Great column, including: "But no strings were attached to this massive public subsidy to prevent taxpayer dollars from being siphoned away in a subsequent sale to a dominant competitor."
That a private company would avail itself of an inefficiency in a market created by an incompetency in government is not a crime and is to be expected at some point by some astute enterprise. And a willing seller contracting with a willing buyer is an absolutely essential feature of any functioning economy. If there is a villain here it is the dim bulbs at city, state and federal level giving away public subsides to perceived winners then left with their pants around their ankles. Their inability to pick these winners is perpetually remonstrated and it will be interesting to see how many more are lurking in our current renewable-energy, micro-chip, and infra-structure giveaways.
An important issue that needs to be discussed. At the time we gave all of the cash to the Weaver Plant, the chemistry news pointed out that Iowa didn't need this plant and was subsidizing it way too much.
This is a good analysis. I saw another story about this earlier and have been thinking about it since. I think that an important angle to this story that is not discussed is the detrimental effect of nitrogen on the water supply. It seems to me there is a significant overuse of nitrogen causing what economists call a negative externality. Essentially, the application of the nitrogen imposes costs on water users. Ask the Des Moines water utility about this. One of the usual policy solutions for a negative externality is to tax the good in order to reduce its use. Do you think Iowa or the US would tax nitrogen fertilizer? No. What does this have to do with your article? While I’m generally in favor of competition and antitrust policy, the paradoxical effect of monopoly power here is to increase the price of fertilizer and reduce its usage which is the result we would desire if we internalized its detrimental costs. Consequently, we might end up with cleaner water and more efficient use of nitrogen fertilizer!
One other thing, I’m a bit skeptical of the increased food cost assertion. First, half of the corn is used for ethanol rather than food and a lot of the corn has to go through a pig or cow or some other processing. Many of the paths of corn to consumer have multiple layers of low competition firms. I’d be interested in an analysis of whether the change in nitrogen prices will really affect consumers (and farmers) or whether it will result in the rearrangement of profits between monopolists.
Thank you Cheryl. When will we as consumers and taxpayers ever be the ones to be protected? Regulations are to protect us, in cases like this. The Grassley. Ernst, Walker attempt is like you stated, probably too late. In all the years that Grassley has been in office, he has never moved forward true legislation to protect people.
Terrific column!
Great column, including: "But no strings were attached to this massive public subsidy to prevent taxpayer dollars from being siphoned away in a subsequent sale to a dominant competitor."
That a private company would avail itself of an inefficiency in a market created by an incompetency in government is not a crime and is to be expected at some point by some astute enterprise. And a willing seller contracting with a willing buyer is an absolutely essential feature of any functioning economy. If there is a villain here it is the dim bulbs at city, state and federal level giving away public subsides to perceived winners then left with their pants around their ankles. Their inability to pick these winners is perpetually remonstrated and it will be interesting to see how many more are lurking in our current renewable-energy, micro-chip, and infra-structure giveaways.
An important issue that needs to be discussed. At the time we gave all of the cash to the Weaver Plant, the chemistry news pointed out that Iowa didn't need this plant and was subsidizing it way too much.
This is a good analysis. I saw another story about this earlier and have been thinking about it since. I think that an important angle to this story that is not discussed is the detrimental effect of nitrogen on the water supply. It seems to me there is a significant overuse of nitrogen causing what economists call a negative externality. Essentially, the application of the nitrogen imposes costs on water users. Ask the Des Moines water utility about this. One of the usual policy solutions for a negative externality is to tax the good in order to reduce its use. Do you think Iowa or the US would tax nitrogen fertilizer? No. What does this have to do with your article? While I’m generally in favor of competition and antitrust policy, the paradoxical effect of monopoly power here is to increase the price of fertilizer and reduce its usage which is the result we would desire if we internalized its detrimental costs. Consequently, we might end up with cleaner water and more efficient use of nitrogen fertilizer!
One other thing, I’m a bit skeptical of the increased food cost assertion. First, half of the corn is used for ethanol rather than food and a lot of the corn has to go through a pig or cow or some other processing. Many of the paths of corn to consumer have multiple layers of low competition firms. I’d be interested in an analysis of whether the change in nitrogen prices will really affect consumers (and farmers) or whether it will result in the rearrangement of profits between monopolists.
Cheryl,, you've done it again - highlighted a major issue hiding in plain sight. You are terrific reporter, writer, and columnist.
Thank you Cheryl. When will we as consumers and taxpayers ever be the ones to be protected? Regulations are to protect us, in cases like this. The Grassley. Ernst, Walker attempt is like you stated, probably too late. In all the years that Grassley has been in office, he has never moved forward true legislation to protect people.
Great reporting. Thank you!
I will be interested to hear what Senator Amy Klobuchar says about this deal. She is incredibly well-versed on antitrust matters.
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Monopolies are taking over far too many sectors of our economy. Thank you for highlighting yet another one.
Thanks— I can search sometime too.
Great column.