Wednesday, September 20, 2006

Kill 'em All; Let the Market Sort 'em Out

So the punchline to the whole spinach scare is that the growers were warned:

Just 10 months before fresh spinach started sending people to the hospital, state and federal officials warned Salinas Valley growers and packers to clean up their act after a decade of deadly E. coli bacteria breakouts.

In November 2005, the FDA sent a letter to growers, packers, processors and shippers warning them to improve produce safety....

The recent outbreak is the 20th time in a decade that leafy greens from Monterey County have been contaminated by the deadly O157:H7 strain of E. coli bacteria.
My second reaction to this story (after 'wow, I'm surprised that the FDA under Bush did anything at all') was that this is beautifully illustrates the inanity of the anti-regulatory position.

In a libertarian utopia, regulation is unnecessary because the market takes care of these things. The market takes care of these things because business always make rational decisions that advance their own interests.

Except in this case, the growers didn't. They were warned (by a regulatory agency) to improve the safety of their product; they decided not to, and as a result their industry is taking a hit that will take years to recover from.

But here's the thing: in a regulation-free environment, it would be rational for the growers to take shortcuts with product safety. In the absence of regulation, we consumers wouldn't have gotten any reliable information about the contaminated spinach. Neighbors could be dropping dead from e coli infections and we would have no idea. And what that means is that unless the toll gets above, say, five percent, there's no market penalty for killing your consumers.

Update: In comments, Nobody in Particular notes something I had missed:
Also, I love the name of the culprit brand: "Earthbound Farm's Natural Selection label ... "
Appropriate indeed.

[That's all, folks]