Yesterday, the Joe Biden administration announced that it was going to provide hundreds of millions of dollars to mom-and-pop meat processors via grants, loan guarantees, and reduced inspection fees. The idea behind this splash of money is to promote competition in the meatpacking industry and ultimately achieve a redistribution of money from meatpackers to farmers, in the form of higher prices, and consumers, in the form of lower prices.

Four large meat-packing companies control 85 percent of the beef market. In poultry, the top four processing firms control 54 percent of the market. And in pork, the top four processing firms control about 70 percent of the market. The meatpackers and processors buy from farmers and sell to retailers like grocery stores, making them a key bottleneck in the food supply chain.

When dominant middlemen control so much of the supply chain, they can increase their own profits at the expense of both farmers — who make less — and consumers — who pay more.

The explanation of the problem makes a lot of sense. On its journey to the consumer, meat starts with a farmer, travels through a meatpacker, and then finds its way to a retail store. If the meatpacking part of the value chain is clamped down by a few players that are colluding with one another, they can grab an outsize share of the meat revenue.

But the offered solution to this problem — some grants and loans to smaller processors — seems both inadequate to solving the problem and needlessly indirect. Frankly, this is true of most of the ideas that come out of the competition policy community.

If there are four companies that control the meatpacking market, and the government thinks that they are colluding in a way that generates superprofits at the expense of adjacent market players, then the government should simply buy one of the four companies and run it properly. You don’t need yearslong efforts to maybe increase competition through subsidizing new firms. Simply nationalizing one of the big players would allow you to increase competition and bust up collusion in a few months.

Consider Tyson Foods, for example. They are one of the big four meatpackers. They also happen to be publicly traded. Right now, the market cap of Tyson Foods is a mere $32 billion. Their profit last year was a bit over $3 billion.

The federal government can currently borrow money for ten years at an interest rate of 1.63 percent. Thus, if it borrowed $32 billion to buy Tyson Foods, it would only need to generate $522 million per year from the company in order to break even on the interest expense for this borrowing. In all likelihood, even after reforming the new state-owned Tyson so that it competed properly and stopped squeezing consumers and farmers so hard, this type of leveraged buyout would end up being a profitable investment for the federal government.

Of course, I know why this kind of thing is never pursued or even proposed. It reeks a bit too much of the dreaded socialism. But if you put aside these kinds of ideological hang-ups for a second, I think you would really struggle to find a simpler, faster, or more effective way to tackle these kinds of problems. This kind of selective nationalization would not only allow the government to directly solve the problem in the targeted sector but could very likely influence behavior in other sectors that do not want to become the next acquisition target.