Banning Bake Sales

The American Enterprise Institute held a panel discussion yesterday on food safety. They discussed congressional proposals aimed at addressing contaminants in our food, such as pathogens like Salmonella and E. Coli. Panelists actually agreed on a few things … well, actually, they agreed on what they don’t know.

First, no one could answer the question as to whether legislation would significantly reduce risks, nor could anyone determine where the real risks lie. And no one could provide an adequate justification for increased government action because food safety has not declined in recent years—it is more likely improving.

Nonetheless, David W. K. Acheson of Leavitt Partners (a former FDA official) and the Consumer Federation of America’s Carol Tucker Foreman strongly supported increased federal action simply because they “believed” it would work. Walter Olson of the Manhattan Institute and noted some serious, potential pitfalls, such as reduced competition, destruction of small businesses, and the expansion of crazy regulations on bake sales and other food-related activities. He used the disaster created by the Consumer Protect Safety Improvement Act (CPSIA) as an example.

Michelle Worosz professor from Auburn University argued that we need more information before regulating. Worosz is correct about holding off. However, we can’t simply wait for better information because we will never have it.

By definition, public officials are too far away from process to make reasonable one-size-fits-all decisions about myriad, varied, ever-changing, and situation-specific problems. As F.A. Hayek pointed out, it is a fatal conceit to believe otherwise. Only the multitude of individuals in a dynamic market process–which holds each accountable–produces desired results. Regulators, on the other hand, simply second-guess all those private decisions. They might have good or bad motivations—but it doesn’t matter. They simply don’t have the information they need, nor can they design a one-sized fits all rule that will address all problems.

Despite claims to the contrary, private parties are also more accountable. They must live with the consequences of their own choices, and businesses in particular must address the impacts they have on others. After all, no one profits from making their customers sick. Businesses are held liable in courts or suffer substantial losses of market share where problems, or the perception of problems, exist. They act more quickly than government, and their solutions are more precise.

In contrast, regulators can pass misguided rules based largely on political tides rather than good information. They often do more harm than good and are expensive, yet few people trace the problems back to government. Then regulators go back to Congress for bigger budgets to fix the problems they created. They don’t lose their jobs or go out of business when they make fatal mistakes. This is, as Olsen points out, pretty much what’s happening with the CPSIA law.

Indeed, the disciplines of the marketplace explain why our food supply is amazingly safe and getting better considering all the opportunities for contamination from farmyard to table. And no government regulator will do any better in correcting problems as they emerge. In fact, this is why we don’t have the government growing and distributing our food. If we did, we probably would all starve!

Photo attribution: Rachel Kramer Bussel’s photostream, on Flickr.