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All In Favor Of Regulation Say ‘Aye’

The industry is all set to practically demand regulation in Washington, DC. This may be a wise policy.

It is a weakness of democratic politics that people are prone to believe that passing a law against something will accomplish something. So just as it was once believed that the Kellogg-Briand Pact, also known as the Pact of Paris, would end all war, people believe that a law banning unsafe produce will end foodborne illness outbreaks.

The Kellogg-Briand Pact was a treaty — still binding in fact — “providing for the renunciation of war as an instrument of national policy.” Alas, this 1928 agreement signed by Germany, Italy, Japan, the UK, the USA, France, Russia, Poland and many other countries, did not prevent World War II or any of the wars since.

Ceremony held upon the signing of the Kellogg-Briand Pact

There is actually a very strong argument to be made that the most effective food safety system is no system at all. If the government would actually announce a policy of caveat emptor and tell buyers they are on their own — that the government makes no effort to secure safe produce — the immediate effect would be to raise the value of brands.

Consumers — as well as trade buyers — would pay a premium to buy brands that they felt were safe. This premium would justify investments in food safety that would advance the technology.

Regulation may well raise minimum standards, but it provides no incentives for going beyond the minimum.

We explained the dynamics of this in a column in Pundit sister publication, PRODUCE BUSINESS, entitled The Economics of Mandatory Regulation.

The effort before Congress, though, is not so much designed to increase food safety as to increase public and regulatory confidence. There is some irony in the idea that by begging for regulation the industry can appear to be safer, while rigorous competition to be seen as safer might actually cost the industry a lot more money.

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