Meat Market

A New York Times article today poses the question of whether or not regulatory oversight has been too lax on the meat packaging industry. To show the market’s failure to maintain safety standards, the article cites the Topps meat factory which was forced to recall a year’s worth of its patties the past summer when it was discovered that they were contaminated with E. coli. But would a bigger stronger government regulator have prevented this?

The answer, most likely, is no. The title of the article “Many Red Flags Preceded a Recall of Hamburger” says it all. There were plenty of warning signs that something bad was going down at Topps, but nobody said or did anything.

The failure of Topps to maintain safety standards, followed by the E. coli outbreak, was a more effective regulator than any government entity. After 67 years in business, Topps has gone under.

So, while it is sad that 40 people were made sick during the outbreak, it’s not an example of the market’s failure to regulate–it’s an example of how the market can successfully regulate itself. The invisible hand of the (somewhat) free market is swifter and more severe in applying justice than any government body which would have only fined or reprimanded Topps. Federally oversight would have only allowed the company to languish for several more years, operating at substandard levels of safety. Sure the company might have improved standards under a stronger regulator, but only enough to prevent fines.

In a self-regulated market companies that fail to meet the safety standards of the public do not survive long.