Wednesday, August 25, 2010

Eggs: An English Lesson

The recent egg recalls have raised the issue of whether the FDA should require farmers to vaccinate their hens against salmonella, something it has so far declined to do. Thus the NYT writes:
Faced with a crisis more than a decade ago in which thousands of people were sickened from salmonella in infected eggs, farmers in Britain began vaccinating their hens against the bacteria. That simple but decisive step virtually wiped out the health threat.

But when American regulators created new egg safety rules that went into effect last month, they declared that there was not enough evidence to conclude that vaccinating hens against salmonella would prevent people from getting sick. The Food and Drug Administration decided not to mandate vaccination of hens — a precaution that would cost less than a penny per a dozen eggs.
The obvious implication is that the U.S. ought to imitate a wise British decision and require vaccination. Further down in the article, however, we discover that:
There are no laws mandating vaccination in Britain. But it is required, along with other safety measures, if farmers want to place an industry-sponsored red lion stamp on their eggs, which shows they have met basic standards. The country’s major supermarkets buy only eggs with the lion seal, so vaccination is practiced by 90 percent of egg producers, ...
Or in other words, Britain's success in drastically reducing the number of salmonella case is due not to regulation but to voluntary private action driven by market pressure.

13 Comments:

At 3:09 PM, August 25, 2010, Blogger Vadim Iaralov said...

OK but it begs the question why US market failed to do so. I doubt it's subsidies or the like. Maybe it's historical process leading to multiplicity of equilibria. (vaccinate <-> red lion)

Perhaps, the government in US can hop the economy into the clearly more beneficial equilibruim where any individual consumer/producer has little incentive to be the first one to do so. Why vaccinate if consumers/supermarkets don't expect red lion stamp. Why ask for stamp if no one else is vaccinating.

 
At 5:15 PM, August 25, 2010, Anonymous BlackSheep said...

Vadim, having a "free of Salmonela" stamp seems pretty beneficial to the producer. More likely, the FDA regulates the info on the label.

 
At 10:49 PM, August 25, 2010, Blogger David Friedman said...

"why US market failed to do so."

It's not clear to what degree it did. According to the NYT story, vaccination is practiced in Britain by 90% of egg producers, in the U.S. by one half to two thirds. That's a difference, but not an enormous difference.

 
At 12:38 AM, August 26, 2010, Blogger Aquarion said...

Also, it's not quite good enough. When the Red Lion came in after the salmonella scare, it came with a public education blitz as to what it means, but a few years down the line where thousands of local corner shops are selling unstamped eggs, people will only find out what the stamp means if there's another outbreak.

(Also, the "less penny per dozen" thing isn't quite true. It costs a penny to immunise the second chicken. Immunising the first is quite a lot more expensive.)

 
At 7:42 AM, August 26, 2010, Blogger DerekL said...

I guess you could also describe the widespread adoption of Microsoft Windows in the same terms - 'to voluntary private action driven by market pressure'.

 
At 7:53 AM, August 26, 2010, Anonymous Anonymous said...

According to the NYT story, vaccination is practiced in Britain by 90% of egg producers, in the U.S. by one half to two thirds.

Ok, but is this not a bit similar to human vaccination? Given that eggs are a mostly undifferentiated pool to consumers, a 1 in 2 to 3 chance of "winning" non-vaccinated eggs isn't all that great.

It also brings up an interesting point that always makes me wonder. Absent a purely philosophical "feel good" angle, in a given, specific case like this, why do we care that the coercive impetus to vaccinate eggs comes from gatekeepers at a grocery store rather than gatekeepers at the FDA? The effect on farmers would be the same.

I get it in terms of wider capture, overstepping remit, dumb decisions, etc. I'm looking at the single instance here. Suppose that a British equivalent of the FDA mandated it instead. Where's the difference?

 
At 12:37 PM, August 26, 2010, Anonymous Anonymous said...

"...is due not to regulation but to voluntary private action driven by market pressure."

It is due, in part, to regulation: Regulation that says "if you want to use this stamp, you have to vaccinate". Otherwise, what's to stop farmers from using the stamp without vaccinating?

 
At 7:38 PM, August 26, 2010, Anonymous Anonymous said...

Its dumb, but here is a wonderful example of the U.S government preventing a private entity from doing something similar. (From 2006)

Creekstone answers USDA in court over mad cow testing

US - Creekstone Farms Premium Beef has answered the U.S. Department of Agriculture's court documents opposing the company's motion for summary judgment in its lawsuit againstUSDA. Creekstone sued the USDA in March for refusing to allow the Arkansas City beef processor to voluntarily test all the cattle it slaughters for BSE, commonly called mad cow disease.

 
At 8:31 AM, August 27, 2010, Blogger Brendan said...

Anon Writes:

"It also brings up an interesting point that always makes me wonder. Absent a purely philosophical "feel good" angle, in a given, specific case like this, why do we care that the coercive impetus to vaccinate eggs comes from gatekeepers at a grocery store rather than gatekeepers at the FDA? The effect on farmers would be the same."

What you are essentially asking here is "If the Government produces the same effect as voluntary action driven by market pressure, why choose one over the other?"

There is no reason to choose one over the other, but the point that I believe David Friedman has been trying to make for years now is that the Government GENERALLY DOES NOT produce results similar to market action. Market action generally produces results preferable to government action. This is why market action is preferred, not for any "feel good" reasons.

Also, do you think it is appropriate to describe a voluntary testing and labeling system as producing a "coercive impetus"? Since when is the voluntary coercive?

 
At 10:55 AM, August 27, 2010, Anonymous Anonymous said...

I did a quick bit of research - it seems that there was a Red Lion stamp program - created managed and produced by the British Government. It was quite successful.

When it was abandoned during the Thatcher regime, egg sales slowed, and there was a giant salmonella scare and egg sales dropped. Add in a need to meet EU requirements, and the British Egg Industry had a small and shrinking market.

They've privately revived a former Government program, it seems.

I could be wrong about some of this: 10-15 minutes of web searching and reading does not give one serious experience to draw upon.

But I'm not at all clear that this is a triumph of superior private markets and free market capitalism. It could just as easily be viewed as private industry seeking government regulation badly enough to repeat it upon themselves....

There was some useful history of the British Egg Industry Council, and its government predecessor the Egg Marketing Board on Wikipedia, which eventually lead me to the historic article on the current incarnations web site.

 
At 2:04 PM, August 27, 2010, Blogger David Friedman said...

"why do we care that the coercive impetus to vaccinate eggs comes from gatekeepers at a grocery store rather than gatekeepers at the FDA? The effect on farmers would be the same."

My discussion of the general issue, in a different context, is at:

http://www.daviddfriedman.com/Libertarian/Capitalist_Trucks.html

 
At 2:23 AM, August 29, 2010, Anonymous Egg Lover said...

Salmonella from eggs is only a concern for the elderly and infants who are eating undercooked or raw eggs.

For healthy adults it's largely irrelevant, especially if you keep your eggs properly refrigerated until use.

I don't see why I should be paying the cost; people can choose to buy pasteurized eggs for the elderly or infants if they choose to.

 
At 8:59 PM, September 06, 2010, Anonymous Runyan said...

A common simplified view regarding the rise of the US regulatory state is that it arose in order to protect the public against unethical big businesses.

The most used example of this is the Meat Inspection Act and Pure Foods & Drug Acts that were passed supposedly in reaction to Upton Sinclair's "The Jungle".

Writing in Everybody's Magazine, XIV, 1906, pp. 612-613; Sinclair states something entirely different:

That the Federal inspection of meat was, historically, established at the packers' request; that it is maintained and paid for by the people of the United States for the benefit of the packers; that men wearing the blue uniforms and brass buttons of the United States service are employed for the purpose of certifying to the nations of the civilized world that all the diseased and tainted meat which happens to come into existence in the United States of America is carefully sifted out...This is a strong statement; and yet I might go even farther. I might say this also: that the laws regulating the inspection of meat were written by the packers, and written by the packers for the express purpose of making this whole condemned-meat industry impossible of prevention.

By pushing for government inspections and seal-of-approvals, the major packers/exporters (The Beef Trust)were able to socialize one aspect of the cost of production (quality control) that would have been needed to be completed privately in order to remain competitive.

This general theme of 'big business sponsored legislation marketed as being socially responsible' is the norm for most regulations, then & now.

An interesting side-note to this dialogue is that private inspections and certifications were also developing at this time. By 1905 Underwriter Laboratories (UL) had already issued over a thousand testing reports on various consumer and industrial products, and had just begun their factory inspection program that continues to this day.

[Good starting points for more info on early regulations and the Progressive period: G. Kolko's "Railroads and Regulations" & "The Triumph of Conservatism"; also J. Weinstein's "The Corporate Ideal in the Liberal State"]

 

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