products. It would be foolish to allow one’s entire metal refining industry be undermined by imports. Energy, electronics, aviation, robotics, artificial intelligence, and pharmaceutical production are candidates for protection. Food – any country that allows its food production capability to wither in favor of less expensive imports is putting its citizens at risk.

Sovereignty

Our sovereignty, and by extension our Constitution, has also been circumvented by the inclusion of “Investor-State Dispute Settlement” mechanisms in the trade agreements. Foreign governments and global corporations were given the right to challenge and overturn laws and regulations that the citizens of this country democratically enact. We have not even been allowed the opportunity to object.

What happened over Country of Origin Labeling (COOL) is an egregious example of how foreign governments and global corporations are allowed to interfere on our sovereign right to govern ourselves. In order to distinguish domestically raised beef, pork, and lamb, Congress, in 2002 passed a law requiring a label stating the country of origin.

The governments of Canada and Mexico, on behalf of the global meat packing cartel, challenged COOL. The issue was adjudicated by an international panel of three trade judges (one judge previously served as a trade official for Mexico). Since only government officials can address the essentially secret proceedings, representatives of the US cattle industry could not attend these hearings. Ultimately, the World Trade Organization tribunal ruled against COOL and Congress dutifully rescinded the right of US consumers to know the country of origin of their meat purchases.

This is obviously disturbing but given the secrecy in how the trade agreements were and continue to be negotiated – inevitable. The interests of the American public have been systematically excluded from participation in the trade negotiations. However, international investors and representatives of global corporations are at the negotiation table. Once a trade treaty has been negotiated, Congress is not allowed to debate the individual provisions but pass the entire treaty in an up or down vote. The process guarantees that the international trading system always favors the investor class, while undermining the rights of labor, and ignoring the environmental side-effects.

Equivalency

The laissez-faire free traders also dismiss the trade deficit on the grounds that a third to half of the total is created by domestic US companies who manufacture abroad but sell their products in America. If you are not an owner of that now global company, it cannot befit you. Most Americans, in fact, do not own stocks and therefore receive no benefit from outsourced production. A global corporation is beholding to its global investors – not to its employees, or to its customers, or to the country that initially gave it the opportunity to create its wealth.

All of the trade agreements were signed with our President at the time making lavish promises of immediate increases in exports. Time and again that proved not true because the treaties are clearly structured to favor imports. We grant trading partners favorable terms with little regard to equal access to their markets. We unilaterally dropped tariffs to nothing but still face both tariffs and non-tariff barriers for our exports. Currency manipulation to discourage imports and make exports more attractive is technically not allowed, but in practice nothing has been done to stop China from doing just that. In addition, China will not allow foreign investors to own more than 50% of a corporation. Chinese investors, however, face no restrictions when buying US corporations, including high tech companies in Silicon Valley. Equivalency, in terms of trade has not been a consideration for our government.

The VAT

Then there is an aspect that is almost totally ignored but effects everyday Americans directly – the Value Added Tax (VAT). A VAT is a national level sales tax that most countries in the world rely upon for funding their investments in infrastructure, education, and healthcare. The global average is about seventeen percent (17%). The United States is the only notable country in the world to not have a VAT. We, instead pay for infrastructure and public education through locally imposed sales and property taxes. Health care, for those fortunate enough to have health insurance, comes mostly from one’s employer.

The problem is that under the trade agreements, the VAT is refunded to the manufacturer for everything they export and imposed on all imports. For instance, a car that costs $25,000 in a foreign country of manufacture will have a net cost of 17% less ($20,750) on the US market. On the other hand, a $25000 car manufactured in the US will sell for $29,250 when exported to this same country.

Infrastructure, education, and health care must still be paid for, and if a US brand name global corporation has outsourced its manufacturing to foreign shores, that company is no longer contributing to the tax base of the US community it has abandoned. The people left behind are still on the hook, paying higher property and sales taxes for the maintenance of the infrastructure and the costs of public education. And since the “new American economy” often does not include health insurance, people struggle to pay their own health care costs.

Agriculture and the Promise of Exports

For the last half century, agricultural policy has been premised that if a farmer tilled more acres, used larger equipment, and employed the latest bio-technology, that this “efficient” farmer would prosper because of export demand. This policy worked as planned, the number of farmers since 1980 has decreased by two-thirds. Yet the surviving so-called “efficient” farmers of today find themselves perhaps even more vulnerable than farmers ever were. More land, more machinery, and astronomical operating costs translates to untenable debt.

Bigger farms of course also mean fewer farmers, and as a result the communities where farmers live and where their children attend school, are now hollowed out repositories for some of the poorest people in the nation. Rural America no longer resembles a picture by Norman Rockwell and is instead a widely disbursed slum. Too many living in Rural America are in a perpetual economic depression and anything that threatens to disrupt agricultural exports makes conditions even worse.

Unlike corn and soybeans, this country does not raise enough cattle to meet the domestic demand. As a result of the trade agreements we get high levels of beef and live cattle imports which in turn depresses domestic cattle prices. Agriculture, therefore, is not united in its opinion of laissez faire free trade. Cattle producer’s experiences with NAFTA, and the WTO are revelatory of the issues at stake.

For cow/calf producers and independent feedlot operators, NAFTA has been nothing but a disaster. Upon signing that trade agreement, all of Canada’s and Mexico’s cattle instantly became “captive supplies” controlled by the three major packers. A source of feeder and fat cattle that was invisible to the domestic market, making US cattle prices much easier to manipulate. To counter the negative effects of imports, American producers convinced Congress to pass COOL. The hope was that consumers would elect to purchased US produced product. In retaliation, the packers enlisted the governments of Canada and Mexico to use the “Investor-State Dispute Settlement” provisions imbedded in NAFTA to declare COOL discriminatory to the trading interests of Canada and Mexico.

The cattle industry also found out that International trade trumps animal health considerations. Because of NAFTA, we imported BSE (Bovine Spongiform Encephalophagy) from Canada and continue to import tuberculosis from Mexico. Our trade treaties with South America puts us at a high risk of importing Foot and Mouth Disease (FMD). An outbreak of FMD will devastate livestock production for decades. The trade agreements saddle livestock producers with the risks from imported diseases, while the global corporations rake in the rewards.

What American agriculturalists did not consider in their embrace of the imperative to “get bigger or get out of agriculture” and in the promise of lucrative export markets, is that as a consequence the competitive market for what they grew would evaporate out from under them. The “market” for all of the major commodities can no longer be called actual “markets.” None of these crops are sold subject to true “supply and demand’ in a transparent competitive market place.

Any segment of agriculture that is dependent upon exports to absorb its excess production is vulnerable to changes in demand, foreign wars, environmental disasters, and policy decisions by our own government. The Farm Bill does not even try to protect agriculture from price shocks caused by disruption in export demand. Nor do the makers of farm policy apparently care if farmers and ranchers have fair and transparent markets.

As a consequence, farmers and ranchers are no longer independent producers, selling into a free market. Instead we are serfs, contractually and financially dependent upon a handful of interlocking vertically integrated global monopolies. So, obviously, there is more to the rural economic crisis than just whether China buys American soybeans and corn. Those of us who grow food are pawns in the high stakes game of who benefits from laissez faire free trade and who loses. These are serious issues that go beyond the solvency of our farms, because the future of our country and the survival of our constitutional government is also at stake.

Lobbying by global agri-business and the farm groups that represent them target farmers and ranchers to pressure the Trump Administration to back off on the declared trade war. It hard to say what has been the effect of this lobbying, since the Administration is happily flip flopping back and forth again on the stated goal of leveling the trade playing field. Farmers and ranchers may have no influence over the market for our products but if we still have some lingering political influence, we need to stand up to the global agri-business corporations. For the sake of all Americans, the international trade regimes need reform. In the process we need a united front if we are to restore competitive markets, regain our independence, and rebuild our communities.

Conclusion

Laissez faire free trade and international trade are two different things. Trade between countries should be equivalent. If another country needs to import things that we produce and if we need to buy things that they produce, then trade in natural. The terms imposed should be equal. Safety standards, respect for labor, and mitigation of the side effects on the environment should be strong and equivalent. The rights of the citizens of all countries to govern themselves, should be protected. International trade, just like commerce everywhere should bring together willing buyers with willing sellers. Properly structured trade agreements benefit everyone.

Recent news on the NAFTA re-negotiation talks are disturbing. There are indications that our negotiators will settle far short of the desperately needed NAFTA reforms. The “Investor-State Dispute Settlement” provisions, which were employed to outlaw COOL, may not be eliminated as promised. A problem with the Trump Administration’s approach to trade reform is that we, the public, are not privy to the bottom line. There is nothing written that explains the ultimate goal. This has been the problem all along with all of the trade negotiations – it has not been a democratic process. We the people have been systematically kept in the dark with no avenue to express our opinions or desires. The result is a trade regime that has eclipsed the Constitution. America deserve transparency because it is time to take our country back.

Gilles Stockton
Grass Range, Montana

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It’s the 199th anniversary of Walt Whitman’s birth

An excerpt from Whitman’s “Democratic Vistas,” published in 1871:

I say we had best look our times and lands searchingly in the face, like a physician diagnosing some deep disease. Never was there, perhaps, more hollowness at heart than at present, and here in the United States. Genuine belief seems to have left us. The underlying principles of the States are not honestly believ’d in, (for all this hectic glow, and these melodramatic screamings,) nor is humanity itself believ’d in. What penetrating eye does not everywhere see through the mask? The spectacle is appaling. We live in an atmosphere of hypocrisy throughout. The men believe not in the women, nor the women in the men. A scornful superciliousness rules in literature. The aim of all the littérateurs is to find something to make fun of. A lot of churches, sects, &c., the most dismal phantasms I know, usurp the name of religion. Conversation is a mass of badinage. From deceit in the spirit, the mother of all false deeds, the offspring is already incalculable. An acute and candid person, in the revenue department in Washington, who is led by the course of his employment to regularly visit the cities, north, south and west, to investigate frauds, has talk’d much with me about his discoveries. The depravity of the business classes of our country is not less than has been supposed, but infinitely greater. The official services of America, national, state, and municipal, in all their branches and departments, except the judiciary, are saturated in corruption, bribery, falsehood, mal-administration; and the judiciary is tainted. The great cities reek with respectable as much as non-respectable robbery and scoundrelism. In fashionable life, flippancy, tepid amours, weak infidelism, small aims, or no aims at all, only to kill time. In business, (this all-devouring modern word, business,) the one sole object is, by any means, pecuniary gain. The magician’s serpent in the fable ate up all the other serpents; and money-making is our magician’s serpent, remaining to-day sole master of the field.

The best class we show, is but a mob of fashionably dress’d speculators and vulgarians…

CLICK HERE to read the entire work from Walt Whitman.

–courtesy of Tom Giessel

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Vicious Circles – Big meat packers continue to suck the blood out of cattle industry

For no reason whatsoever, other than they can, the big meat packers, while currently making $300 per head, took another $130 to $150 per head off the value of live cattle last week, leaving a decaying carcass of what’s left of the cattle industry.

Few people know the history of meat packing in the U.S. and the reason the ruthless meatpacker monopoly as broken up in the 1920’s, only to return bigger and even more powerful today.

An excerpt of the story of how IBP (now Tyson/IBP) fell under the control of the New York Mafia follows. Today, not much has changed. The top executives of Brazil’s JBS, the world’s biggest meat packer, are either in jail or out wearing ankle bracelets, after bribing 2,000 politicians and meat inspectors. Also, Brazil’s Marfrig, the world’s second biggest meat packer, just purchased fourth largest U.S. beef packer, National Beef. Marfrig’s chairman has offered to cover $22.98 million in damages in a recent corruption probe.

On opening day of trial in 2004, I called Tyson/IBP gangsters, thugs and thieves. Tyson didn’t like it and threatened to sue me if I didn’t retract the statement. Here’s my response to the Tyson lawyers.

Much more is revealed in Christopher Leonard’s book, The Meat Racket.

Do we want a no-rules food system in which the biggest cheaters win, and global monopolies control our food supply? It’s what we have today.

On April 25, 1970, a scruffy, half-literate little manipulator named Moe Steinman shuffled into a suite at the elegant Stanhope Hotel overlooking Central Park in Manhattan, pulled the blinds, and within a few hours assumed a stature that even the most celebrated racketeers in history hadn’t dreamed of.

Other mobsters had gone only partway. Gurrah Shapiro had controlled the garment center, and Joe Bonanno the Brooklyn dairy products district. Steinman had also gone partway – he had dominated the Fourteenth Street meat market. Some racketeers before Steinman had persuaded the heads of rival Mafia families to unite behind a single organized shakedown system. Thus had Steinman united racketeers from three powerful Mafia families, Genovese, Gambino, and Lucchese, and become the meat industry front for all of them. Other racketeers, before Steinman, had achieved nationwide control over certain specialty products, like mozzarella cheese, or over an atomized industry, like trucking.

But on this day, Moe Steinman, as a front for the Mafia, would achieve what no one else had achieved, even in the days of Al Capone or Lucky Luciano. Moe Steinman, who had risen from the gutter only by his lack of scruples, would tighten his fist around one of the biggest corporations in the country, a corporation that dominated a major national industry. It was an industry that almost every American depended on almost every day. It was an industry – unlike trucking – that was clothed with all the garments of Wall Street respectability.

Into this darkened room at the Stanhope Hotel, Moe Steinman would summon Currier J. Holman, founder and head of Iowa Beef Processors Inc., by far the largest meat company in the world. Then, as now, Iowa Beef’s name was listed in the upper levels of the Fortune 500 ranking of largest corporations. Its shares were traded on the New York Stock Exchange. Its financing was handled by a syndicate of the biggest banks in the country. Then, as now, its sales were in the billions of dollars, and its food was on the tables of millions of Americans from Bangor to San Diego.

And Currier J. Holman, the tall, graying Notre Dame alumnus and widely-recognized business genius who organized and ran this mammoth operation, was to come crawling all the way from the Great Plains, bringing with him his co-chairman, his executive vice-president, and his general counsel, all at the beck of a foul-mouthed alcoholic hoodlum.

“Iowa Beef, though founded only in 1961, already in 1970 dominated the meat industry the way few other industries are dominated by anyone.”

Iowa Beef, though founded only in 1961, already in 1970 dominated the meat industry the way few other industries are dominated by anyone. Since then, in partnership with Steinman and his family and friends, Iowa Beef has grown more dominant still. It was as if the Mafia had moved into the automobile industry by summoning the executive committee of General Motors, or the computer industry by summoning the heads of IBM, or the oil industry by bringing Exxon to its knees. Moe Steinman and the band of murderers and thugs he represented had effectively kidnapped a giant business. Its leaders were coming to pay him the ransom, a ransom that turned out to be both enormous and enduring.

“Moe Steinman and the band of murderers and thugs he represented had effectively kidnapped a giant business [IBP].”

As a result of the meeting in the darkened suite at the Stanhope that day in 1970, Iowa Beef would send millions of dollars to Steinman and his family under an arrangement that continued at least until 1978. After the meeting, millions more would go to a lifelong pal of Steinman and his Mafia friends, a man who had gone to prison for using slimy, diseased meat in filling millions of dollars in orders (he bribed the meat inspectors) and who wound up on Iowa Beef’s board of directors. Consequent to the meeting in the Stanhope Hotel, Iowa Beef would reorganize its entire marketing apparatus to allow Steinman’s organization complete control over the company’s largest market, and influence over its operations coast-to-coast. In 1975, Iowa Beef would bring Moe Steinman’s son-in-law and protege to its headquarters near Sioux City to run the company’s largest division and throw his voice into vital corporate decisions. But, most important, a mood would be struck in the Stanhope that day – a mood of callous disregard for decency and the law. Iowa Beef would proceed to sell its butcher employees out to the Teamsters union, to turn its trucking operations over to Mafia-connected manipulators, and to play fast and loose with anti-trust laws.

“… a man who had gone to prison for using slimy, diseased meat in filling millions of dollars in orders (he bribed the meat inspectors) and who wound up on Iowa Beef’s board of directors.”

Because of their hold on Iowa Beef, the racketeers’ control of other segments of the meat industry would expand and harden. And as a result of all this, the price of meat for the American consumer – the very thing Currier Holman had done so much to reduce – would rise. Meyer Lansky once said that the Syndicate was bigger than U.S. Steel. When Iowa Beef Processors caved in on that April day in 1970, the Syndicate, as far as the meat industry was concerned, became U.S. Steel.

“Because of their hold on Iowa Beef, the racketeers’ control of other segments of the meat industry would expand and harden.”

Moe Steinman is not impressive to look at. He is of average height, but seems shorter. He isn’t fat, but there’s something overweight about him. He has a sad, doberman-like face, that is pockmarked and ruddy like a drunk’s. Steinman is often drunk. His clothes are sometimes flashy, but seldom tasteful. He is appallingly inarticulate when he talks. But everybody knows what he means.

Detective Bob Nicholson once stood near the bar of the Black Angus restaurant and saw a slightly tipsy Moe Steinman point his stubby finger at John “Johnny Dio” Dioguardi, the foremost active labor racketeer in the Lucchese Mafia family. “You listen here, Johnny,” Steinman said. “You don’t tell me how to run my business. I tell you.” The boast rocked Nicholson (and Dio may not have cared for it, either). Ultimately, the Mafia retained its power, through its violent system of justice. But the fact that Steinman was allowed to get away with such bragadoccio – and he did it repeatedly – showed just how indispensable he had become to the Mafia’s design on controlling the marketplace. There is a story in the industry that once in the late 1960s Steinman brazenly cheated Peter Castellana, a relative and high aide of boss Carlo Gambino. Steinman is said to have short changed Castellana on the sale of a load of hijacked turkeys. And nobody raised a finger.

Industry sources also talk about a speech Steinman gave in 1970 at a retirement party for a Grand Union supermarket executive. The party, naturally enough, was at the Black Angus, which was owned by a retired executive from the rival Bohack chain, who had acquired it from the family of the retired head of the butchers’ union. While the departing Grand Union official was guest of honor at the party, the center of attention was Johnny Dio, who also was about to depart, in his case for prison, where he was being sent as a result of illegal deals in the kosher meat industry. Steinman, it’s said, stood up before the assembled guests, openly recalled how close he was to Dio, and assured everyone that he personally would “take care of business” while Dio was away.

Only once, in the mid-1960s, is Steinman said to have suffered Mob disfavor. There are reliable reports that he was beaten up once in a supermarket warehouse, and hospitalized. Nobody who is willing to talk seems to know for sure what the beating was about.

Bob Nicholson had been impressed the first time he heard Steinman’s name, back in 1964 in the Merkel horsemeat scandal. When Merkel’s boss, Nat Lokietz, wanted a connection in government so he could bribe his way out of trouble, he had called Moe Steinman. Steinman didn’t arrange the bribe meeting – Tino De Angelis did – because Steinman was out of town. But after the bribery attempt backfired, Lokietz went to Steinman again ina last-ditch effort to keep Merkel afloat. In the spring of 1965, Steinman had met with Lokietz at the Long Island home of a Big Apple supermarket meat buyer, who acted as intermediary. The buyer was in Steinman’s pocket; he would later plead guilty to evading income taxes on payoffs he took from Steinman. Through subsequent conversations that were wiretapped, police learned that Lokeitz had asked Steinman to get the Mafia to rescue Merkel. Some money, some political clout, and Lokietz could be back on his feet again. Steinman huddled with Dio over the idea one night at the Red Coach Inn in Westchester County, but with the horsemeat scandal all over the papers and Dio involved in some promising new rackets, they decided to let Merkel go on down the drain.

As a result of these meetings, however, Steinman was called in for questioning before the Merkel grand jury. Nicholson was sent to serve the subpoena, and thus got to meet the racketeer for the first time. Immediately Nicholson saw the arrogant conniver that was Steinman, a man who thought he could wheel and deal his way out of anything.

Nicholson found Steinman at the Luxor Baths, the famous old establishment on West Forty-sixth Street where the wealthiest of New York’s European immigrant community used to go. There they relived the old-country male ritual of a steam bath, a massage, and a nap. Numerous business and entertainment celebrities had visited the Luxor over the decades. But by the late 1950s, the clientele had cheapened a bit and mobsters were more in evidence. The bathhouse was a frequent hangout for the likes of Johnny Dio, Anthony “Tony Bender” Strollo, and Lorenzo “Chappy the Dude” Brescia. Wiretaps would later reveal that the Luxor served as a convenient location for underworld plotting and the passing of payoffs. It was at the Luxor that Steinman often took care of supermarket executives and butchers’ union officials. In 1975, the Luxor Baths closed, and reopened as a house of prostitution.

Nicholson remembers going into the lobby of the Luxor with his subpoena in 1965, and paging Steinman. The stocky (but not fat) racketeer came down in his bathrobe and turned on his crude charm.

“Can you tell me what this is about?” he asked Nicholson.

“Sorry,” he was told. “I can’t discuss it.”

“Why don’t we sit down to talk?”

Nicholson looked around at the well-appointed lobby, and then at Steinman in his bathrobe.

“Come on into the steam room. We’ll have a nice bath,” Steinman said.

Nicholson turned him down, but kept him talking. Maybe there would be an open offer of a bribe.

“After we have a bath,” Steinman said, “we can talk. We’ll have a few drinks, maybe we can go out to dinner.”

Nicholson kept him talking.

“Are you married?” Steinman went on.

Nicholson said he wasn’t.

“Do you have a girlfriend? May I could get you a girlfriend. I’m a nice guy. You’ll like me.”

“I had to say, ‘No thanks,'” Nicholson recalls now. “Anything further would have been a compromise. But that’s the way Moe Steinman operates. He never gets caught.”

Others have noticed the same phenomenon. Says a partner in a large and long-established New York meat supply company, “Steinman bribes people in the bank not to sign him in or out when he goes to his safety deposit boxes. He has boxes all over the city. Once I was with him on a trip overseas and he bribed the guy at the airline counter $20 to avoid a $50 overweight charge. He didn’t need the money. It’s just a game with him.”

Steinman was wrong when he thought he could bribe Bob Nicholson. But there were ways over Nicholson and around Nicholson. Even when the law had Steinman absolutely dead to rights in 1975, he was able to manipulate his way out of trouble. Bob Nicholson was right about one thing: “He never gets caught.”

Moe Steinman has declined numerous requests for an interview. His communications to the author have consisted mostly of grunted greetings and monosyllabic comments in the hallways of various courthouses. There was also a very pregnant stare on day in a visitors’ room at the federal Metropolitan Correctional Center in Manhattan when Steinman showed up at what I had been told would be a secret meeting between me and a cellmate of his.

Much of Steinman’s story, however, can be told from the public record. He has testified several times about his background (while his veracity has not been constant, certain facts can be verified). And many persons in the meat industry, including his son-in-law Walter Bodenstein, have contributed information to the following sketch.

Steinman was born in Poland around 1918. He came to the United States with his parents at age eight. His father, a butcher, settled in Brooklyn. He quit school after eighth grade and ran off to be a porter or cary worker at the Chicago World’s Fair in 1933. He returned to Brooklyn, where a young greengrocer named Ira Waldbaum had decided to lease out sections of his stores to meat dealers. This was, of course, long before Waldbaum’s became the major regional supermarket chain it is today.

A dealer who had leased the meat departments in two Waldbaum’s stores hired young Moe Steinman to run them, and the budding hoodlum was on his way. Steinman bought his first meat from Sam Goldberger, who would later go to prison for selling adulterated meat and bribing federal food inspectors. And Steinman made connections with two other Polish-Jewish immigrants, Max and Louis Block, who had just left their own Brooklyn butcher business to organize the Amalgamated Meat Cutters’ union under rights obtained through mobsters Little Augie Pisano and George Scalise. Pisano and Scalise were of an older generation, but there was a younger, more contemporary Mafia figure whom the Blocks and Steinman and Goldberger began to meet – Johnny Dio.

Soon Steinman was expanding his meat counter operations to the Bronx …

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News.MikeCallicrate.com: Food monopolies Continue to Plunder and Pillage

by Mike Callicrate | May 18, 2018

1940: Farmers’ Share Does Not Increase As Price Margins Widen

Despite the efficiency of large-scale production, the farmer has continued to get a smaller and smaller share of the consumer’s dollar as monopoly control has increased over the past 25 years. An analysis of figures put out by the Bureau of Agricultural Economics shows that the margin going to the processors and distributors has swollen considerably over this period.

In a recent report the Agricultural Advisory Council stated that on food-stuffs alone the farmers are losing $2,000,000,000 a year because of the present disparity between farm prices and other prices.

While a one cent reduction in the farmer’s share of the consumer’s dollar seems like a trivial sum, the cumulative effect adds up to a staggering total. Thus, in the case of dairy products, the farmer’s share has dropped from 55 cents in 1913 to 42 cents in 1939. The effect of this shift is to reduce the income of dairy farmers by approximately a third of a billion dollars annually.

The farmer’s margin has decreased on practically all food products, but two most extreme cases are white flour and pork products. Though the farmer got 58 cents on the consumer’s flour dollar in 1913, this proportion had gradually dropped until by 1939 it was only 39 cents. In the case of pork products, the farmers had been getting 80 cents in 1913, but this had fallen by 57 cents by 1939.

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The most striking point about middlemen’s margins is their rigidity and fixity in recent times. Price changes are passed either forward or backward, but absolute price spreads remain surprisingly constant despite vigorous changes in farm and retail prices.

Prior to 1915 the farmer received about 53 cents out of the consumer’s dollar spent for all foods. Durin gthe 20’s the farmer’s share dropped to about 47 cents. In 1938 and ’39 it remained unchanged at 40.5 cents.

These price spreads are figured in terms of a standard budget comprising 58 foods selected by the Department of Labor as typical of an average workingman’s family.

–courtesy of Tom Giessel

The National Farmer’s Union currently reports farm share of the consumer dollar at an all-time low of 14.8%.

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98.3 KXDJ Radio asks what can the Trump administration do to help agricultural producers?

Listen to the KXDJ Radio Interview with Mike Callicrate by clicking here

How did we lose our markets? See the following editorial from 2013:

It’s Still Called Stealing

By Mike Callicrate | April 5,2013

Grade and yield buying used to be called “Grade and Steal” by most cattlemen. Today, it’s called Value-Based Marketing by the big packers and their cheerleaders, like Certified Angus Beef’s (CAB) Miranda Reiman. In her March 4th article, “Value-based cattle marketing dominates”, Reiman attempts to mentally condition Angus breeders and other cattlemen to accept their fate in Big Food’s supply chain where performance enhancing drugs, added flavorings, Pink Slime, various pre-digestion methods, and meat recalls, do more to damage demand than CAB quality can possibly do to help it.

Cattle feeders once knew better than to let the packer decide what their cattle were worth after the hide was removed. It was just plain bad business not to negotiate the price. Economics professor, Dr. John Helmuth once said, “Somewhere between when a calf is born and the steak hits the plate, price has to be discussed”. Not known for their benevolence, the packer, admittedly, always wants to pay the lowest price possible. Giving the packer the ability to solely determine the value was considered foolish.

Those born after 1975 (Miranda Reiman) have likely not participated in a competitive market for fat cattle. By the spring of 1994, the big meat packers proved they had essentially eliminated competition for live (fat) cattle. IBP, following the advice of the Boston Consulting Group, had decided in the late 1970’s that it was more profitable to cooperate than compete with the other very large packers. Together, the biggest packers systematically eliminated most of the smaller independent regional packing companies, drastically reducing competition. Additionally, they were feeding more of their own cattle and making preferential pricing and exclusive market access deals with the biggest feeders for additional large volumes of cattle that they didn’t have to bid on. Armed with enough captive supply cattle to stay out of the cash market for an extended period, the packers dropped the price of fat cattle $17 per cwt. in six weeks – a loss in value of around $200 per head. Over a thousand angry cattlemen packed the Holiday Inn in Omaha, Nebraska. The packers got the message. The market recovered about $12 per cwt. right away. The packers learned an important lesson – without competition, the market, and people’s perceptions, would have to be managed.

From deep in the meat packers’ pockets, the economists, market touts, and those receiving preferential treatment, bleated all kinds of phony excuses for the price drop – from ‘supply and demand’, to the standard ‘too much chicken and pork’, and, of course, cattle feeders were poor marketers. Dr. Helmuth’s explanation was simple and accurate, “There’s an economic term to describe this phenomenon, it’s called stealing”.

Big packers fear two things – Competition and court rooms

Attorney Robert M. Cook, representing one of the biggest cattle feeders in Nebraska, described forcefully in “Helmuth” language what the packers had done to the market – IBP sued him.

The trial revealed the accuracy of Cook’s statements:

“At times, the company over purchases its entire needs, with forward contracts. (See Supp. App.Ex. 197) Exhibit 197 shows that during April-June of 1994, a time critical to this case, IBP contracted for as much as 122%, and as little as 53%, of its entire projected kill with cattle contracted for forward delivery. IBP’s corporate policies required it to sell these cattle on the commodities market before they were contracted for purchase from a cattle feeder. IBP killed 180,000 head of cattle per week in 1994.”

When closing argument was presented against IBP in the Cook case (USDC Neb. 1995) I argued to the jury that IBP had become the largest owner of cattle feedyards in America through the artifice of contracting. Forward contracts had permitted IBP to buy up, control, and therefore effectively own, an overwhelming portion of America’s cattle production capacities “without buying one acre of land, pouring one cubic yard of concrete, installing one linear foot of feed lot, digging one post hole, stringing one wire, or investing one dime.”

The jury reacted to the argument with widened eyes, then, as I could see the thought sink in, their amazement turned to disgust.

They rewarded my client with their verdict.
– David Domina, Attorney for Robert M. Cook

Awarding cattlemen $1.28 billion in a 2004 trial, the jury found Tyson/IBP had manipulated the cattle market with as much as 170% captive supply (70% more cattle than they needed), more than in the spring of 1994. Additionally, head cattle buyer Bruce Bass admitted that IBP paid less for cash cattle when captive supplies were plentiful. Grade and yield data showed that the cash cattle IBP was forced to bid on (to set the price for captive cattle), were better quality than their so-called value-based purchases. Judge Lyle B. Strom, a Reagan appointed “de-regulation”-“bigger is better” judge, reversed the jury’s verdict, handing the cattlemen’s win over to Tyson/IBP and sticking cattlemen with Tyson’s court costs.

Like losers in a Monopoly game, independent producers are out of money and sitting on the couch. The so called value-based, moving-target, grade-and-yield fools game, where quantity trumps quality and discounts are often ten times the premiums, is leaving independent producers, from ranchers to feeders, with no chance for a fair price and no hope of survival. Honesty, integrity, and meat quality have disappeared along with antitrust law enforcement and a fair cash market. The retailer monopoly (Walmart, Kroger, Safeway, etc.) is charging record high prices for beef as independent producers are slaughtered with their livestock.

Epilog 2018: According to USDA data, between 1990 and 2012 we lost 204,000 ranching operations, and between 1996 and 2016 we lost 81,887 feedlots.

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