Perils and Promise of Monopolization

Two recent developments in the news have made me think about the growing consolidation of corporations and their impacts on our lives, both for good and bad. Take the spinach crisis that emerged a week ago or so in the US. It appears that at least one and maybe more industrial farms are implicated as sources of the E. coli-laden spinach that affected more than a dozen states across America, resulting in numerous hospitalizations and a nationwide recall on all spinach products.

How does this come about? How is it that our FDA gets the point where it says that NO ONE in the US can eat any spinach "until further notified?" Consolidation, that's why. With modern large-scale industrial farming, something like 70% of all spinach consumed in the US comes from California. Why is this so? Well, these large corporations enjoy economies of scale; can provide low-cost, relatively high quality products with quick distribution. By the way, this was a large-scale organic farm, if I remember correctly. So, many of our "organic" or "natural" products are being produced at large industrial farms. Whole Foods and Trader Joe's both buy from such companies.

The downside is obvious. With less diversification of our food resources, we are prone to health breakdowns like the one that occurred this past week. Furthermore, some argue, such as in Michael Pollan's "The Omnivore's Dilemma", that increasing homogenization of the food that we eat is in itself detrimental to our health. Rather than eating locally grown, seasonal foods like our forebears did, we are all stuck with the same diets, whether they are McDonald's, organic or vegan. The sources are the same. This is 1) potentially a health risk during contamination episodes like the E.coli problem or Avian flu, 2) limits biodiversity and impacts other plant and animal species and 3) potentially promotes unhealthful farming techniques, like feeding cattle corn instead of their traditional, evolutionarily-developed grass.

A second article in the NY Times got me thinking of the impact of monopolization from a different perspective. Wal-Mart, in a bid to assert more influence in the competitive health care market, has begun to offer generic prescription drugs. This will place a large amount of pressure on other pharmacies and insurance plans to keep up with Wal-Mart's demands. Wal-Mart is such an enormous player economically in the world that this action alone may have substantial effects on the health care industry in this country.

Although I have some problems with Wal-Mart's health care policies, I have to agree that this decision to support generic drugs is an important and positive development. Many generics are quite cheaper than their brand name competitors but equally effective. Pharmaceutical companies fight tooth and nail to maintain individual patents or suppress generic drug makers. In the end, costs skyrocket but health benefits are not necessarily improved.

In other ways, I often wonder to myself if the global dominance of Wal-Mart is a good or bad thing. I enjoy getting cheap products all in one spot from a Target or Wal-Mart. Deep down, I realize they are pressuring small vendors around the world with their purchasing power. Yet, at the same time, I think they provide real service and cost-benefit to us, the consumer.

I guess my point is that there are plusses and minuses to consolidation of resources and economies of scale. No kidding. I guess I've steered away from my prior knee-jerk reaction to "corporate" influences. Sometimes, business and the "invisible hand" of Adam Smith are the most efficient ways to stimulate progress and development. I think my main beef is not with companies or marketers or business people. Rather, it is with our own government. Our own watchdog institutions such as the EPA or FDA or Justice Department.

Whether it's our own Department of the Interior interfering with its internal auditors or Congressmen who move back and forth from government to the Lobby de jour or our academicians and scientists who have stock options or honoraria from the very companies whose products and drugs they are supposed to evaluate "objectively", it is the growing conflicts of interest in all aspects of our society that is most disturbing to me.

We must not forget that the FDA and USDA emerged shortly after Upton Sinclair's "The Jungle" shed light on the dismaying practices of the meatpacking industry. That the SEC gained strength after the stock market crash of 1929. That we needed antitrust litigation to break the power of Standard Oil. That perhaps humans are meant to simply repeat our mistakes over and over again. That the endless cycle of progressivism alternating with conservatism is simply the way of life.

I just hope we don't all have to get the E.coli runs to bring back Teddy Roosevelt.