Conservative Principles: An Illuminating Test Case

by hilzoy

Via Effect Measure: the House has voted to override state food safety labeling requirements:

"The House approved a bill Wednesday night that would wipe out state laws on safety labeling of food, overriding tough rules passed by California voters two decades ago that require food producers to warn consumers about cancer-causing ingredients.

The vote was a victory for the food industry, which has lobbied for years for national standards for food labeling and contributed millions of dollars to lawmakers' campaigns. But consumer groups and state regulators warned that the bill would undo more than 200 state laws, including California's landmark Proposition 65, that protect public health."

All but 13 Republicans voted for this bill; 71 Democrats (including my annoying Representative) voted for it, and 125 voted against. The Republican votes are interesting, since it is a fairly clear case of conflict between supposedly conservative principles. On the one hand, this bill is business-friendly, and has GOP contributors and lobbyists behind it to boot:

"The vote Wednesday was a sign of the tremendous power of the food industry in Congress. Corporations and trade groups that joined the National Uniformity for Food Coalition, which backed the bill, have contributed more than $3 million to members in the 2005-06 election cycle and $31 million since 1998, according to data from the Center for Responsive Politics.

The industry also has many top lobbyists pushing the bill, including White House Chief of Staff Andrew Card's brother, Brad Card, who represents the Food Products Association.

A leading fundraiser for the bill's chief sponsor, Rep. Mike Rogers, R-Mich., has also been lobbying on the bill. Matt Keelen, a Republican consultant whose fundraising firm raised more than $315,000 in political action committee donations for Rogers in 2001, is now a lobbyist for the Grocery Manufacturers of America, which has led the charge for the measure."

On the other hand, it violates two other supposedly Republican principles: commitments to states' rights to effective markets. The conflict with states' rights is obvious: this bill deprives states of the power to require labeling they think is important. The conflict with a commitment to effective markets is subtler, but (to me) more interesting, since it concerns the relation between regulation and markets.

Regulation is generally burdensome to individual businesses: without it, they could do whatever they want; with it, their options are more limited. However, some regulation is necessary to the effective functioning of markets as a whole. Markets only work, for instance, when there are effective rules against theft: if everyone could simply steal whatever they wanted with impunity, then many people might not bother to actually purchase anything. Laws against theft are inconvenient to businesses that might otherwise wish to steal raw materials or machines; however, most of them more than make up for this by allowing those businesses to sell their products, rather than just waiting for them to be stolen. However, since there are presumably some businesses that would do better if theft were permitted than if it were banned (e.g., if they were a lot better at stealing things than at making things that people would actually want to buy), sometimes a regulation that is good for markets generally will be bad for some particular business.

Similarly, markets work best when would-be purchasers have reliable information about those aspects of products that matter to them. This is why we require publicly traded companies to obey accounting requirements: the stock market is much more efficient when would-be purchasers of stocks have information about the financial state of the companies they are considering purchasing shares in. And this isn't just a matter of preventing stock buyers from making mistakes. If people did not have access to accounting data from publicly traded firms, and had to decide whether to buy based on, say, gossip, a lot of people might just decide not to invest in stocks at all, since they would not be able to make sound decisions about what to buy. (Or, slightly more technically: since most decisions about purchasing stock would be a lot riskier in the absence of reliable accounting information, people would have to have a higher tolerance for risk in order to play the market than they do now; and thus the market for stocks would be smaller.) This would make our economy as a whole less efficient: companies would have access to less investment capital, and individuals would have less ability to take on, and possibly profit from, the amount of risk that they are willing to bear.

As before, the fact that accounting regulations burden all businesses, while benefitting only those that would do better in a more efficient market, opens up the possibility that a regulation that is bad for some individual business might benefit markets and consumers as a whole.

Labeling requirements, like accounting requirements, are a means of giving potential consumers the ability to access reliable information about features of products they are considering buying that matter to them. They allow us to decide, for instance, whether we want to buy a cheaper product that might cause cancer, or a slightly more expensive one that does not. This is exactly the sort of freedom that conservatives take markets to give us: we, as individual purchasers, get to decide how much it's worth to us not to run the risk of getting cancer, and we enforce our decisions through our collective market power.

Free market ideology would not, I think, imply that consumers need to have access to every known fact about the products we might buy. There has to be a tradeoff between the costs to companies of requiring disclosure and the benefits to consumers of having the information in question. For some bits of information -- e.g., whether a given product has an even or odd number of molecules -- the costs would be high, the benefits would be virtually nonexistent, and so requiring disclosure would be absurd.

But this doesn't apply in the present case. For one thing, the state regulations that are targeted -- California's requirement that carcinogens be disclosed, for instance -- are obviously not useless bits of information, like whether the number of molecules in a product is even or odd. More fundamentally, though, if tradeoffs have to be made, people's elected representatives would seem like the best people to make them. What matters, after all, is how important a given bit of information is to consumers, and elected representatives, for all their faults, are the best people to make those calls.

The House of Representatives has just voted to deprive us, as consumers, of some of the information we take to be relevant to our decisions. In so doing, it has chosen to help a given set of businesses at the expense both of states' rights and of effective markets. In deciding that consumers need not be given information that they take to be relevant to their decisions, moreover, it deprives them of a part of the kind of freedom that markets supposedly secure: the right to decide for themselves which features of products matter to them, and to make their purchasing decisions accordingly. They are, in short, doing something that's good for a specific set of businesses but bad for markets and for consumers as a whole. All this, and it will probably lead to unnecessary additional cases of cancer!

Truly a great moment in the history of conservative principles.

Comments

[Michael Cain]

States' rights is, effectively, a dead issue. Neither major party is in favor of states' rights except when they can't get their way at the federal level. And Supreme Court decisions for the last 70 years have been steadily shifting authority from the states to the federal government.

However, I will miss those labels that say, "This product contains ingredients that are known in California to cause cancer." I always thought that was amusing.

[CaseyL]

I agree with you, hilzoy (bit shock there!) about the larger issue, but this specific issue bugs me, since it implies that consumers are helpless to do anything about a lack of food safety labels.

Are there food producers who aren't members of those lobbying organizations? Did organic food producers and distributors join the lobbyists in favor of the bill?

If the answers are Yes and No, respectively, then the companies that opposed the bill can turn the vote to their benefit, by launching a PR campaign announcing that they will voluntarily continue to list food safety information.

Consumers can reward those companies by buying their products, and boycotting the ones who no longer list the information.

Considering how Americans are obsessed with personal safety and health (to an insane degree, IMO), this strategy could work very well.

[hilzoy]

Casey: sorry; I didn't mean to imply that consumers are powerless; just that in this instance, pure market principles diverge from business interests (though you're right that an active consumer movement could turn that around), and that, quel surprise, the House GOP members (and the 71 Democrats who sided with them) chose business interests over markets.

[Jonas Cord]

For one thing, the state regulations that are targeted -- California's requirement that carcinogens be disclosed, for instance -- are obviously not useless bits of information, like whether the number of molecules in a product is even or odd.

To a large extent, this requirement in California is a useless bit of information, given that it does not inform you of whether the levels of carcinogens are above average, in comparison to other similiar foods or other foods entirely; whether the carcinogens are naturally or artifically occuring, and the ratios between the two types; etc.

Either way, food labelling requirements at the local, State, or Federal level are going to be mostly special-interest pandering, not necessarily some objective font of useful knowledge. The special interests involved will either be the self-interested businesses subject to the regulation or over-the-top health fearmongerers. Take your pick and pat yourself on the back.

[am]

This posting is a classic example of the workings of the partisan mind.

How can one *possibly* evaluate such a piece of legislation without considering, or even mentioning the reasons which its supporters gave for their vote?

Just look at it. What we have is allegations of corruption, allegations of callousness toward consumers' rights and and some pathos about evil legislators wanting to poison people.

So *why* did all those legislators vote for the legislation? Presumably they had good reasons, but that has simply been censored - rubbed out and replaced with conspiracy theories.

It's pretty disgraceful. But common.

[liberaljaponicus]

So *why* did all those legislators vote for the legislation?

am,
you are certainly welcome to present your own theory as to why, which you could then list the presumably good reasons and even back them up with some evidence. I would suggest that you follow the example of Jonas, which seems like a much better starting point than accusations of conspiracy theory, imho.

This is from an interview with Adonal Foyle
"Everything I looked at came back to one thing -- money's influence on politics. Not to oversimplify things, but it's quite amazing. If you want to talk about the environment, about civil rights, about gender issues, about education, it all comes down to who has the money, who has the financial wherewithal to get their ideas heard."

and it suggests, as Hilzoy does, that it is not conspiracy, but monied interests. A subtle difference perhaps, but one that is there nonetheless. What Hilzoy points to is this, and trying to spin this as her spouting conspiracy theories is a misreading on your part.

This Crooked Timber post points to an online C-Span interview with Foyle for those of you intrigued.

[Dean Moriarity]

am, if you are convinced of another, more plausible explanation, please expound. Until then, I'm with hilzoy- shameless subjugation of supposedly conservative ideals in deference to shameless fealty to monied interests.(of course, I suppose the latter could be considered the most important conservative ideal of them all).

[Sebastian Holsclaw]

"The conflict with a commitment to effective markets is subtler, but (to me) more interesting, since it concerns the relation between regulation and markets."

The problem is one of balance. I'm not a big fan of Prop 65 (actual text of which can be found here. I generally like disclosure requirements as a matter of policy, I just think that Prop 65 requirements are so strict that it doesn't provide useful information. You basically end up issuing warnings for thousands of things that aren't unsafe. The only listing exception to that is:

An exposure for which the person responsible can show that the exposure poses no significant risk assuming lifetime exposure at the level in question for substances known to the state to cause cancer, and that the exposure will have no observable effect assuming exposure at one thousand (1000) times the level in question for substances known to the state to cause reproductive toxicity, based on evidence and standards of comparable scientific validity to the evidence and standards which form the scientific basis for the listing of such chemical pursuant to subdivision (a) of Section 25249.8. In any action brought to enforce Section 25249.6, the burden of showing that an exposure meets the criteria of this subdivision shall be on the defendant.

The problem with this kind of threshold level is that 1/1,000 threshold will often bring you to the 'trace' level which means that all sorts of things will show up above the threshold by natural proccess. It becomes akin to worrying about radiation from depleted uranium--yes there is radiation just less than your average similar amount of sand.

That said, I'm torn, because Prop 65 has gotten some companies to be super-strigent when they can--and that is probably a good thing. Like many things there is a strong diminishing returns issue. Enforcement people crack down on problem cases the first few years and that is a great thing. Then they go on to more marginal cases and that is an ok thing. But at some point they are spending their time on trivial cases--that ends up costing more than it is worth. This trajectory [in this case a tragectory? :)] is followed by many government agencies. I wish I knew a good solution to it because I typically like the first step results but I think the third step results can be hugely counterproductive.

Back to the subject at hand. I think this cuts a lot of different directions from a "conservative" point of view. States Rights--it cuts both ways because we like the state experiment idea but we don't like the interstate commerce problems. (BTW dealing with this for national and international distribution chains is within even the obvious part of the interstate commerce clause). Excessive regulation--conservatives don't like it. Access to information for market purposes--conservatives like that.

Saying this is a monied interest issue doesn't answer the question of whether it is a legitimate monied interest. If it is a legitimate monied interest (costs outweigh benefits) I'm not worried about it. If it is classic rent seeking or a desire to endanger people I would have a problem. I think the costs outweigh the benefits in this case.

[Sebastian Holsclaw]

One other problem with Prop 65 is the interpretation of "a chemical" for purposes of

No person in the course of doing business shall knowingly and intentionally expose any individual to a chemical known to the state to cause cancer or reproductive toxicity without first giving clear and reasonable warning to such individual, except as provided in Section 25249.10.

In practice this often means that a natural substance which is much more dangerous than a similar synthetic substance will not require a warning.

[Bernard Yomtov]

I think the costs outweigh the benefits in this case.

It's not clear to me what you consider the "costs." Is it the cost to manufacturers of meeting varying state standards? If so, what data do we have to measure this cost?

Or is it the cost of the warnings under what I take to be California's Prop 65? In that case isn't the issue the wisdom of the state regulation rather than the wisdom of this legislation, which would wipe out even the most sensible state-level rules?

[Kyle Hasselbacher]

...shameless fealty to monied interests.

As a monied interest, I don't have to buy fealty from present office-holders. Rather, I generously support the campaign of up-and-coming candidates who already share my interests.

I'm not saying that people in Congress haven't been bought. It's just that it's possible for Money to get its way without actually corrupting anyone.

It's ultimately the same result, of course...

[Sebastian Holsclaw]

"It's not clear to me what you consider the "costs.""

The costs include:

Costs of compliance with state measures (testing cost, labelling cost). The testing cost can be especially high if the legally tolerable amount is especially low.

Cost of compliance with different standards for different states.

Informational cost (devaluing information by treating nearly all levels of containing "cancer-causing" chemicals as the same.) This may also lead to sales cost by people overreacting to the "warning" on trivial matters. This may also cause people to incorrectly privilege natural products which don't contain a warning even if they cause worse health outcomes (another source of potential cost is the worse health outcomes).

I actually think the informational cost is very bad.

[rilkefan]

"Cost of compliance with different standards for different states."

Here everybody could be made happy by having Federal standards match the most stringent state standards.

[Frank]

Sebastian- If those costs are so burdensome the producers aren't required to sell in California, they can simply take their business elsewhere. What do you have against the free market?

As for the informational costs you are acting like you know better than the consumers, what is good for them, why can't the right ever trust people to make their own choices? ;)

[Sebastian Holsclaw]

"Here everybody could be made happy by having Federal standards match the most stringent state standards."

That is pretty much exactly what happens. Everyone with a national scope who has goods that might end up in California spends the fairly huge amount of money to comply. So if the policy really is too burdensome it is hitting a lot of people inapproriately. Which is exactly why the federal government might want to get involved--to regulate interstate commerce.

[Sebastian Holsclaw]

"As for the informational costs you are acting like you know better than the consumers, what is good for them, why can't the right ever trust people to make their own choices?"

I do. The informational cost of labelling vast numbers of safe products as "containing cancer-causing agents" is near zero. Call me again when we have a problem of information dissemination.

[Sebastian Holsclaw]

I of course mean the information gained has a value of near zero because the inappropriately labelled items so vastly outnumber the appropriately labelled ones. That makes the cost-benefit analysis so easy.

[Dean Moriarity]

Kyle, I appreciate your points, and I didn't mean to imply corruption on the part of the legislators, or at least corruption qua bribery.

However, whether it comes in the form of paying someone to change their mind, or in the form of generously supporting those who already have that mindset, the end result is the same- and too often it means skirting useful regulation to save a nickel.

I'm all for getting rid of stupid regulations, but I shudder to think that I have to trust this administration's ability to implement sound scientific/public health regulations that automatically trump those of the states. I understand Sebastian's concerns about the informational costs, but I suppose the decision has to be whether we are more comfortable living with some excessively implemented warning labels or letting Bush appointees decide what is or is not dangerous. Given the proclitivites of this administration to thus far subjugate professional/scientific opinion in favor of political favoritism (NASA, FDA, FEMA), I just can't get behind this legislation.

[Bernard Yomtov]

Sebastian,

It seems to me that you are saying that it is appropriate for the Federal Government to step in because California's laws are silly - they impose costs on food suppliers to no good purpose. (Let's just forget about your argument that there are things the consumer is better off not knowing because the knowledge will cause them to make foolish decisions)

If so, then isn't it just a question of whether federal rules will be more sensible than California's? I doubt they will be. I think Dean Moriarity's worries about the Administration's attitudes towards science are wholly justified.

[Sebastian Holsclaw]

"(Let's just forget about your argument that there are things the consumer is better off not knowing because the knowledge will cause them to make foolish decisions)"

You'll have to point to that argument. My argument is that 'warnings' with zero information value don't provide knowledge to consumers.

"If so, then isn't it just a question of whether federal rules will be more sensible than California's? I doubt they will be."

That's nice I guess. Then have people you like propose the changes. Oh wait, they won't.

Look, California can BAN things if they aren't safe. The whole problem is fearmongering. Lets put it in another perspective--you want to have an informed foreign policy discussion, but Bush keeps saying things that (given the evidence available at the time) are technically true but misleading. Is that a good thing? Is trying to get him to stop doing that or calling him on it at all like saying that you want to keep the American public away from information because the knowledge will cause them to make foolish decisions? It is technically true that Prop 65 warnings tell you about hazardous chemicals. It is highly misleading to say that they do so in a useful way. They privilege more dangerous 'natural' products. They force reporting levels that are 1/1,000 dangerous levels (three orders of magnitude). They don't provide enough information to make the warning useful. Classic case of regulation gone wild.

[Dean Moriarity]

". Classic case of regulation gone wild."
>>
That may indeed be the case. However, can we accomplish the objective (protecting consumers by providing meaningful information on food labels) without giving control over to an administration who, almost without exception, has shown itself to be willing to defer to corporate wish lists, regardless of the expense or risk to the average citizen? Sure, they always appeal to or put populist lipstick on a plutocratic agenda, but at the end of the day, it seems that the end result of a safer population is sacrificed in the name of avoiding "burdensome regulations" or "frivolous lawsuits" or "job creating tax cuts" or ....

It seems like California could have done everyone a favor by providing more useful information on the labels. It just sucks that "fearmongers" get blamed for these things, whether it involves food labels, global warming, mercury or gas additives in the ground water, fiscal policy analysts, or foreign policy skeptics.

[Sebastian Holsclaw]

"However, can we accomplish the objective (protecting consumers by providing meaningful information on food labels) without giving control over to an administration who, almost without exception, has shown itself to be willing to defer to corporate wish lists, regardless of the expense or risk to the average citizen?"

Well, if Democrats don't want to propose good labeling and you don't trust Republicans apparently the answer to your question is "No".

[Bernard Yomtov]

Well, if Democrats don't want to propose good labeling and you don't trust Republicans apparently the answer to your question is "No".

Once again, I'm not clear what you are saying. One thing that is clear is that right now whatever Democrats propose at the Federal level isn't going to matter. The rules will be what the food companies tell Bush they want.

To some degree this discussion is going in circles. You say California rules are idiotic. They provide a lot of useless information. Dean and I say Federal rules will be worse. They will omit a lot of useful information. Repeat.

But remember that there are informational costs to leaving out useful information - quite possibly higher than those of including useless stuff. After all, you are free to ignore data of no interest, but you can't make use of valuable data you don't have.

Are the costs of testing imposed by California so high? Maybe, but I'm not willing to take industry at its word on this.

Finally:

your [Sebastian's] argument that there are things the consumer is better off not knowing because the knowledge will cause them to make foolish decisions

You'll have to point to that argument. My [Sebastian's] argument is that 'warnings' with zero information value don't provide knowledge to consumers.

----> This may also lead to sales cost by people overreacting to the "warning" on trivial matters. This may also cause people to incorrectly privilege natural products which don't contain a warning even if they cause worse health outcomes (another source of potential cost is the worse health outcomes).

[Sebastian Holsclaw]

Bernard, do you interpret my point about the natural vs. chemical disclosure issue as "better off not knowing"? It seems to me that the point is that the CA government is requiring information on 'chemicals' but not on 'natural' products. If CA wanted to require all products to report silly levels of hazard, people could realize how silly they were pretty easily. Requiring 'chemical' products to get labels while leaving 'natural' products unlabeled is what causes a "not knowing" problem.

I'm not saying that knowledge is bad, but that a little knowledge--poorly communicated--can be misleading.

"One thing that is clear is that right now whatever Democrats propose at the Federal level isn't going to matter."

That is silly. If Democrats suddenly started making a lot of sensible proposals you think it is improbable that they would be listened to at all? And even if true, this hypothetical river of sensible proposals would illustrate to the US population that Democrats have balanced approaches to such problems. In reality, when Democrats get control, we tend to get unbalanced things like the actual CA rules.

This might however illustrate why we don't get moderate sensible rules--apparently neither side wants to propose moderate rules because it doesn't differentiate you from the other side enough.

[Dean Moriarity]

"This might however illustrate why we don't get moderate sensible rules--apparently neither side wants to propose moderate rules because it doesn't differentiate you from the other side enough."
>>
Wow, that pretty much sums up my increasingly intolerable level of frustration with politics anymore. Anyone have any extra Xanax?