Author: Phil Garland

Small Meat Goes Packing

Posted on by Phil Garland

The American meat packing industry is a monopoly built from regulation, not free market economics. As you might have read before, “Four companies slaughtered about 85% of U.S. grain-fattened cattle that are made into steaks, beef roasts and other cuts of meat for consumers in 2018.” This level of concentration (four companies) is not a mistake. It was deliberately created by lobbyists and politicians to line the pockets of large companies while hampering competition from smaller meat packers.

As Joel Salatin states in the below YouTube video, “It’s not that there aren’t farmers like me that want to do this. It’s not there aren’t eaters who want to eat it. It’s not that the economies aren’t there. It’s not that we don’t know how to do this. It’s not that we need more infrastructure development to figure out how to do this. It’s that these very arbitrary and capricious regulations that were designed to keep industrial short cutters and opaque food systems in check, that don’t then scale down and apply in a local, transparent neighborhood friendly kind of operation.”

The steps for a small, local meat processor to turn their livestock into commercial-grade meat has become a boondoggle.

Kate Miller outlines the need for more small plants in this post, however, she also outlines the many obstacles presented for a new plant owner. Not only do owners need to understand the regulations, audits, insurance, and testing required to sell USDA-certified meats but they also need to have a sales pipeline sufficient enough once they get through all of those hurdles. She says “The reality is that a small plant asks ownership to be skilled traders of two inherently different commodities while being technically skilled operations managers. Does this sound reasonable to you? It doesn’t to me. It sounds like a lot of sleepless nights and heartburn.”

The Biden Administration has attempted to alleviate this situation by providing small meat processors with $1 billion in federal grants available. Although this sounds like a large investment into improving small farmer operations, the industry does not fully agree. As pointed out in the linked Missouri Independent article, Greg Gunthorp says “It’s a complex problem to solve, I don’t know that they delved into it hard enough.” Indeed, it is a complex problem created by regulation. “They’ve exceeded any efficiencies associated with economies of scale and are now engaged in controlling the marketplace” said Bill Bullard, CEO of R-CALF USA, which advocates for independent cattle producers.

What Regulations Created This Mess?

Some research delving into the history of meat processing regulation in benefit of large meat processors.

What Are the Next Steps?

Efficiency Beats Legacy

Posted on by Phil Garland

The reason entrepreneurship is so successful is because it’s made up of people searching for opportunities in the market trying to make things more efficient. Startups fall into this category too. Even the unicorns. Stripe, Uber, Box, etc. are all entrepreneurial endeavors that became billion plus dollar companies. They figured something out that the legacy firms were failing at; efficiency. 

Based on R.H. Coase’s paper “The Nature of the Firm”, the larger a company gets, the harder it is to control costs. The startups will eventually fail (see Facebook). And in their place a more efficient company will arise. The world economy is a constantly shifting world of rising and falling efficiencies. But at the end of the day, in a capitalist society, the most efficient always win. 

Even if Uber is to fail, it made it clear the world is better off with a car sharing app as opposed to the outdated medallion system taxi drivers had to utilize. Even if Spotify fails at becoming the world leader in music streaming, it has set a course of action on how to share music while compensating artists. The world is constantly evolving and becoming a better place because of the market. We are living in a time where entrepreneurs have boundless chances to create a more efficient system and they are despite the existence of legacy firms and laws.

Small Steps Forward Are Better Than None

Posted on by Phil Garland

When I was first starting my career I’d have some pretty rough days where I didn’t get anything done. I’d sit there, staring blankly at my work, hoping to be done with it but not able to produce. After a day or two of that, the anxiety would grow and I’d get stuck in a self-doubting circle.

Now, I still have bad days where I don’t get as much as I want done, but it doesn’t stop me from moving forward. Instead of tackling the hardest tasks, I focus on the smaller things that I’d put off when doing the bigger projects. I also make sure to respond to all emails and not let anything sit for long. 

Although I don’t always love having days where I don’t accomplish as much as I know I’m capable of, accomplishing some things from my to-do lists moves me closer to achieving my end goals. It’s all about taking small steps forward.

Nobody Sees the Hardwork Before Success

Posted on by Phil Garland

Steve Jobs, Elon Musk, Jeff Bezos and countless other names are touted as visionaries capable of massive successes. They have every right to be admired for the things they have been able to accomplish. However, a lot of the successes also came with failures, perceverence and good ol’ hard work.

In the words of B.o.B

It’s like, people only see it the way it appears
But they never see the ropes and the pulleys and the gears
Blood, sweat and tears. We cry blood, all we sweat is tears

–B.o.B vs Bobby Ray

We love to see success stories. You can read 1,000s of articles on Medium about people’s morning routines that create massive results. Or the life hacks that make successes seemingly happen overnight. Those are all well and good. Good habits and good routines are required to become successful. But the biggest driver in success is putting in the hardwork each and every day.

There’s no such thing as an overnight success. There’s probably no such thing as a five-year success. It takes countless hours, unending mistakes, and a drive to keep going to become the next Bezos or Musk. They didn’t happen overnight and neither will you.

Consistently building on your personal goals is the only way to success. It it takes time, hard work, and a commitment to leaving things better than when you found them. From the famous Robert Collier:

The great successful men of the world have used their imaginations… they think ahead and create their mental picture, and they go to work materializing that picture in all its details, filling in here, adding a little there, altering this a bit and that a bit, but steadily building — steadily building. 

Unintended Consequences to the World Economy

Posted on by Phil Garland

Ramit had a strong email today talking about why people broke their diet and exercise routines. Here’s the highlight from the email (you can sign up for his newsletter here, I highly recommend!):

Ramit's Words

In short, people were trying to right their own ship by diet and exercise but suffered from the law of unintended consequences. In hindsight, it’s pretty obvious that if you go to bed two hours late, your day will be skewed but that wasn’t brought to the forefront of their minds. Instead, they believed they were failing because of binging on cookies at one o’clock in the morning.

The law of unintended consequences is an economic term that means every action has a reaction, sometimes those reactions are problems that couldn’t have been foreseen (or were purposefully neglected) before the action took place. This happens all the time in politics.

A politician implementing a tax on a product may inadvertently (or purposefully) raise the demand for a similar good that doesn’t have the tax. Similarly, a lower federal interest rate can cause loans to be given to people who otherwise shouldn’t be given a loan because of economic stimulus (quantitative easing).

People make choices every day that have a bevy of unintended consequences. The great thing about being human is you get the chance to make up for your bad behavior. If you have a Ramit in your life, somebody is there to tell you that what you need to fix is binge-watching Netflix until one in the morning.

The world economy doesn’t work in the same way. Unintended consequences in a globalized world create ripples throughout international monetary policies. We can’t have a Ramit overseer to our economic misdeeds. Instead, we have to shake out the unintended consequences through market means. This creates a boom and bust cycle.

Over the past 10-years, we’ve seen quantitative easing on a massive scale. The world economy is built on a massive ripple that’s been mostly trending upward. Eventually, the unintended consequences will have to catch up with us and lead to an issue of obesity (economic dysfunction).

I stopped counting how many books I read

Posted on by Phil Garland

That may seem like a humble brag that I stopped counting because I lost track. It’s not. 

I haven’t read too many books this year. I think I’ve completed one and read about four others. The reason why I’ve stopped counting number of books is because it’s a terrible metric for me to judge what I’m learning. I read every weekday, at least two hours a day, but it’s not always in books. I read blog posts, longer articles on blockchain and societal dynamics, daily fintech pieces and posts by friends when the title sounds interesting. I’ve also been working on “Human Action” which is a dry, 1,000 page book on economics. Does that count as only one book? 

I understand the desire to read as many books as possible. You learn a ton from reading other people’s ideas. The only problem is, there’s a bias that comes with every book. You’re reading a singular viewpoint for hours on end. I prefer my method because I hop around from interesting piece to interesting piece, trying to determine the author’s biases and taking bits and pieces to help create my worldview. 

I love books and I will continually read books as much as I can find time. But finding time to read the never-ending supply of blog posts out there is far more valuable to me. I learned so much today from reading two 10-minute posts on blockchain economics and authoritarian systems. They don’t count towards any book goal that I’m aware of but I gleaned valuable insight.

Books are great, reading is more valuable.

Life’s About Moving On

Posted on by Phil Garland

While I was working out today, listening to Macklemore, Starting Over started playing. Below is the verse that always strikes a chord with me.

And every kid that came up to me
And said I was the music they listened to when they first got clean
Now look at me, a couple days sober, I’m fighting demons
Back of that meeting on the East Side, shaking, tweaking
Hope that they don’t see it, hope that no one is looking
That no one recognizes that failure under that hoodie
Just posted in the back with my hands crossed, shooken
If they call on me I’m passin’, if they talk to me I’m booking
Out that door, but before, I can make it
Somebody stops me and says “Are you Macklemore?
Maybe this isn’t the place or time, I just wanted to say that
If it wasn’t for ‘Otherside,’ I wouldn’t have made it”
I just looked down at the ground and say, “Thank you”
She tells me she has nine months, and that she’s so grateful
Tears in her eyes, looking like she’s gonna cry, fuck
I barely got forty-eight hours, treated like I’m some wise monk
I want to tell her I relapsed, but I can’t
I just shake her hand and tell her, “Congrats”
Get back to my car, and I think I’m tripping, yeah
Cause God wrote “Otherside,” that pen was in my hand

Macklemore and Ryan Lewis, Starting Over, The Heist

If Macklemore had been demonized for his relapse, if he hadn’t instead written a song about being an inspiration to those who have failed and are “starting over”, he never would’ve become the world-famous Macklemore he is today. This song reminds me of a powerful quote.

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People change, people grow, people become different people every day. Part of being human is to be able to forgive and forget. Sometimes it’s difficult to put your ego aside and question “If I were in that situation I would’ve done _________ instead”.

Part of life is going through a metamorphosis. We are constantly consuming ideas, gleaning cues from those around us, learning new ways to tackle a task. We are also experimenting with failure. We mess up, a lot. We can’t judge people on who they were, only what they want to become. 

Life’s about giving opportunity to the most people to see what they do with their chances. 

Knowledge Sharing in our Society

Posted on by Phil Garland

Why are we so bad at sharing knowledge? As a society, it takes a really long time to integrate with culture, social cues, and pretty much every skill people need in adulthood. For most, it takes 18-22 years, at least within the convines of our society. There are outliers, the geniuses who graduate college at 16, but even they usually have a lot to learn from a social perspective.

If we were really good at sharing knowledge, I’d believe the time it takes to get people ready for adulthood would be a lot shorter than 18 years. Possibly a couple of days (if you have a machine like Neo in The Matrix) or more likely five to ten years. But it typically takes us 18 years to let someone off on their own.

Once you have “entered” adulthood, there are many more skills that need to be developed. Beyond the basics of keeping yourself fed, doing mundane chores, and getting enough sleep, you also have to put a roof over your head. For that, you’ll need to study (whether in college or via online material) a skill and find employment doing it. Skills are called “hard skills” for a reason. They’re very hard to develop.

Is it good for society to make things so difficult we can’t easily share knowledge? Currently, our best system is to reward people who bring the most prosperity (profit) to the most people. When you create value for others, you are rewarded with dollars. This breeds competition, and gives people a chance to improve on what they deem as opportunities. Those who succeed, bring more prosperity to the system and are handsomely rewarded. Those who fail, lose the money they tried to improve an opportunity with but gain valuable information. This information can then be used to find another opportunity for improvement. This is what we call an entrepreneur.

But, the only reason opportunities exist is because of imperfect information. If we were able to share knowledge better, wouldn’t we also live in a better world?

I’m not sure the answer to any of my questions but I am happy to live in a world where your ability to improve other people’s lives brings yourself an improvement of your own.

Can you build a toaster from scratch?

Posted on by Phil Garland

I was reminded today of a great TED Talk where a guy tries to build his own toaster from scratch. The end result looked like this:

Homemade Toaster

Obviously, he didn’t succeed. There were far too many specialized parts to replicate the $10 toaster you can pick up at WalMart.

This is an example of comparative advantage that Leonard E. Read explained in his seminal piece, “I, Pencil“. Put another way, comparative advantage is doing what you do best and trading for the rest. By specializing in a specific product or service, you become a master at your craft that gives value to others.

For instance, the steel factory that makes many pieces of the toaster specializes in only making steel. They then sell their raw materials to companies that are looking to use their specialty for an end good (in this case, a toaster). The buyer of steel is probably also a buyer of plastic, hot plates, electrical wiring, and all the components that make the toaster. They probably then sell it to a retailer (WalMart) who sells the product to the consumers.

All of this, the mining of ore, turning ore into a component, combining the components into a product, selling the product, the shipping, packaging, marketing, and all other factors of production allow for a company to sell you a toaster for $10. It’s a pretty miraculous feat when you realize there’s no overseer making this happen. This has all been created by economic necessity. Every person involved in the operation is trying to make their ends meet and by doing so improve our standard of living.

It truly is an amazing time to be alive.