> Ian Shepherdson, chief economist at Pantheon Macroeconomics[:] "There genuinely was an increase in costs, but then there was this extra margin on top. So the question is, how on earth did [retailers] manage to get away with that? That to me is the big issue."
Competition should temper this more than it did, but didn’t.
My money’s on “incredibly high levels of concentration of ownership in both food production and food retail”. A stupid fraction of the stuff on shelves is made by a handful of companies. We used to just assume this kind of thing was bad and break those kinds of things up well before they hit this level of concentration, but stopped doing that in the ‘70s, and here we are, with most industries dominated by a tiny number of players, including food.
Here is the Abstract
CHAPTER 5 The Monopoly Enigma, the Reagan Administration's Antitrust Experiment, and the Global Economy from the book: Constructing Corporate America: History, Politics, Culture
"In the 1980s, the Reagan Administration drastically altered American antitrust policy, virtually eliminating Section 2 cases involving monopolies. This chapter provides a context for that decision by tracing the efforts that the federal government made since 1890 to reconcile an opposition to highly concentrated economic power with the even stronger enthusiasm Americans have always had for the economic success they associated with the nation's largest enterprises. In this setting, judges and government lawyers struggled over the years to come up with a clear concept of monopoly. In the global economy of the late 20th century, the Reagan policy innovation solved that problem and proved to be timely and significant. The new policy allowed American firms to get up to global scale, either through strategic alliances or through mergers that would not have been allowed under previous administrations"
Yeah I'd be willing to bet that if you were to go into a given aisle at a "typical" american grocery store and were to tally up all the companies that own the brands in that aisle, you comfortably end up with under 20 companies, in some cases less than 10 (excluding the beer/wine aisle).
It's honestly embarrassing how concentrated ownership of food has become.
Competition should temper this more than it did, but didn’t.
My money’s on “incredibly high levels of concentration of ownership in both food production and food retail”. A stupid fraction of the stuff on shelves is made by a handful of companies. We used to just assume this kind of thing was bad and break those kinds of things up well before they hit this level of concentration, but stopped doing that in the ‘70s, and here we are, with most industries dominated by a tiny number of players, including food.