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FDA scandal! Or is it?

A front-page story in yesterday's Wall Street Journal by Jane Zhang (via Stier) expresses one-sided dismay that HHS blocked an FDA safety effort on E. coli contamination in produce.

"Among other things, the FDA outlined a three-year effort that would pump $76 million into its coffers to monitor produce safety and impose stringent rules on growers and processors to prevent contamination. Such a campaign could cut produce-related outbreaks of illness in half, the FDA officials said."

There are 356 cases of produce-borne E. coli a year. Regulators wanted to spend $76 million to prevent a little over 500 cases of E. coli? Maybe taxpayers would prefer to have one less case of E. coli nationwide instead of $140,000, but it doesn't seem so self-evident that the argument should be ignored entirely, as the story does.

Simple-minded folk on the left sometimes pooh-pooh this sort of cost-benefit analysis as "safety is too expensive," an appallingly arrogant pronouncement of proud ignorance. How much should we spend to eradicate E. coli? Why stop at $76 million to just reduce the small number of cases by half? Why not spend the entire nation's GNP to completely eradicate E. coli contamination of produce?

The answer is obvious to the intellectually honest: if we as a society spend that much money on one small problem, larger problems will necessarily go unaddressed, and we are all worse off. Resources are scarce, rather than unlimited, and not every problem can be solved.

The Wall Street Journal story doesn't even mention how expensive the costs would be to produce-growers beyond the taxpayer layout of expenditures. Would the increased price to fruits and vegetables cause poor people to switch to less healthy carbohydrates and fats in their diet, and increase obesity and health risks that more than offset any small gains from reduced E. coli contamination? I don't know—but it's a question that should be at least asked.

The interesting quote is this one: "Major players in the fresh-produce industry, hurt by sinking sales after the recent outbreaks, support mandatory steps to prevent accidental contamination."

Unmentioned is that this is an interesting case of a collective-action problem exacerbated by government regulation. No one wants to be the first mover, only to learn that the government is going to require a completely different safety scheme that will require a second set of expenditures. If there wasn't the risk of government action, the market would have found the right level of safety that satisfied consumer demands at a price consumers were willing to pay for that safety.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.