RE: Food labels and consumer information (was Re: Protesters swarm Calif. biotech meeting)

From: Rafal Smigrodzki (rafal@smigrodzki.org)
Date: Thu Jun 26 2003 - 11:17:04 MDT

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    Alfio wrote:

    >> But what reason is there to think that laws and the bloated
    >> government departments that always grow around them like a cancer
    >> will stop somebody selling colored water as orange juice better than
    >> the market can?
    >
    > I am somewhat uneasy at applying market logic to issues regarding
    > basic human needs. Even assuming that the market will adjust
    > perfectly, it will do at the public expense (at first): for example,
    > if a producer sells some poisoned food, the market will not correct
    > it before some people die. Or, if very unsafe cars are sold, again
    > they will continue to be sold until they are demonstrated unsafe on
    > the market, e.g. when people die because of them (come to think of
    > it, the FDA is doing a better job than automobile regulations...)

    ### This is incorrect. Only unpredictable dangers will be inadequately
    addressed by the market (but this is the nature of the world - the
    unpredictable by definition defies a specific preventative action, whether
    individual or collectivist). The predictable dangers can be easily addressed
    by civil liability and insurance. The maker of poisonous food who fails to
    inform his customers about the properties of his product may face liability
    for the effects of poison that could not be foreseen and prevented by the
    customer (when the presence and amount of poison exceed the expectations of
    the so called reasonable customer). This knowledge will make him think twice
    before poisoning food beyond the expected range (i.e. he can still put
    hydrogenated oils in his cookies but will try to avoid surreptitiously
    putting cocaine into them, since this would be an unexpected poisoning).
    Also, his liability insurance carrier will demand that the manufacturer
    either informs about poisons, or refrains from using them, again because of
    the *expected* financial costs, not the costs associated with actual death
    of customers.

    The same logic applies to cars. A very unsafe car (but non-obviously so)
    will a source of liability by regular civil liability rules, with absolutely
    no need to introduce statutory limitations on human behavior.

    In general, as in most other circumstances, such as the stock market, and
    banking, the market is much better at predicting the future and reacting to
    the predictions preventatively, than large bureaucracies. They tend to be
    slow, rigid, unresponsive to the needs of customers, and horrendously
    wasteful (because of the virtual absence of economic feedback loops in their
    decision-making).

    Rafal



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