On Food Inspections

by Don Boudreaux on April 20, 2009

in Complexity & Emergence, FDA, Food and Drink, Regulation

Hat tip to Chris O'Leary for alerting me to this report in the New York Times.  It's a report on how food processors in California are paying for their own food inspections.  Because the chief cop-on-the-beat — Uncle Sam — does a poor job of inspection, food processors themselves are footing the bill for inspections.

Of course, the report has quotations from persons offering the predictable complaint — namely, that if food processors are footing the bill for inspection, then the inspections can't be as trustworthy as those done by government. 

Those who issue this complaint overlook several important facts; here are two.  First, the agency that these complainers insist is the only trustworthy inspector (that is, the federal government) has in fact done a poor job.  It's a stretch to say that Uncle Sam is the most trustworthy agency to perform food inspections in light of the reality that he has done this task in an untrustworthy manner.

(Extra credit for those who can pinpoint the flaws in the response that says "Well, Uncle Sam has performed poorly at this task only because its regulatory budgets have been gutted during the past several decades.")

Second, food processors have incentives to create a trustworthy inspection system.  Business for these food processors is better when consumers put more trust in the products offered by these food processors.

(Extra credit for those who can explain how branding and advertising play key roles in ensuring optimal levels of food safety.)

Update: Eric Crampton, over at Offsetting Behavior, tells a telling tale.


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