Piggish Capitalism

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.