BT et C

Friday, September 09, 2005

BSE & BS

In today's post, Bovine Spongiform Encephalopathy, also called "mad cow disease", becomes a starting-point for an exploration into political reality-versus-perception issues.

I think if you asked your average down-to-earth, common-sense oriented conservative what's up with government regulation of business, consumer safety legislation, etc. you'd be told that regulation in modest amounts is defensible, but that it's just gone way too damn far in this country.

Your super-conservatives (the "radical right" (:) would, of course, deny that first part, and yearn for total deregulation of everything. But let's stick with the boring, middle-of-the-road mainstream position for awhile.

The basic idea is that companies (e.g. beef packers) will invest what they can in making their meat safe. They are in fairly constant conflict with bleeding-heart liberals who want them, increasingly, to cut into their profits and do more testing, etc. that the consumer has not explicitly asked for in the market.

And the small-government position is that there isn't any need for all these programs to crawl over the companies' facilities with a microscope, because the information about which companies have the safest meat will get around in the marketplace, and the companies that make the safest meat will reap the benefits, etc. This all makes perfect sense.

Now think for a minute about that picture of things ... how reasonable it is, and how -- with only minor adjustments -- most people would agree that yeah that's pretty-much what's up. The government's too big, and trying to over-regulate stuff is at least part of the problem.

Into this wheel I'm going to throw a spoke:

Two companies in America would like to test ALL of their cattle for BSE and provide this reassurance to their customers. But, alas, they cannot.

How come? Is it technically difficult? No -- the BSE test is pretty straightforward.

Can't afford it? On the contrary, one of them has already invested in the necessary equipment and is just rarin' to go. Largely because much of their (former) business went to Japan, which banned US-imported beef until all animals are tested.

You've got a company in a "free" market that wants to spend its own money to make extra-sure its products are safe, and a bunch of customers who are cool with footing the bill. So what's up?

The USDA forbids the company to do these tests.

Let's read it again: The USDA forbids a private company from testing for BSE at its own expense. The testing equipment is required to sit there, unused.

One of the companies, Creekstone, is losing about $280,000 a week because of unavailability of the Japanese market. "That the USDA is standing in our way makes no sense," Fielding (COO of Creekstone) said. "Their position flies in the face of the basic rule of business -- that the customer is always right, and our job is to meet their demands." (src)

Well, Mr. Fielding is right of course. This post is about what does and does not make sense, or more-to-the-point, whether common sense has anything to do with What Actually Is. Because this picture, of the free market asking for X, and a business deciding to provide X, and the government saying "no way", does not fit in neatly with the common-sense (I would posit: reductionist) view of the situation presented above.

Let us propose three possible ways of organizing a market for beef:
1) "Japan style" - require that 100% of beef sold come from cows tested for BSE.
2) "free market style" - let people know which packages of beef have been tested (i.e. with a label or something) and they can pay extra for these packages, or take their chances. "Americans are willing to fund a higher level of reassurance. A January poll by the Consumers Union showed that 95% of adults would pay 10 cents more a pound for tested beef. Testing every slaughtered cow would cost about six cents per pound." (src)
3) "US style" - make everyone take their chances, even if they don't want to and are willing to shell out cash so that they don't have to. "The U.S. Department of Agriculture (news - web sites) (USDA) currently does not allow such private testing for mad cow disease. And it claims that a new government testing system it approved this month is perfectly adequate. " (IBID)

This leads us to two questions:
1) Why do we have a US style market?
2) Why do we think we have a free market style market?

Well, if you looked through those linked pages enough to solve the mystery, you found yourself right back at common sense: it is because large corporations are not willing to compete fairly. (Bet you're going to have a heart attack and die from that surprise). The "big four" agri/beef companies have put a lot of pressure on the USDA to disallow any private testing. That is to say, it would cost them a Lot of Money to test all their cows, and they don't want to. But they can't very well have their beef sitting on the shelf next to a package of some other company's beef that says "tested for BSE". That would be a #2 style market, and we all know what another word for "number two" is.

Interlude: yes, this is more about beef than anyone wanted to know, but too bad. Japan apparently backed down from the 100% testing requirement, but as of March still hadn't reopened the market. I bring this in only to show that I'm aware of it; it is, however, completely beside the point, viz. my right as a Beefy Entrepreneur to test for Neisseria Meningitidis if I want to and/or if I think my customers want me to. Even though it only affects humans.

Well, I shoulda made the interlude into an Epilogue, 'cause I think that's just about it. I'm not of the opinion that all American industries are under-regulated, just that things are not as simple as they seem. And, emphatically, I believe this:

The influence of major corporations over our governmental institutions is a much larger problem vis-a-vis the free-ness of the market than the (I daresay weak) regulation of industries and standards by government. Much larger.

In short I think the whole business-versus-government thing is a myth, and that it was basically foisted upon an unthinking populace by business-and-government, which are in fact Very Good Buddies.

2 Comments:

  • preach it, brother. and join the club, we have shirts.

    but a couple of notes...

    "And the small-government position is that there isn't any need for all these programs to crawl over the companies' facilities with a microscope, because the information about which companies have the safest meat will get around in the marketplace, and the companies that make the safest meat will reap the benefits, etc. This all makes perfect sense."

    don't leave out the strictly moral defense of private property and liberty. you lay out the small-government UTILITARIAN position. but the MORAL small-government position is that the government has NO RIGHT to restrict companies' nor consumers' peaceful exchanges of private property.

    in addition, I wouldn't call Creekstone or MO Valley strongly-principled in their desire to be free of government intervention, considering that between them, they've received maybe $750k of our tax dollars in subsidies.

    you did answer your first question, and I agree 100% with your assessment. but since you did not answer your second, I'll give it a crack...

    the free-market illusion is convenient for the government AND its accomplices, which are increasingly and predominantly, though not exclusively, corporations.

    huge successful corporations can always justify some or all of their more shady dealings and activities on the premise that they are merely winning in the "free market." but they don't ever mention how much the "free" market has been altered and obscured by cryptic and ornate government-enforced tax-breaks, regulations, subsidies, monetary control, etc. nor do they issue press-releases nor ad campaigns proudly publicizing how much of these mutations are of their own inception. no, they are never using government to enforce their own competitive advantages into the market - they are always just winning in the "free market." riiiight.

    the government, likewise, benefits immensely from furthering the free-market facade because in doing so, it not only creates the ultimate and perpetual scape-goat for all of its failings, but it also dupes the easily-duped into hypocritically supporting massive expansion of government power. someone said that government should be invisible, but I think the opposite is true. people should see anywhere and everywhere that the government intrudes into their everyday lives. as long as the government can hide behind a free-market mask, it can always rally support for ever-increasing power, just like all self-enforcing institutions can be expected to do.

    By Blogger luke, at 2:54 PM  

  • Subsidies are a different topic, but I don't find Creekstone or MO Valley "strongly-principled in their desire to be free of government intervention" and never said so.

    Of course I left out the defense of small government on moral grouns; I made it quite clear that I was confining myself to the mainstream small-government position.

    In point of fact I do not endorse that position, nor the one you describe, but this is all beside the point, which is: political reality versus perception.

    I have just watched the film, and am now reading the book, Manufacturing Consent which I can recommend highly Most pertinent to this discussion is their answer to the question (#2) at large. We think we have a free market because broadcasting rights were transferred wholesale to commercial interests in 1934, and since then the public discourse on these issues has been -- at least -- framed, and often outright controlled by the ever-dwindling number of institutions that generate mass media.

    Politically-charged categories and metaphors -- e.g. culture as "content", the internet as "information superhighway", and our favorite "intellectual property" -- are used uncritically, and become massaged into our core vocabulary, our common sense. The result is that "We have ruled out of our minds certain issues, ranges of outcomes, possible modes of organization" (src). "Free"-markets-versus-government regulation is just one of thousands of oversimplifications that have become predominant, like "IP versus piracy" ... and by strange coincidence it serves the interests of concentrated power centers (corporate and governmental) that this predominance continue.

    And, yes, you will hear 100 free-market-verus-regulation stories for every 1 free-market-versus-subsidies (or -versus-corporate-welfare, etc.) story.

    I've asked before, but you must have missed it: what's your overall take on Chomsky? Another extremist, like Lessig (!)(?)(;))

    By Blogger Matt Crouch, at 1:10 PM  

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