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Do Food Makers Want to Kill You?

Mises Daily: Friday, July 23, 2004 by

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Freedom can stand or fall on issues large (wars, depressions, natural disasters) or small (a hundred thousand regulations that manage our daily life). Regulations on food labeling count among the small issues. It is a tricky issue for market advocates because bad labeling might actually count as breach of contract and thereby require legal intervention of some sort.

As Murray Rothbard writes, "if A sells B breakfast food, and it turns out to be straw, A has committed an illegal act of fraud by telling B he is selling him food, while actually selling straw. This is punishable… [by] the legal code of the free society that would prohibit all invasions of persons and property."

But by conceding that small point does not mean that regulators should be permitted to regiment all aspects of food production, which is where we are headed.

At issue is the theoretical presumption itself. Can market forces manage issues of food labeling or must regulators be involved? Many politicos on Capitol Hill are under the impression that food manufacturers are neglectfully poisoning the 6-11 million Americans who have food allergies by sneakily failing to point out on labels that the food contains deadly ingredients. So here we have the ultimate paranoid-socialist fantasy at work: business rakes in profits through fraud while people die!

So in order to protect life and limb, the House and Senate have passed the "Food Allergen Labeling and Consumer Protection Act" that requires manufacturers to say whether their food contains milk, eggs, peanuts, tree nuts, fish, shellfish, wheat, or soy. This legislation was supported by the FDA and the DHHS, two bureaucracies you know have your health foremost in mind. This is supposedly going to save 250 lives per year, and protect millions from sickness.

It passed on a voice vote. If anyone opposed the bill besides Ron Paul, the press certainly hasn't said anything about who he is. And yet there is every reason for a freedom lover to be against this bill, and something very fishy going on with its seeming absence of opponents.

When it passed, it was heralded by one and all, as if it represented another small step in the march of history toward fairness, justice, and truth. The news stories treated it as a victory for consumers over rapacious and even murderous food makers who lie, lie, lie over the ingredients in their products. Thank goodness for government, we are supposed to believe, because it protects the interests of the little guy against blood-sucking corporate snack kings.

But think about this. It is rather implausible that anyone selling food would somehow be reluctant to say that this or that product contains milk, eggs, peanuts, or whatever. This is not information anyone would have a reason to hide. These are not ingredients that somehow gross out consumers, or chemicals that producers would just as soon people not know about.

Perhaps the amounts are too small to mention, but still end up deadly to consumers who have particular allergies toward them? Perhaps so, but then a bit of education is all that is necessary, for no one has a greater incentive to insure the safety of their products than food makers. It is contrary to good business to risk the lives of those who consume your products.

Doubt it? Think back to every food panic you can remember. Nothing makes people more hysterical and resentful than the idea that a particular food is not nourishing but rather deadly. One dramatic death is enough to throw an entire hemisphere into mania. It doesn't take much thought to realize that food manufacturers are rather disinclined to want this level of bad press for themselves. Death is bad for business. So is sickness.

But you might say that the manufacturers are not aware of the danger that some people face from food allergies. Really? Who has more of an incentive to stay constantly on top of the latest information concerning such matters: the makers of food or Congress? Not even the regulators have a reason to stay on top of these matters. It is the makers and sellers for food themselves who have the greatest stake in being aware of what consumers need to know.

Nor is the food allergy niche too small: every food retailer has an incentive to market specifically to this group to stay ahead in a business with very thin profit margins. Even if the manufacturers are not quite on the ball, grocery stores don't want to sell food that kills people, and for many years the major chains have been working with food-allergy groups to send out alerts on products that might contain small traces of listed foods.

Not only that. The FDA has been sending out press releases on this subject for years, and the Federal Register published a regulation back in 1992! And anyone who knows something about the FDA knows that it is the last institution to hear about such matters. As with most regulatory agencies, it sends out press releases and mandates long after the private sector has already dealt with the issue. This is the routine aspect of all safety regulation: retailers and manufacturers discover the problem, issue the recall, manage returns and compensation, while the FDA and various safety commissions send out press releases for the media to run.

If it is really necessary for Congress to force (that is what legislation is about) food makers to confess that they use eggs or peanuts or whatever, in order to prevent people from dying who would otherwise croak on a crumb, if it is really essential that the coercive apparatus of the state, which George Washington compared to a fire and the whole liberal intellectual tradition warns is up to no good, be put to use in this way, if this is really necessary, then there is no case for freedom at all. If government needs to do this, it needs to do everything. If the market fails here, it fails everywhere, and we need the total state.

So far from being a small non-issue, the food allergy regulation bill is a test case. To support it is implicitly to support the full regulation of economic life by politics. To believe that the market works—especially in the case of an issue and sector that any idiot can see is perfectly capable of managing itself—is to undermine the core principle that freedom manages society and government is just not necessary.

How does the market respond? By making ingredients explicit or providing incentive for producers to produce special products that meeting the needs of special dieters. Another market response is the development of trade associations that certify products for special needs, such as that offered by the National Nutritional Foods Association. There are probably hundreds or thousands of such organizations.

Now, the food-allergy regulation advocates say that it is far more complicated than this. A case cited in this link says that two people were rushed to the hospital because an older brother discovered that the package of a Rice-Crispy Treat said it might contain nuts, but once contacted the company said, well, actually, there are no nuts in the R-C Treat. The kids left the hospital. The grave matter here is that the "family suffered an unnecessary scare and trip to the emergency room." The legislation supposedly gets rid of this problem by forcing manufacturers to be more specific and eliminate weasel-phrases like "may contain."

In this case, the problem was caused by the regulation itself. The company that made the snack would not have sensed the need to add that it "may contain" peanuts if not for fear of regulators who punish the failure to disclose. What the anecdote does is suggest the need to tighten the screws further: you must say what is in your product and you must be sure that whatever you say might be in your product had darn sure better be there!

Now we are getting to the heart of the issue. As you read about this subject ever deeper, we find that the issue isn't really ingredients. It is the small traces of peanuts or some other substance that might be in food resulting not from a recipe but from the equipment used in manufacturing plants. Small traces of peanuts might be floating in the air or tiny particles of milk product might be remaining in a large mixer, as it moves from making one product to another. What the new regulation demands is that even these small particles be either completely eliminated or the label needs to say what is in there—and if it says it is there, it had better darn sure be there.

What we are talking about here is extreme cleaning, extreme attentiveness, and extreme disclosure—not merely the elimination of negligence or inattentiveness but the addition of difficult processes in manufacturing itself. Most of the product recalls impacting on allergies deal with such issues: animal cracks that contained traces of milk, a frozen vegetable that contained traces of eggs, a packaged turkey product that included just a bit of milk. And so on it goes.

Now, it might appear that such an idiosyncratic diet that would demand such extreme measures is best served by companies that specifically cater to such needs, as with the many religions that have special food requirements and sustain large sectors of food makers who specialize in dealing with them. Perhaps, then, the food-allergy is best handled in this way. Why impose such strictures on the whole of the market?

In handling such issues, the largest manufacturers are in a far better position to absorb the expense of complying as compared with the smaller ones. That is not to say that the small companies openly argued against the legislation. Who is going to come out for the right to kill allergy suffers? No, just as with the whole history of product regulation, especially in Republican administrations, the large producers run roughshod over the small ones by harnessing market pressure towards safety to a solution that imposes legal penalties on smaller and start-up competitors.

This is not a small factor in the history of economics. It is how the regulatory state came about, from the Progressive Era to our own. Regulation then as now is a form of mercantilism that benefits some at the expense of others. And the some who benefit are not the consumers. This labeling bill won't help those with food allergies so much as reduce their own level of attentiveness to what they eat, giving them a false sense of confidence. It could thereby lead to more deaths, followed by more regulation.

Economic life needs to be regulated but the question is: by what and how? It can be regulated privately so that consumer needs and producer behavior are coordinated and all types of innovation are rewarded, or it can be regulated by the state, which uses its mandate to reward friends, strangle innovation, raise costs, and give us all a false sense of security. It is the market process of competition and consumer service that serves us all, even those with highly specialized needs. The government serves only itself and those with clout enough to get the state to do their bidding.

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Llewellyn H. Rockwell, Jr. is president of the Mises Institute and editor of LewRockwell.com. Rockwell@mises.org.  Comment on this article on the blog.