What, according to a free market, should happen after this?
Obviously in cases such as these the statist will be in favor of regulation or more regulation.
Will people stop buying from Hillandale Farms with or without regulation?
I think I know what the free market answer is, although I’d like your opinions on it. The free market take would be that industry is self-regulating based on profit. Ergo, you make/produce/grow a product with defects and people may die, but the incident will never happen again because of the destroyed credibility of the company. But do consumers/distributors always make decisions based on that?
Are there any industries where people have repeatedly been burned but that are kept alive becasue of the majority of the populus keep pouring their money into them?
I know I wouldn’t buy from certain places because of these sorts of problems, but that doesn’t mean other people follow the same rationalality involved when goods or services are purchased. In fact, I think that most people don’t at all and because most people don’t, wouldn’t we see these industries still producing while getting away with, for example, serious food safety violations?
I’d love your opinions. I may be out to lunch on this one.
You buy your food from trusted intermediaries, like walmart. I bet all major food retailers are trying desperately to make sure none of their customers get sick from anything.
Free market skeptics think that retailers would sell poison to their customers if it weren’t for regulations. But it would be easy for walmart to fudge its expiration dates. They don’t because if people get sick it will create a market for honest vendors.
This is just more utopian statism. They want to live in a world where everyone is instantly held accountable for every mistake and no one gets hurt. If a three year old fell of their tricycle, they’d still cry “market failure”. I’m not really intimidated by this kind of story anymore because they still don’t accept the burden of proof that you have to go out and attack innocent people to fix the problem. They’re basically right that more regulations would have fixed the problem, but whether those regulations should come from government is a different question.
If the government didn’t mandate the recall the eggs could probably be sold at a discount, and warning given that they be disinfected and fully cooked. Salmonella in eggs used to be much more common, so I’m not sure I see the need to destroy all these eggs?
In a free market most certainly people would be more selective with whom they dealt. Now, people just assume the FDA will protect them no matter where they buy from, so they have no incentive to discriminate. Sort of like how people just forked their money over to Madoff without doing their homework on him because they figured there was no way the SEC would allow a con man to run a hedge fund.
@OP: What Sieben said. I would add that you can also look at this from the point of view of self-defense. You don’t want to die and one of the ways you can die is from being (accidentally) poisoned through impure food. You buy insurance for your house, your car and even your life. That is, you are willing to pay money to insure the things you own and your life. If foodstuffs were more generally dirty or diseased, you’d likely be willing to forgo something like fire insurance in order to pay an agency that does nothing but inspect food for safety (privatized FDAs, in essence). These agencies, in turn, could compete for business on the basis of their spotless records… even one mistake would spell disaster. The incentives for rigor should be obvious.
It turns out that foodstuffs are pretty damn clean, even in countries with less regulated food markets than the US. So, there’s not a lot of profit to be earned from inspecting food in the first place. But the wealthy will always want to “be sure” their food is safe, so there will always be some market for private FDA-esque agencies.
LRC put up an article on how people are buying Kosher and Halal foods as an alternative to FDA foods as the FDA slides off into the abyss of socialized diet-engineering instead of doing its job… to certify food for purity. I think this is an interesting factoid that shows the true, ancient function of religious dietary restrictions… to avoid foods that are prone to disease and certify the foods which are permitted in the diet for purity and safety. It is a myth of modernity that, because pre-moderns didn’t have the germ theory, they were therefore a bunch of cavemen blithely shoving anything they came across into their mouths.
“Are there any industries where people have repeatedly been burned but that are kept alive becasue of the majority of the populus keep pouring their money into them?”
Ummm … the industry of gunverment and other industries which it is in bed with perhaps, e.g. banks, insurance, health, security, etc.?
I meant industries that weren’t in bed with the government, but you guys have given me lots to think about.
I think in light of this, it’s important to remember that when we hypothesize a free society, the society is never exactly the same as it is today, minus the whatever we argue against. That’s the problem with liberal a priori reasoning, they presuppose that the market is unable to quickly adapt to solve problems.
Obviously we would have to adapt to the circumstances in the occasion that the government no longer becomes our nanny. Almost like how churches stepped into philanthropy before the government ever started providing its own form of ‘charity’.
For instance, after some deep though in the shower today, I figured that in the event of deregulation in this area, each corporation that is a mass purchaser of eggs would employ its own safety analysts to arrange the proper protocol to be followed at each farm that produces these eggs.
Although it would inefficient since it would cement producers and distributors together because of the hundreds of different safety regulations employed by hundreds of different farms for hundreds of different corporations.
Yes, I see the private sector providing us with private agencies for voluntary regulation although I wonder how long it would take for this to happen? Who knows.
With deregulation, I’d do it in one area at a time to allow the market to adapt. I guarantee that if you deregulated every industry all at once, the result would be chaotic.
You can believe me or you can not, but please read carefully.
First, yes it will happen again, and government regulation will never change that. It will not make your eggs the least bit safer, no matter how much a legislator claims he cares. Of course, this fact won’t stop calls for more regulation.
You can bet your ass that when the government imposes additional regulations, it will not involve just eggs, but of as much of American agriculture as they can cram into a bill-- all for our safety, naturally. Compliance with the new regulations will cost billions and lead to higher prices, but more importantly, small farms will be shut down. Large industries will stay in business not because they produce superior products in greater numbers, but because only they can afford to comply (or bribe the necessary officials). That is why when safer products are called for, big companies are the first ones to lobby for new regulations. One dirty little secret of Socialism is that it is only the rich and powerful who actually benefit from it.
One example of an industry that is kept alive in the manner you describe is the tobacco industry. There are hundreds of regulations, taxes, and public programs aimed at crushing it, but still it survives. All the while, tobacco farmers still receive subsidies to keep them in business. Why? Because if people actually stopped smoking, where would all those tax dollars, public programs, and regulatory bureaucracies come from?
The occurance of an exceptional event once is not sound reason to lose credibility. Sometimes shizzle happens and that is all there is to it. It is consistent or higher than mean problems that isolate one firm as bad. All firms having about the same frequency and type of problems is specific to the product type rather than a firm. For example, all fruit goes rotten within a few days.
The answers above are all excellent, especially the point about how the moral hazard that the very existence of the FDA increases these risks a priori (in regards to increasing consumer trust and lowering demand for private testing and certification).
One thing that hasn’t been mentioned, however, is the illumination that methodological individualism gives us in all of this. The statist-left will stew in their juices about how government “has to protect us from corporations poisoning our food!!!111one”, yet who is “us”? The abstract known as “us” is the aggregate of individuals voluntarily purchasing the eggs.
There are those that are voluntarily willing to take the miniscule risk in order to consume a fairly inexpensive good such as an egg. There are some I’m sure who are too stupid or ignorant to even realize there’s a risk. The former should not be punished for the latter’s ignorance in the form of regulation (or a ban) resulting in an increased cost or outright inability to purchase the good.
I’ll also add that the government-created depression we’re currently in will result in consumers tending to consume lower-priced goods, thus objectively increasing any odds that they will consume “unsafe” products.
Clayton and Sieben make very good points. The free market should be responsible enough to handle all of the peaks and troughs of the market. Obviously, it can. Though there are some factors they can’t control, such as the existence of salmonella, they can control for the type of product they want to sell. No one wants to sell salmonella-infected products so major companies have taken extra precautions to make sure they products are safe to consume. According to a recent Reuters article, Walmart, McDonald’s, Chipotle, and Papa John’s have taken necessary measures. McDonald’s hasn’t even experienced any issues relating to the salmonella outbreak and neither has Chipotle. They just temporary stopped serving tomatoes. Some companies, like Walmart, that do not have any problems with the salmonella outbreak have gone the extra mile to let customers know if their products are safe to consume or not. As far as I see it, the only role the FDA has taken up is to take this overboard and alarm everybody into thinking that the government is the only problem solver out there. Groups like the Union of Concerned Scientists have pushed for a bill to give the FDA more power, unaware or ungrateful of the company’s role in limiting salmonella outbreaks. As Clayton suggested, entrepeneurs should tap into this market and show what a free market can really do.