regulation – E Pluribus Unum

Those Damn Government Bureaucrats, Keeping Us From Eating Poison Food Again…

At least 53 people have been sickened by tainted, chopped romaine lettuce in an expanding E. coli outbreak that now spans 16 states, the Centers for Disease Control and Prevention said on Wednesday.

At least 53 people have been sickened by tainted, chopped romaine lettuce in an expanding E. coli outbreak that now spans 16 states, the Centers for Disease Control and Prevention said on Wednesday.

Source: New York Times, E.Coli Outbreak Tied to Romain Lettuce, 4/19/18.

Unless you have an advanced chemistry lab in your house or you grow all your own food — meaning, 99.99% of the US population — you assume the food you buy in grocery stores and are served in restaurants is safe to eat. That assumption is right with only infinitesimal exceptions. Let’s do the math using some “back of the envelope” numbers

360 million Americans
Each eats 3 meals a day on average
Each meal consists of 3 food items on average

That means, on average, conservatively, Americans consume 3,240,000,000 — that’s 3.2 billion — food items per day. This is a conservative estimate because in the age or processed foods, most food items contain dozens of ingredients.

Accordingly to the article, over 24 days, March 14 to April 6, or 77,760,000,000 (that 77.8 Billion) food items consumed, 53 people were reported to be made ill by the contaminated lettuce. Even if the 53 reported cases was only 1/100th of the actual number of e.coli cases, that means the food supply error rate was only 1 sickness per 147 Million food items. The average person, who lives to 80, only consumes under 300,000 food items his his or her life has a less than 0.02% chance of food poisoning in their lifetime.

In contrast, the National Safety Council reports your risk of dying from a lightening strike in your lifetime as 1 in 114,000.

I’m shocked, shocked politicians doing the bidding of their campaign contributors

When politicians and political appointees are overly influenced by industries rather than the people who elected them, what do we call that? — corrupt?

You all remember the famous lines of faux incredulity from Casablanca?

We all know that corporations make campaign contributions to gain access to elected officials and “have their voice heard.” An Energy Dept photographer caught exactly what “being heard” means in photos that were leaked to the press. The below images show the memo handed to the Secretary of Energy, Rick Perry, with a list of Murray Energy wishes to protect their coal business, including:

Cut the staff of the US Environmental Protection Agency at least in half
Replace members of the Federal Energy Regulatory Commission
Replace members of the Tennessee Valley Authority Board of Directors
Replace members of the National Labor Relations Board

Murray Energy has a long running list of coal mine safety violations and is aggressive in denying their responsibility for mine accidents, such as the Crandall Canyon disaster. See a bio of the owner here and a safety violations tracker here.

When regulators are overly influenced by the industries they regulate, they are called “captured.”

When politicians and political appointees are overly influenced by industries rather than the people who elected them, what do we call that? — corrupt?

Read the full story here.

Externality: Food poisoning

A reasonable, but perhaps not accurate, assumption of US consumers is that they food they are eating will not make them sick. Yet, every year, about 15% of the US population gets sick from food they eat.

About 48 million Americans get sick from food-borne diseases each year, according to the agency. Of those, 128,000 are hospitalized and 3,000 die.

A radical free marketeer would say “caveat emptor” – let the buyer beware. But in the age of industrial agriculture and a high societal reliance on prepared foods, such ideological purity is not realistic. Consumers cannot tot around a food testing lab to every meal they eat or every grocery store they visit. We rely on a combination of the merchant and our government to protect us from food that makes us ill. This is because, the cost of that Chipotle burrito or that head of lettuce does not capture the true cost of giving perfect information to the consumer about the safety of the food they are about to consume. That is why we need regulations.

Cigarette Externalities

This full page advertisements appeared in several national newspapers starting today, due to a Federal Court order, from a long-delayed Federal Court case that found US Tobacco companies systematically lied about the health hazards of cigarette smoke for decades.

Smoking was and remains, a massive transfer of cost from the tobacco manufacturers to smokers and the society at large who pay the increased medical care costs caused by smoking. This is the classic externality.

Quoting:

A Federal Court has ordered R.J. Reynolds Tobacco, Philip Morris USA, Altria, and Lorillard to make this statement about the health effects of smoking.

Smoking kills, on average, 1,200 Americans. Every day.
More people die every year from smoking than from murder, AIDS, suicide, drugs, car crashes, and alcohol, combined.
Smoking causes heart disease, emphysema, acute myeloid leukemia, and cancer of the mouth, esophagus, larynx, lung, stomach, kidney, bladder, and pancreas.
Smoking also causes reduced fertility, low birth weight in newborns, and cancer of the cervix.

NYT, Sunday 11/26/17. P. 13.

Chart: Comparative Automobile Deaths

While US government regulations dramatically improved automobile safety and reduced US highway deaths per million miles driven, in recent years we have fallen behind other industrial countries.

The US now lags behind many industrialized countries in road safety. Had we kept up with the other countries, 30 fewer people would die in highway accidents every day or 10,000 fewer each year.

Source: NYT 2017-11-20

Self-Dealing Elites

one important factor is the capture of the American political system by powerful insiders — big businesses, elite professionals, wealthy homeowners — that use it to entrench their own economic power.

Charles Nast - Boss Tweed

Our predicament of slow growth and sky-high inequality has many causes, but one important factor is the capture of the American political system by powerful insiders — big businesses, elite professionals, wealthy homeowners — that use it to entrench their own economic power. In so doing, they protect themselves from competition, fatten their bank accounts with diverted wealth and slow the creative destruction that drives economic growth.

Four key policy areas shed light on the growth of this political-economic swamp — financial regulation, intellectual property, occupational licensing and zoning.

NYTimes 11/26/17.

Water Pollution … Just the Transfer of My Costs to You (the unsuspecting downstreamer)

Regulations are a real annoyance, costing the manufacturer more money and annoying the workers in their toils (think having to wear particle filtering masks in an already hot coal mine). But then the workers, consumers, or the neighbors to the plant need the results of the regulation…

“[A] local shoemaking company, Wolverine Worldwide, the maker of popular footwear brands like Hush Puppies and Merrell and a mainstay in this area since 1883.

Decades ago, Wolverine dumped sludge and leather from its tannery in the woods around here. For years, the company and the government stayed mostly silent about the trash piles, even as developers built houses and a golf course near them and even as researchers documented serious health risks from chemicals in the sludge.

…

Ms. Schweinzger’s well water is among at least 30 to have been found to exceed the federal government’s recommended lifetime exposure levels for PFAS, also known as perfluoroalkyl and polyfluoroalkyl substances. She lives on the same street where Wolverine once dumped sludge that included Scotchgard, the waterproofing chemical used in Hush Puppies shoes that contained PFAS.”

Regulation is merely the making explicit the true cost of the manufacture, distribution, and sale of a product – the true costs that have previously been hidden as externalities and often born by unsuspecting outsiders to the transaction.

NYTimes article 11/25/17.

Who Says Bureaucracy Doesn’t Add Value?

It’s a favorite trope of conservatives and libertarians to claim that government regulation only reduces productivity and increases cost of goods and services. From the

Auto Car Crash 1960s

manufacturing firm’s point of view, this is true.

However, we live in a

republic of people, not firms, and that one-

sided point of view leaves out the other side of market failure situations, such as consumer safety.

The cost of dangerous automobiles and highways still existed back in the days before airbags and seatbelts, only the cost did not appear on the publicly held companies financial ledgers. Rather, those very real costs were transferred to the consumers, who died at a rate more than 8 times as high as before the imposition of “bureaucratic” safety standards.

Regulations did not make the cost of cars go up, rather they merely made the true costs of safe cars transparent.

Highway Deaths Rates 1946-2016 - NYT - 2017-11-09.jpeg

Source: NYTimes 11/7/17.