Saturday, June 14, 2008

Marginal Revolution covers food safety

Alex Tabarrok at Marginal Revolution gives Paul Krugman a hard rap on the knuckles for criticizing federal food safety regulators without noting the relevant data. Krugman's recent column describes a crisis of foodborne illness outbreaks, while Tabarrok points out CDC statistics showing that at least some kinds of outbreaks haven't increased. Still, the CDC data aren't the whole story. Here is my comment:
Interesting post and thread, Alex.

On food safety issues, I try to ignore the ideologues.

On the one hand, Grover Norquist and Milton Friedman have hopes for market incentives that are not only unrealistic, they are very far from the current state of good contemporary economic thought on food safety.

On the other hand, I give little weight to critics who hold out unrealistic expectations for government prevention of all food safety risks, not so much because they care about food safety, but because they just have large ambitions for government interventions in the economy.

Current economic thought draws on a fairly specific diagnosis of different kinds of imperfect information, each of which calls for a different policy response, which can range from laissez faire to labeling to testing to regulation.

A standard mainstream -- or even somewhat conservative -- text on the economics of food safety is John Antle's book on food safety. It acknowledges market failures in food safety, and particularly recognizes the need for strong government regulation of food-borne pathogens, because in many cases consumers cannot recognize the safety of the food even after purchase, and hence cannot defend their own interests in the marketplace. In my reading, Antle is a strong critic of food safety activists on other topics, such as pesticides (where he believes there is over regulation disproportionate to risk), but on foodborne disease he seems to me closer to Krugman than Friedman.

There are some exciting private market innovations in food safety recently. For example, the buyers for major supermarket chains are getting more sophisticated in demanding safety from their suppliers, which allows the market to achieve good outcomes that individual consumers could not command on their own.

At the same time, it is fair to say USDA and FDA oversight of food safety have fallen far short of a balanced position. The CDC stats on outbreaks have a number of shortcomings, and don't suffice to make me think otherwise. Take something like the USDA's refusal to let Creekstone beef voluntarily test its own product for BSE. It is so outrageous that the J. Thomas in his comments even presumes it to be untrue (it's true). The so-called "regulators" are way out of step with the public interest position of economists, even market economists who appreciate the market's accomplishments on its good days.
[Update 6/15/2008: Lively continuing discussion of this topic at the Economist's View, including comments from Mark Thoma, Tyler Cowen, and Alex Tabarrok.]

1 comment:

Anonymous said...

The problem is that the Bush administration has cut back the number of food inspectors as the amount of domestic and imported food increases.

I am in the food industry, we have always had a higher level of testing than required by the States and the Feds since we are Organic. (Organic must meet all state and federal food safety laws but our customers prefer more oversight)

Yes, the supermarkets and big Fortune 100 food companies have their own new and very detailed set of food safety standards for their products and for all their co-packers but that is due to threats from class action lawsuits. Which is want Freedman envisioned, but that does not effect all the food in the US system so the need for adequate enforcement and additional regulation is needed to keep the food system safe.

Have you noticed that nobody is telling us that the US food system is the safest in the world anymore?