Free Markets, Free People

Government v. The Market

The myth is that without government regulation, the market would certainly do everything it could do to kill or cheat its customers. Of course most of us realize that doing those things is a sure way not to be in business long. But for a significant number of others, that myth is alive an well. A recent example, however, provides a perfect example of the absurdity of that notion. And, I suggest that it should be applied to health care as well.

Myth:

The U.S. Department of Agriculture says the meat it buys for the National School Lunch Program “meets or exceeds standards in commercial products.”

Reality:

In the past three years, the government has provided the nation’s schools with millions of pounds of beef and chicken that wouldn’t meet the quality or safety standards of many fast-food restaurants, from Jack in the Box and other burger places to chicken chains such as KFC, a USA TODAY investigation found.

[...]

McDonald’s, Burger King and Costco, for instance, are far more rigorous in checking for bacteria and dangerous pathogens. They test the ground beef they buy five to 10 times more often than the USDA tests beef made for schools during a typical production day.

And the limits Jack in the Box and other big retailers set for certain bacteria in their burgers are up to 10 times more stringent than what the USDA sets for school beef.

So the burger at Jack in the Box is safer than the mystery meat your child is served at school. Children are served tons of chicken in school each year that KFC won’t touch (KFC doesn’t do “spent hens” but your child does).

Jack in the Box and KFC have to please and answer to customer demands if they want to stay in business. If KFC makes you sick because of bacteria, you and others will most likely vote with your feet and go elsewhere. What is your choice if that happens in a government school?

Now, think health care.

End of story.

~McQ

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25 Responses to Government v. The Market

  • Have you ever worked in Fast Food place or knew someone who has?
     
    They may have all kinds of standards, may follow them.  But once that food comes off the truck and into the hands of teenagers…   eeeshhh.

    • Actually I did – 3 years in college. Helped pay my way. I also ate in the school cafeteria. And I can say, without equivocation, which of the two had higher standards – which is why I ate at the fast food joint at every chance.

    • It ain’t just teenagers. ‘Adults ‘ have had more time to pick up bad habits.

  • So the burger at Jack in the Box is safer than the mystery meat your child is served at school.

    The irony of that statement is not lost on me.  ;)

    Jack in the Box and KFC have to please and answer to customer demands if they want to stay in business. If KFC makes you sick because of bacteria, you and others will most likely vote with your feet and go elsewhere. What is your choice if that happens in a government school?

    You can also sue JitB or KFC if they drop the ball and make you sick with tainted food – you can’t sue the government for providing sub-standard beef and killing your kid.

    • I think that’s Bruce’s point– the government is not answerable to the people on the same level that a business concern is, which gives us the worst of all possible worlds.  We wind up spending tax dollars to allow government to inefficiently provide sub-standard service that we have limited options for correcting, once the programs are in place.  Hollywood loves to tell the story of the evil and soulless corporation that is eventually undone by the righteous radical and the conscientious government bureaucrat.  The truth is nowhere near as ambiguous.

  • I saw that a few of the “Progressive” sites were complaining this morning that Harry Reid had quietly included a “lifetime limit” into his version of ObamaCare.
    “Lifetime limit” is one of those “faceless” and “peopleless” “death panels.”

  • If your kid gets sick from a school lunch, will their medical care be handled by ObamaCare? :-(
    In a regulated market, one only has to please the gang of 535 and few bureaucrats (apparatchiks) ; in a free market, one has to please MILLIONS of customers. That’s why business hates a free market; it exists for the CONSUMER, not the for BUSINESS.
     

    • At school, care will be supplied by the official, government paid school nurse. Unfortunately, as I understand it, this highly trained and certified medical professional is forbidden to do anything but call 911 and hand out condoms.

  • An interesting observation follows:  in this analogy, I can take my business elsewhere if I’m not satisfied. If I’m dissatisfied with my insurance company’s dismissal of my claim, where else can I take my business? It’s too late, pre-existing condition. The deal a burger joint makes with any given customer is that the customer will receive food – largely bacterial-free – for a set fee. If the restaurant fails to uphold its end of the bargain, the customer falls ill and is rewarded a legal settlement. My deal with my insurance company is dependent on the ability of auditors to ensure that I crossed all my t’s when filling out forms, as well as it is dependent on a set fee.
    The issue is not with the quality of the “meat”. The resounding and persisting issues are with denials of claims and general lack of availability. Once upon a time, education, like medicine, was for the wealthy. Now a substandard public school will accept most any student, barring former problems with an individual; not ideal, perhaps, but an improvement.For those who can afford private services, they will always be available and superior. Perhaps education should once again become a privilege reserved for the wealthy…
    I for one, like the idea of a mandate of reliable coverage. A claim filed should be investigated for legitimate fraud and paid if no such fraud is found.  Disputes should be settled by further investigation rather than dismissal of said claim. I’m not a political theorist, an industry specialist, or a business exec… but it seemed an idea worth exploring.
    Adam Smith’s view of the glory of our free market economy was threatened by the corporation, in his view. The issue with an unregulated free market system – dominated by an ‘oligarchy’ of corporations that prevent ‘small-time’ operations – is that each competitor need only meet the current market standard. If that standard can be maintained, universally, at a sufficiently diminutive level, the large companies see greater profits. While this is theory, it shows itself to be practical, as well. Quality of the actual health care may not reflect this standard, but the quality of the coverage does.
    I’m not endorsing any ideas or legislation. I could wish that those who do so far as to endorse are more well informed than myself. I would wish futilely, I fear. I am condemning an overly simplistic analogy that falls apart in analysis. Analogies are designed to facilitate communication, but this  merely obfuscates an already hard-to-grasp idea by cramming it into a tiny, simple box into which it doesn’t fit. That is accomplished while insinuating that the reader need not know facts, that the reader is, in truth, sufficiently well informed by this awkward, inappropriate metaphor to rend judgment capably.
    Please do us all a favor and help to develop ideas rather than to quell their development.
     
    J
    P.S.  A ‘free-market economy’ isn’t really ‘free’ if it’s artificially manipulated by ‘leveraging’ investment bankers, greedy politicians, and a recklessly negligent pharmaceutical industry. Any system, such as an economy, can be manipulated with adequate knowledge of the system.

    • Your choice of insurer should be made up-front, with a close reading of the policy documents which list the conditions to be met in making a valid claim. The policy is a contract, and if it says they’ll cover changing your dog’s gender, then they’ll generally cover changing your dog’s gender.
      If a claim has been investigated and then denied, it’s generally because the investigation yielded enough information to support a denial. Saying the insurer should then “investigate further” simply adds another layer of cost – yes, investigations cost money – which will ultimate  raise policy prices for all (but which will also be an employment boon for all claim workers, I suppose.)
      Your desire for “reliable coverage” indicates that you have an unclear picture of what insurance really is.  A policy is a very precise and exacting contract covering a wager between you and an insurer – you betting your premium dollars that you’ll get sick, the insurer betting the list of benefits set out in the policy that you won’t.  What you want is the ability to bet on the Vikings by three, with an option to change your bet after the game’s over.  You just want someone else to pay your medical bills, period.

  • Again, I have the unnerving experience of seeing McQuain publish an article on a topic using an innovative analogy, just as I have finished writing a similarly-themed piece.
    The piece I finished yesterday, extrapolating metaphors inspired by a visit to McDonalds in Strasbourg, will go out this afternoon with a disclaimer and a link to this piece, which I think is devastating in its simplicity and its profundity.
    All commentators are at their best and most accessible when reverting to straightforward philosophical principles, and McQuain is no exception. Another gem, Bruce.
    P.S> I’m starting to wonder if we’re telepathically connected.

  • Sounds like this was written by someone with an axe to grind. Very possibly someone that wants meat eliminated from the school menu. If the standards are so low, where are all the sick kids that must be being carted away on a daily basis?  Wouldn’t that attract the eye of the media? As for spent hens, they are simply aged layers that no longer produce eggs. Nothing wrong with making them into chicken pot pies or chicken noodle soup. In fact, if you eat those products, you are in all likelihood consuming spent hens. They are simply too thin, old and tough to make good frying chickens.

    • You’re using the fact that there has yet to be some horrible outbreak of food-poisoning as proof that the standards used are ok.  Not only is this not true (there have been many cases of such incidents at public schools), but is flawed in its logic.
       
      For example, by the time of the Challenger disaster, NASA was walking a tight-rope between success and failure.  Every successful flight that had a slightly lessened safety factor was used as evidence that they could take even more risks.  What once had been exceedingly safe had become decidedly unsafe, and it took the explosion of the shuttle to make that fact clear.

    • Except Campbells refuses to use them for it’s chicken noodle soup. So obviously KFC and Campbells see a problem using them and that says to me there is “something wrong” with them. If they’re not acceptable for their customers, why are they acceptable for your kids?

      • You have an imaginary fear, much like global warming. Meat processed for the school lunch programs is processed exactly the same way as meat destined for commercial channels. It comes from the same plants for crying out loud. There is no difference in the nutritional value in the meat of spent hens compared to young broilers.   At the time they are killed, spent hens aren’t any dirtier than broilers, and they are processed under the same sanitation standards as broilers. So it sounds like your complaint boils down to the fact that spent hens produce a lower quality meat. Well if that is the case, you better quit eating hamburgers as well. A great percentage of hamburger meat comes from old cows. They make great burger but are not suitable for cutting up into steaks and roasts. It is the same difference with spent hens. They make fine stewing meat, or chicken salad, they just aren’t suitable for frying. As for Campbell’s if they are not using spent hens, I suspect it is for reasons other than bacteria, which would be killed in the canning process anyway.

        • Good grief, there are more strawmen in that paragraph than a field of scarecrows. No one is talking about how the meat is processed. What is being discussed is the myth that without government regulations the level of inspections would be lower and the quality of the product would be worse. In both cases, this example shows that myth to be false. What freaking part of that don’t you understand?

  • The private sector almost invariably has better quality than the public sector on all things.
    To me the real funny thing with government and food is this:
    1.  Governments pay substitutes to farmers to increase production, and drive down prices.
    2.  Private companies are able to offer more food for the customer at lower prices.
    3.  Government pay for school lunch programs that offer substantially more then a normal caloric needs based on the assumption that the poorest have no food at home, and that this is necessary to compensate.
    Result:  Number one problem facing the poorest among us is child hood obesity.
    So what is the government response?  Is it to lower substitutes? Is it to reduce calories in school lunches?  No, this is the government, so its going to add a few new programs on top of the mess it has already made to correct issues that it should have never created in the first place.

  • Oddly enough, for all their terrible standards, I can’t find any record whatsoever of anyone being killed by a school lunch.  

    However, despite their stellar standards, several of the private companies on the list, most notably Jack in the Box, are responsible for the deaths of some of their customers due to e coli and salmonella outbreaks.

    • Oddly enough, this isn’t about that – it’s about the myth that government must regulate to protect consumers or companies will do harm to customers in an effort to increase profits. And that’s driven by a basic misunderstanding of market dynamics in which competition is strong. Ford is not going to offer an unsafe car in the face of high safety standards in its competitors cars. It would lose customer confidence and thereby customers. And in the market place, again where competition is strong, consumers have a choice.

      There is no choice available in a government run monopoly and thus there is no reason, driven by demand, to have higher standards.

      • This is not about that?  You picked food standards to make your point, not me.  If the government “monopoly” for the school lunch program is not killing people and the supposedly higher standards in the private food industry are, then what is left of your point?

        Seriously, there’s not strong competition in the fast food market?  The only monopoly I see there is in a Sylvester Stallone movie.  Yet JitB has killed people, and they are now larger than they ever were.  Where are the people voting with their feet?  PCA killed people and cost others thousands of dollars, yet they are still the largest supplier of peanut products in the nation.  Where are the industries voting with their feet?

        My belief in the beneficial effects of competition is not in doubt, but it only goes so far.  Businesses, particularly large corporations, will cut every corner they can get away with to increase profits.  They will particularly do so in a situation where the harms are diffuse, very long term, or hard to pin down to a single source.  They will continue to do so as long as the revenue stream stays strong, as demonstrated by dangerous products that were sold by paint, insulation, and pesticide manufacturers for years after their dangers became apparent.

  • ” it’s about the myth that government must regulate to protect consumers or companies will do harm to customers in an effort to increase profits”

    Sorry, but there is a reason other than the desire to increase the size of government for the FDA’s existence. “The Jungle” may have been a work of fiction but the results of investigations inspired by it weren’t.

     There is also a reason for the lengthy specifications for products purchased by the government.  Lives have been lost due to intentionally defective products sold to the military, even in time of war.  Harry Truman made his reputation exposing some of them in WWII. The American Civil War was worse.  Military and civilian aircraft parts are numbered and documented, and there is still a problem with substandard and dangerous parts.