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Friday, August 22, 2008

Is that Fish?

The state, supposedly, has a whole apparatus set up to protect consumers against fraud.  Nonetheless, it took two high school students to show that up to a quarter of the fish in New York City is mislabeled. 

So what use is the state then?  Why do we, indeed, need to rely on the state for consumer protection when it clearly has failed us, once again, and the fortuitous curiosity of two teenagers exposed the mislabeling?  Free marketers have long argued that it takes private inspectors who are motivated by profit or fame and reputational quality of producers to best protect the market, rather than bureaucrats who, may be well intentioned, but who lack the proper rewards and punishments.  This story is just another typical example of how the state fails us. 

And yet, the state, on both sides of the border, continues to insist that despite its constant failings (tainted meat anyone?) that it is the sole provider of quality and safety.  It does so by trying to grab more power such as the attempt to regulate herbal and alternative remedies in Bill C-51George Stigler was a famous free-market economist who won the 1982 Nobel Prize.  He developed a theory of regulation known as “regulatory capture,” in which he argued that regulation benefits the regulated industries at the expense of consumers.  These latest events prove him right once again.

Posted by Moin A Yahya on August 22, 2008 in Current Affairs | Permalink

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Comments

Moin,

"The state, supposedly, has a whole apparatus set up to protect consumers against fraud. Nonetheless, it took two high school students to show that up to a quarter of the fish in New York City is mislabeled. So what use is the state then?"

You have only shown that state agencies are not perfect. Only a fool would have thought they were. So agencies that are set up to ensure that there is no consumer fraud sometimes do that, sometimes not. That they get it right most of the time answers your question of what use they are.

Sometimes investigative journalists uncover crimes that the police miss. That is not an argument for disbanding the police. It does not prove they are of no use. Similarly, that the fish police (Was Abe Vigoda in charge of that force, perchance?) did not ensure proper labelling in this case does not show that state oversight is useless.

The more general comments about state "regulation" are (ahem) a red herring (No! It's a mackerel! I swear!) Economic regulation is (ahem) a different kettle of fish, not to be confused with regulations that require truthfully reporting what a product is. Economic regulation typically protects profits of those in the industry, adds costs to consumers, and makes it harder for new businesses to enter the industry. But that has nothing to do with the fact that the law prohibits you from labelling "Mozambique tilapia" as "white tuna". That sort of regulation is a good thing.

Posted by: Fact Check | 2008-08-23 8:02:28 AM


Moin A Yahya writes:
"It does so by trying to grab more power such as the attempt to regulate herbal and alternative remedies in Bill C-51."

The federal government is not trying to grab more power. They have been regulating natural health products since 2004 under the Natural Health Product Regulations:

http://canadagazette.gc.ca/partII/2003/20030618/html/sor196-e.html

These regulations will remain in force after Bill C-51 is passed.

Posted by: Barry Green | 2008-08-23 8:18:20 AM


The trouble is that traditionally the regulatory bodies draw their personnel from the very industries they seek to regulate. This is natural since they are the experts in the field. The fly in the ointment is that these very functionaries are too closely connected to the businesses that wish to be protected. In the case of Bill C-51 it is the pharmaceutical firms that have the most to lose.

Posted by: DML | 2008-08-23 10:31:38 PM


FC: "You have only shown that state agencies are not perfect. Only a fool would have thought they were."

Yeah, right. And all any advocate of state intervention has ever shown is that the free market is "not perfect." Only a fool would have thought it is.

Posted by: Grant Brown | 2008-08-24 12:20:28 AM


Barry Green - you are incorrect in stating that Bill C-51 does not give the CFIA even more power and control to regulate health products (herbs, supplements, etc.). Even the 2004 decision was wrong and this new law will make it worse.

Posted by: Alain | 2008-08-24 12:39:11 PM



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