Bait and Switch

Capitalism’s Shell Game: From Robert Bork to John Deere.

A con artist playing the shell game lifts a shell to reveal a dancing Rich Uncle Pennybags who has removed his face to reveal a grinning skull.

John Deere’s workers are done with their employer’s bullshit.

When the 10,000 workers who keep the world’s largest agribusiness monopoly humming walked off the job last month, it was historic. As one John Deere worker put it, “Everything John Deere did to increase its stock price is now a liability.” Deere’s workforce loyalty had been eroded by decades of reduced pay, reduced benefits and increased hours, all amid skyrocketing profits, stock prices, and executive compensation,.

As the day of the strike vote drew nearer, the company put on a charm offensive, painting its workers as greedy and lazy, unhappy with $60,000 a year.

John Deere was lying.

It doesn’t pay its workers $60,000.

It pays them $40,000.

How did that $60,000 figure get past the Washington Post’s fact-checkers? Just a little of the ole John Deere magic. The company promised its workers pay of $60,000 if they could meet certain targets, then they rigged the game so that the targets could never be met. Yves Smith calls it a “heads I win, tails you lose pay incentive scheme.”

She’s not wrong, but there’s a pithier name for this scam: a shell game. There’s assuredly a pea under one of the shells, but the con-artist working the game has ensured that there’s no way you’ll ever pick that shell.

As George W. Bush so eloquently put it: “Fool me once, shame on me. Fool me twice, we don’t get fooled again.”

John Deere is a poster child for the neoliberal con-game —virtuosos of overpromising and underdelivering, then blaming their workers for failing to attain the metrics that would prove they deserved a living wage and decent working conditions.

Working people everywhere have figured out that the game is rigged. Every variation has been exhausted. For example, major employers have long wrung concessions out of its unions by offering a two-tier benefits schedule, in which senior workers are allowed to hang onto their pensions and benefits, in exchange for agreeing that hypothetical future hires will not received these.

Then, as new workers come on board, the employer can worsen conditions for all workers, including those senior workers who sold out their successors, because that sell-out created an unbridgeable rift between new and old workers. Divided, they fall.

That’s not working anymore. John Deere workers have serious regrets about accepting a deal that clawed back two-thirds of the pensions of workers hired after 1997, and offered no pension to workers hired after this year. The lucky senior Deere employees with more than a quarter-century’s seniority are pissed about their juniors’ anemic pensions because Deere is a family affair, and those second-class workers are the children and grandchildren of the senior workers. Blood is thicker than water, and solidarity is a lot easier to find when it’s your own kin who’s being screwed out of the pension you paid into all your life.

Deere’s workers have now rejected two offers from the company. Not even a 10 percent raise could win them over. Deere doesn’t know what to do — using managers as scabs didn’t work (Deere’s union workforce does skilled labor, and they can’t be replaced by MBAs from head office). Maybe overseas scabs will work?

Don’t bet on it.

Successful con-games depend on the mark thinking that his losses are his own fault. The shell-game hustle works because you think you just lost track of where the pea’s got to — if you knew that the hustler had palmed the pea and all the shells were empty, you’d grab your money and flip the table.

Deere’s “incentives” shell-game worked because it blamed workers for missing targets, just like the midway carny who blames you for failing to get the ball to stay in the peach-basket (the bottom of the basket is sprung, ensuring that every ball falls out).

There’s a reason the midway clears out after a week or two. If you play this kind of game long enough, you see through the hustle and flip out.

It’s time for neoliberalism to blow town. The mark’s gotten wise.

Take antitrust: before the Reagan revolution, American antitrust enforcers pursued companies that exercised “harmful dominance.”

What’s harmful dominance? It’s a harm that arises from a company’s dominant position: suppressing wages, raising prices, corrupting the political process, stomping on new market entrants. The harmful dominance standard gave everyone a say. If a company’s scale hurt you, you could seek redress from the antitrust system.

But during the Reagan years, a fringe economic cult came to power. Its leader was the “jurist” Robert Bork (best known at the time for his role abetting Nixon’s crimes while serving as the nation’s Solicitor General).

In a book called “The Antitrust Paradox,” Bork argued that “harmful dominance” was incompatible with fairness itself. The harms of “harmful dominance” were too subjective, and so two companies engaged in the same conduct, with the same consequences, could end up with two completely different legal judgments.

Bork called for a new standard, “consumer welfare,” to replace harmful dominance. “Consumer welfare” was meant to be empirical and thus immune to the kinds of inconsistencies Bork claimed were the hallmark of harmful dominance-based enforcement.

Bork insisted that consumer welfare was easy to measure: consumer welfare suffers when prices go up and/or quality goes down. If a large company uses its scale to raise prices or reduce quality, then antitrust enforcers should act. The rest of the time, monopolies should be presumed innocent — more than innocent, actually beneficial, because a monopoly that uses its scale to lower prices is efficient. Letting these monopolies be means better stuff at lower prices and a better world for all.

This may sound superficially reasonable, just like any shell game. Three shells, one pea. You make a bet, watch the shells dance, and if your eye is fast enough, you double your money.

But the shell game is rigged. Recall that consumer welfare is not violated whenever prices go up — for the consumer welfare standard to be breached, the price increase has to be the result of the company’s monopoly position.

So it’s not enough to show that when John Deere buys out all its competitors its prices go up. You have to prove that the price hike is the result of the reduced competition, and not, say, increases in the price of inputs, supply chain problems, a higher wage bill, or the moon’s passage through Virgo.

To do that, you have to build a complex mathematical model. Bork and his cronies at the University of Chicago economics department were the foremost proponents of these models, and the most skilled practitioners of the obscure art of model-building.

If you wanted to do something anticompetitive, you could always hire a University of Chicago-trained economist to build a model proving that it wouldn’t harm consumer welfare. If you were currently doing something anticompetitive, you could hire a Chicago Boy to build you a model proving that you weren’t harming consumer welfare.

Decades went by, and we kept turning over the shell that didn’t have the pea. Companies gobbled up their competitors, until every industry was dominated by an absurdly tiny cartel of companies (two major tractor companies, three major record labels, four major publishers, etc), or just one company (one eyeglasses maker, one pro wrestling league, etc). Antitrust enforcers kept discovering that somehow these monopolies were always efficient.

It only took forty years, but we’re finally waking up to the fact that the pea is never under the shell, the ball never stays in the basket, and “consumer welfare” is never violated.

Joe Biden’s top antitrust enforcers —officials like Tim Wu (White House), Jonathan Kanter (DoJ), and Lena Khan (FTC) — are all “harmful dominance” people, who wised up to the consumer welfare shell game years ago (check out Khan’s seminal “Amazon’s Antitrust Paradox” for a masterful takedown of the whole sordid business).

That’s what’s behind articles like “ANALYSIS: The Very Purpose of Antitrust Law Is At Issue in 2022.” Bloomberg Law’s Eleanor Tyler is absolutely right to say that “in the U.S., even acknowledging that attaining the lowest possible consumer prices might not be the central goal of antitrust/competition law is controversial.”

But it’s controversial in the way that the proposition that none of the shells has a pea under it is controversial, until the mark wises up. Like the Deere workers who figured out that the $60,000, performance-dependent wage is a mirage, always dangling just out of reach, no matter how hard you work, the antitrust world is waking up to the fact that you can use Bork’s methods to prove that any monopoly is good, actually, and not a fit subject for antitrust enforcement.

Even when a monopolist makes prices go down, it’s usually doing so on the backs of workers, who have to accept lower wages because they’re the only game in town (“35 years ago, workers at Deere lost a lockout that froze and reduced wages” — University of Chicago historian Gabriel Winant).

For workers, these losses are prettied up with the promise of “performance-based” bonuses and other heads-I-win/tails-you-lose hustles. Meanwhile consumers are seduced by low initial prices that come at workers’ expense. Then, as those savings are shifted from the consumer’s side of the balance-sheet to the company investors’ side, University of Chicago models are pressed into service to prove that none of this is due to monopoly, and anti-trust enforcers should butt out (“stay in your lane!”).

Eventually, we wise up. Consumer welfare is a recipe for infinite, unbounded monopolism — for allowing companies to buy their competitors, corner their suppliers, and screw over workers and customers. Farmers have been attacking Deere for years over its monopolistic control of the repair market, and now the workers who build the machines are going to war against the company for its monopolistic control of the labor market.

Though they may not yet know it, both of Deere’s adversaries — the farmers who buy its tractors and the factory workers who build them— share a common enemy: the consumer welfare standard, and the monopolies it creates.

The whole point of the “harmful dominance” standard was to create a big tent under which workers and consumers could come together. It’s an acknowledgement that any company big enough to screw its workers will eventually screw its customers, too.

The pea isn’t under any of the shells. We can never win the coin-toss.

The enemy of the most senior (pension intact) John Deere worker isn’t the most junior (no pension at all); the enemy of the John Deere farmer isn’t the worker who built their tractor.

The enemy is:




Hell yes “The Very Purpose of Antitrust Law Is At Issue in 2022.” Is the purpose to wave through mergers in the name of an “efficiency” that no one except the shareholders and top management can see? Or is it to create a world where concentrated wealth can’t be converted to power — the power to screw workers, suppliers, the political process, and, ultimately, the purchasers?