This is a few weeks old, but I’m just seeing it now. Accidental vacations have a way of encouraging information delinquency. Anyway, the underlying concepts won’t age, so here it is:
Trans fats are largely synthetic fats widely used in fried foods and baked goods. There is substantial medical evidence that they are significant contributors to heart disease (perhaps increasing the incidence of heart disease by as much as 6 percent) because they both raise the cholesterol that is bad for you (LDL) and lower the cholesterol that helps to protect your arteries against the effects of the bad cholesterol (HDL). About half of New York City’s 20,000 restaurants use trans fats in their cooking; and roughly a third of the caloric intake of New Yorkers comes from restaurant meals.
That’s from Richard Posner, at The Becker-Posner Blog. It’s a fair enough assessment of trans fats and why health officials think it’s bad. There is no harm in information, right? But how do those facts justify a complete ban on the ingredient in all New York City restaurant meals?
What is missing in this analysis is a cost that, ironically, a great Chicago economist, George Stigler, did more than any other economist to make a part of mainstream economic analysis: the cost of information. It might seem, however, that the cost of informing consumers about trans fats would be trivial–a restaurant would tell its customers whether or not it used trans fats, if that is what they’re interested in, and if it lied it would invite class action suits for fraud. But there is a crucial difference between the cost of disseminating information and the cost of absorbing it.
When I first read through this, I’d intended to discuss “the cost of absorbing it” in this context. But that would be less interesting than this, from later in the paragraph:
Actually the danger would be impossible to explain to diners, because it would depend on the diner’s average daily consumption of trans fats, which neither the diner nor the restaurant knows.
Want to take any guesses about who else doesn’t know the diner’s average daily consumption of trans fats? The government, of course, although it’s less far-fetched to believe that the government wants to know. Rather than the invasive, suspect process needed to keep an accurate, or even approximate, tally, it’s easier to just ban everything. That way, the government knows how much trans fat diners will consume in restaurants.
The acceptance of paternalism continues:
In such a situation, even those of us who distrust government regulation of the economy should be open to the possibility that the ban on trans fats would produce a net improvement in the welfare of New Yorkers by satisfying a preference that most of them would have if the cost of absorbing information about the good in question were not prohibitive.
There are tidbits of possible solutions sprinkled throughout the entry. Instead of less troublesome tactics such as mandatory labeling and government marketing against trans fats, Judge Posner finds government prohibition amenable. Unreal. The cost is less prohibitive in either of my hypothetical solutions, although they’re still far from libertarian dreams. Judge Posner’s conclusion is incompatible with liberty.
Hat tip: Hit & Run
14 thoughts on “How do we protect government from itself?”
Trans fat is a man-made contaminant. The creeps who are responsible for putting this dangerous substance in our food should be sued out of business. That would make a ban unnecessary (and assuming the lawsuit was filed by a private citizen or group, it would also make the “government paternalism” argument moot).
It won’t do much to go through the government intervention arguments and counter-arguments. Instead, I think a question might help. Do you believe people should be allowed to eat trans fat if they deem the harm acceptable/inconsequential/whatever?
For me the underlying issue is liberty. People should be allowed to be stupid. We don’t have to be complicit in that stupidity, but without the opportunity to be stupid, people can’t be free. I find that unacceptable, far worse than the harm they could choose to inflict upon themselves.
I have no problem with labeling and warnings for trans fats. Lawsuits might even make sense if food companies knew that trans fats are harmful and deceived customers. Going forward would be different, of course, because now we know. But it shouldn’t be prohibited. If it should, so should cigarettes and a host of other poor choices. I don’t believe that, not even for red meat, for example. As a vegan I deplore it for it’s health dangers, but I value liberty more. I don’t want people messing with mine, so I won’t mess with theirs.
That’s the long-winded way of asking the question I opened with.
“Do you believe people should be allowed to eat trans fat if they deem the harm acceptable/inconsequential/whatever?”
If someone is demented enough to want to eat trans fat (or jump out of an airplane, for that matter), that’s their business I suppose, but under no circumstances should we allow food companies to put contaminants in their products if those products are intended for consumption by people who aren’t demented.
But you can’t allow one side of the liberty equation and outlaw the other. If you do that, you end up without liberty.
If we require labeling instead of a ban, such as with cigarettes, those who aren’t demented won’t eat products with trans fats. Those who are demented and get joy out of those products will eat them. If there’s a sufficient market for it, the product will continue. The demented alone will suffer the price. If the market is saturated with sane customers, the product will go away. Everybody wins and no prohibition is necessary.
Not to bring everything back to single-payer health care, but this is a perfect example. If health care is on the public dime, trans fats will impact public expenditures. That will make the case much easier for politicians and bureaucrats to say “No” to products that people want. For the public fiscal good. But people who are willing to pay the consequences of their decisions are made worse off by the group mentality. That’s wrong. Unfortunately, it will become the norm under single-payer health care. (See: United Kingdom)
I don’t think you understood what I was trying to say, so I’ll try again. I’ll use Nabisco as an example this time.
If Nabisco believes there’s a niche market for trans-fat-contaminated crackers then they can go ahead and sell them and I wouldn’t oppose that as long as they continued to offer consumers like myself another version without trans fat. In other words, they can sell their contaminated crackers in addition to their non-contaminated crackers, but not in place of them.
This is a perfectly acceptable compromise, in my opinion, because it preserves everyone’s freedom of choice.
Yeah, I was slightly off on my understanding, but you probably won’t be surprised to know that my response is basically the same. To the example…
What about Nabisco’s freedom of choice? In your scenario, are they no longer allowed to decide which products to offer? If they offer a trans fat product, must they offer a version without trans fat? Even if they deem the business model to be unprofitable?
If you want non-trans fat crackers, that suggests a market. Under your scenario, Nabisco is forced to meet it, even if they don’t want to. Freedom is still being curtailed.
“What about Nabisco’s freedom of choice?”
Nabisco is a corporation. Corporations aren’t entitled to the same freedoms that human beings have.
But the stockholders are. Nabisco is using their money to create products which generate wealth. If Nabisco must create a product that isn’t economically justified because it loses money or there’s another product that will generate a higher return but won’t get produced, the stockholders are worse off.
The fact that they have stockholders doesn’t entitle corporations to the same freedoms that human beings have.
Not the same freedom for the corporation, but freedom still to act on behalf of the shareholders. Those shareholders retain the freedom to invest their money as they see fit, and to direct the company to enter into mutually agreed upon transactions, i.e. trans fats laden products (or not) for cash.
Take the corporation out of it. What if it’s a one man operation? Does that person retain the right to sell such products because he chose a different legal structure? Consider it a straight sole-proprietorship, where he reports all income and expenses on his 1040.
It doesn’t matter on whose behalf they’re acting, corporations aren’t entitled to the same freedoms that human beings have. No businesses are entitled to the same freedoms that human beings have, regardless of how they’re structured.
But in my last example, it’s a private person entering an exchange with another private person. There is no legal structure involved, other than citizenship. If we’re going to decide to limit transactions between private citizens, who gets to decide what is prohibited? How do we decide what is acceptable to prohibit?
I can certainly think of things that should be prohibited because they cause harm to others. But those others are third-parties. A mutual exchange between individuals in which the only person being harmed is someone willingly entering the transaction. If the person doesn’t know there’s harm, labeling might be justified. Prohibition is not. Again, we can’t fool-proof society against stupidity.
“But in my last example, it’s a private person entering an exchange with another private person.”
Nope. Sole proprietorships are businesses.
We disagree. I don’t really have anything to add, other than I’m happy for the debate. Dissent sharpens my viewpoints, even if my refined arguments don’t alter your mind.
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