Coyote Blog

We often talk about the direct costs of regulation, but in the long run perhaps the most worrying problem is a cost that is impossible to measure -- its effect on innovation.  From a labor regulation paper I am writing:

Labor regulations are written in consideration of existing, well established business models, and are not written for business models that might someday exist.  Often my employees ask me why labor law will not allow practices that would make a lot of sense in our business, both for employer and employee.  I tell them to imagine a worker in a Pittsburg factory, punching a timeclock from 9 to 5 Monday through Friday, working within sight of their supervisor, taking their breaks in the employee lunch room.  This is the labor model regulators and legislators had in mind when writing the bulk of labor law.  Any other labor model – seasonal work, part-time work, working out of the home, telecommuting, working away from a corporate office or one’s supervisor, the gig economy – become square pegs to be jammed in the round hole of labor law.

When someone does try to stick an innovative square peg in the round hole of existing regulation, there tend to be concerted efforts by regulators to kill the new model.  Just look at Uber and the efforts to force it out of its labor model and into a more traditional one.  Most of us see innovation as good and value-creating.  Regulators - by training, by their incentives, by the culture - see innovation as threatening.  They see innovations as viruses trying to bypass the immune systems they have spent years constructing.

Here is an example from pharmaceuticals that really struck me.  Alex Tabarrok is writing on promising anti-aging and cancer reduction drugs:

The assembled scientists and academics focused on one obstacle above all: the Food and Drug Administration. The agency does not recognize aging as a medical condition, meaning a drug cannot be approved to treat it. And even if the FDA were to acknowledge that aging is a condition worthy of targeting, there would still be the question of how to demonstrate that aging had, in fact, been slowed—a particularly difficult question considering that there are no universally agreed-on markers.

 

After dissing the Food Babe in the last post, I guess I need to recover some karma.  The whole gluten-free thing has been justly skewered (e.g. here) because the vast majority of people who want to live gluten-free have no biological justification for doing so.    That being said, there are people who are legitimately gluten-intolerant, like my mother-in-law.

When she visited, I knew nothing about gluten-free stuff.  But I bought this home-made gluten-free donut mix and a donut baking pan from Amazon based on the reviews.  Well, screw the gluten-free part, these things were awesome.  And really easy to make.  No vats of oil, they are just baked.  Recommended even for us wheat-eaters.

A while back I wrote a long post on topics like climate change, vaccinations, and GMO foods where I discussed the systematic problems many in the political-media complex have in evaluating risks in a reasoned manner.

I didn't have any idea who the "Food Babe" was but from this article she sure seems to be yet another example.  If you want to see an absolute classic of food babe "thinking", check out this article on flying.   Seriously, I seldom insist you go read something but it is relatively short and you will find yourself laughing, I guarantee it.

Postscript:  I had someone tell me the other day that I was inconsistent.  I was on the side of science (being pro-vaccination) but against science (being pro-fossil fuel use).   I have heard this or something like it come up in the vaccination debate a number of times, so a few thoughts:

1. The commenter is assuming their conclusion.  Most people don't actually look at the science, so saying you are for or against science is their way of saying you are right or wrong.
2. The Luddites are indeed taking a consistent position here, and both "Food babe" and RFK Jr. represent that position -- they ascribe large, unproveable risks to mundane manmade items and totally discount the benefits of these items.  This includes vaccines, fossil fuels, GMO foods, cell phones, etc.
3. I am actually with the science on global warming, it is just what the science says is not well-portrayed in the media.  The famous 97% of scientists actually agreed with two propositions:  That the world has warmed over the last century and that man has contributed to that warming.  The science is pretty clear on these propositions and I agree with them.  What I disagree with is that temperature sensitivity to a doubling of CO2 concentrations is catastrophic, on the order of 4 or 5C or higher, as many alarmist believe, driven by absurdly high assumptions of positive feedback in the climate system.   But the science is very much in dispute about these feedback assumptions and thus on the amount of warming we should expect in the future -- in fact the estimates in scientific papers and the IPCC keep declining each year heading steadily for my position of 1.5C.  Also, I dispute that things like recent hurricanes and the California drought can be tied to manmade CO2, and in fact the NOAA and many others have denied that these can be linked.  In being skeptical of all these crazy links to global warming (e.g. Obama claims global warming caused his daughter's asthma attack), I am totally with science.  Scientists are not linking these things, talking heads in the media are.

One of the least reported issues related to health care cost inflation is the existence of artificial government restrictions on health care supply, often called "certificates of need".

The COPN [certificate of public need] law is supply-side Obamacare: top-down, command-and-control restrictions on which providers can offer which services. A certificate of public need is, essentially, a government permission slip. Without one, a Virginia doctor can’t put an MRI machine in his clinic. A hospital can’t build a new wing. A hospital company can’t add a satellite campus. And so on.

Getting such permission slips is a long and costly process. The owner of a Northern Virginia radiology practice, for example, spent five years and $175,000 asking permission to buy a new MRI machine. The state said no.

One reason the process takes so long is that competitors often fight such requests. When Bon Secours proposed the St. Francis Medical Center in Chesterfield, rival chain HCA fought it vigorously, arguing there was insufficient demand. The hospital was approved and enjoys a robust business. You’d think state regulators would laugh off competitors’ arguments, but sometimes they’re actually taken seriously. When a Richmond radiology practice wanted to move—not add, but move—a radiation device to its Hanover offices, the state said no in part because Virginia Commonwealth University’s Massey Cancer Center worried the project “could take some of their business.”

This is cronyism and protection of incumbent competitors, pure and simple.  It is often justified by the economically-ignorant as reducing costs because it reduces expenditures on expensive machinery.  But in what industry can you think of does restricting supply ever reduce costs?

In any other industry, the proper response to that would be: So what? If Kroger sets up across the street from Food Lion, we consider that good for consumers: They have more choice. And if they migrate from Food Lion to Kroger, that’s not a bad thing. It means they’re getting more utility for their grocery dollar.

Studies of the COPN system around the country have confirmed what seems intuitively obvious. A joint examination by the Justice Department and the Federal Trade Commission found that COPN regulations hurt competition, fail to contain costs, and “can actually lead to price increases.” Restricting supply raises prices? Imagine that.

We have invested a fair amount of time to try to get sales tax treatment on food items in our California stores correct.  But the rules are insane.   Beyond all the crazy rules (e.g. if a customer buys a refrigerated burrito it may be non-taxable, but if he puts it in the microwave in the store to heat it up it becomes taxable for sure) is the fact that sometimes customer intent matters (e.g. will they consume it at one of the picnic tables on site, or take it back to their home or camp site)

When searching for more resources on the topic, I found this flow chart on deciding if CA sales tax applies to food

Here is more, from the same article

Under California law, foods eaten on the premise of an eatery is taxed while the same item taken to go is not: "Sales of food for human consumption are generally exempt from tax unless sold in a heated condition (except hot bakery items or hot beverages, such as coffee, sold for a separate price), served as meals, consumed at or on the seller's facilities, ordinarily sold for consumption on or near the seller's parking facility, or sold for consumption where there is an admission charge." Exactly which type of foods do and do not fall under the scope of this provision is the frustrating devil in the detail.

Eskenazi notes a few of the ridiculous results of drawing an artificial distinction between hot and cold foods. "A hot sandwich to go would be taxable," for example, "While a prepackaged, cold one would not -- but a cold sandwich becomes taxable if it has hot gravy poured onto it. Cold foods to go are generally not taxable -- but hot foods that have cooled are taxable (meaning a cold sandwich slathered in "hot" gravy that has cooled to room temperature is taxable)."

Most folks who talk about oil production know very little about it.  One reality of oil production, particularly for older fields like those around Los Angeles, is that oil wells have to be frequently reworked to maintain such production  (fracking, by the way, is one of those rework techniques and has been used for over 50 years).  By  banning well rework and re-injection of water (most fluid flowing from older wells is water), the city council has effectively banned oil production.

The linked article is a good reminder of a technique used by many environmental activists.  Despite portraying themselves as being driven by science, they actually often make progress by taking words and both obscuring their meaning and adding emotional baggage to them.  Such is the case with "fracking"

Because with its pun-friendly name, the term fracking has become an effective nonspecific rallying point for extreme activist groups aiming to scare the public about environmental harms that have yet to be demonstrated. Amid the cheering after the vote, some of the national activists behind the effort acknowledged the true goal behind measure. The term fracking, it seems, is actually intended to be a catch-all phrase to describe all aspects of oil and gas production, conventional and unconventional alike, according to Washington-based Food and Water Watch, one of the activist groups behind the measure. In an interview with online publication Streetsblog Los Angeles after the vote, FWW organizer Brenna Norton boldly stated as much when she acknowledged, “It’s easier to engage and organize people around ‘fracking’ than a complicated list of practices.”

Obama's minimum wage push could be an honest attempt to reduce poverty, but since only a trivial percentage of the American work force earns the minimum wage, and most of those are in starter jobs rather than trying to support a family, it does not make a lot of sense.

On the other hand, it could be another cynical payoff to unions that form the backbone of Obama's political support

Organized labor's instantaneous support for President Obama's recent proposal to hike the minimum wage doesn't make much sense at first glance. The average private-sector union member—at least one who still has a job—earns $22 an hour according to the Bureau of Labor Statistics. That's a far cry from the current $7.25 per hour federal minimum wage, or the $9 per hour the president has proposed. Altruistic solidarity with lower-paid workers isn't the reason for organized labor's cheerleading, either.

The real reason is that some unions and their members directly benefit from minimum wage increases—even when nary a union member actually makes the minimum wage.

The Center for Union Facts analyzed collective-bargaining agreements obtained from the Department of Labor's Office of Labor-Management Standards. The data indicate that a number of unions in the service, retail and hospitality industries peg their base-line wages to the minimum wage.

The Labor Department's collective-bargaining agreements file has a limited number of contracts available, so we were unable to determine how widespread the practice is. But the United Food and Commercial Workers International Union says that pegging its wages to the federal minimum is commonplace. On its website, the UFCW notes that "oftentimes, union contracts are triggered to implement wage hikes in the case of minimum wage increases." Such increases, the UFCW says, are "one of the many advantages of being a union member."

The labor contracts that we examined used a variety of methods to trigger the increases. The two most popular formulas were setting baseline union wages as a percentage above the state or federal minimum wage or mandating a flat wage premium above the minimum wage.

Adam Goldberg in the Huffpo has 11 reasons why a shutdown would be "terrible" for me.   Many of these are absurd [sorry, left the link out originally]

1. HUGE NUMBER OF FURLOUGHS: As many as 800,000 of the country's 2.1 million federal workers could be furloughed as the result of a shutdown

There it is again.  Apparently the most useful thing these 800,000 people do is draw and spend their paycheck.

9. NATIONAL PARKS, MUSEUMS (AND PANDAS!): The country's national parks would be forced to close without a government funding deal

Parks! I think I have made my point here already (here and here)

2. ENVIRONMENTAL PROTECTION ON HOLD: The head of the Environmental Protection Agency says that the regulator would "effectively shut down" without a deal to fund the government.

8. WORKPLACE SAFETY: Most Labor Department investigations into workplace safety and discrimination would cease if a deal is not reached to avert a shutdown.

6. FOOD SAFETY: Most routine FDA food safety inspections would be suspended in the case of a shutdown.

This is just playing on the public's ignorance of how these agencies operate.  I suppose there are low information voters out there who think that EPA officials are stationed at each plant with binoculars looking for emissions and once they get furloughed, companies will race to dump a bunch of stuff while they are not looking.  Monitoring is all by data reporting on these issues.  The departments conduct audits and investigations retroactively.  Delaying these investigations that can take years does absolutely nothing in real time to change health or safety.  As for routine food safety inspections, these happen on a timetable of weeks or months, so that a few days delay in an inspection that occurs every 90 days or so is not going to make a difference.

10. STOCK MARKET PANIC: The stock market reacted negatively on Monday amidst worries about a shutdown and an upcoming fight to raise the country's debt ceiling. The lack of a resolution could mean more market madness to come.

Dow up 20 points, S&P up about a half percent as I write this.

7. NO BACK PAY: Employees of one U.S. attorney have been warned that there is a "real possibility" they may not receive back pay if the government shuts down.

Holy crap!  Government workers might not get paid for not working.

11. DOJ DISRUPTION: Attorney General Eric Holder on Monday warned that a shutdown would have a "disruptive impact" on operations at the Justice Department. He pointed fingers at the House of Representatives and stated that there are "good, hard-working Americans who are going to suffer because of this dysfunction."

This is hilarious.  A partisan rant from one of the most partisan knife-fighters in the Administration is not data, and in fact there is no detail at all here.  As it turns out, the DOJ is mostly NOT affected except for some civil litigation, where cases that already drag on for years might take a week longer to complete, and a few lawyers may lose a few days of pay

Under the Justice Department's contingency plan for the shutdown, civil litigation will be curtailed or postponed. The employees of many DOJ agencies will be exempted from furloughs because their roles are deemed "essential."

First, as many of you may have guessed, the "massive cuts" in food stamps over the next 10 years proposed by House Republicans are basically just a modest reduction in their rate of growth.  All attempts to slow the spending growth in any government program will always be treated by the media as Armageddon, which is why government spending seldom slows (see: Sequester).

But I have been amazed through this whole deal that Republicans want to extract a pound (actually probably just an ounce or so) of flesh out of the Food Stamp program but explicitly left the rest of the farm bill with all of its bloated subsidies alone.  Henry Olson asks the same question at NRO.

I will add one other observation about food stamps that is sure to have just about everyone disagreeing with me.  Of late, Republicans have released a number of reports on food stamp fraud, showing people converting food stamps to cash, presumably so they can buy things with the money that food stamps are allowed to be used for.

Once upon a time, maybe 30 years ago in my more Conservative days, I would get all worked up by the same things.  Look at those guys, we give them money for food and they buy booze with it!  It must be stopped.  Since that time, I suppose I never really revisited this point of view until I was watching the recent stories on food stamp fraud.

But what I began thinking about was this:  As a libertarian, I always say that the government needs to respect and keep its hands off the decision-making of individuals.  If people make bad choices, paraphrasing from the HBO show Deadwood, then let them go to hell however they choose.  And, more often than not, it turns out that when you really look, people are not necessarily making what from the outside looks like a bad choice -- they have information, incentives, pressures, and preferences we folks sitting in our tidy Washington offices, chauffeured to work every day, may not understand.

So if we are going to give people charity - money to survive on when poor and out of work - shouldn't we respect them and their choices?  Why attach a myriad of conditions and surveillance to the use of the funds?  Of course, this is an opinion that puts me way out of the mainstream.  Liberals will treat these folks as potential victims that must be guided paternally, and Conservatives will treat them as potential fraudsters who must be watched carefully.  I think either of these attitudes are insidious, and it is better to treat these folks as adults who need help.

Here is an amazing bit of data on where the US corn crop goes:

The Department of Agriculture says the corn crop in the US will be down 13% due to the drought.  But corn available for food uses is down 40% due to the ethanol mandate.  You do the math.  Wait, I don't trust your math.  I will do it for you:

PS-  It's kind of amazing the supposed worst drought ever has dropped corn yields by just 13%.  Hurray for modern agriculture.   This year we will still produce about the same amount of corn we did in 2006.

I have written a number of times on the silliness of food miles and the locavore movement (here and here and here).  For some reason the energy and resource intensity of foods is being judged merely on one component - transportation of the end product - which actually is only a tiny competent of food costs (and thus their resource use).  Is it really more environmentally sensitive for us Phoenicians to grow our corn in the Arizona desert, where soils are unproductive and water must be imported from hundreds of miles away, rather than have it grown in the fertile soils of Iowa and trucked in?

Someone in the media, at least in Australia, finally notices:

TWO brands of olive oil, one from Australia, the other shipped 16,000 kilometres from Italy, sit on a supermarket shelf.

Most eco-friendly shoppers would reach for the Australian oil. But despite burning less fossil fuel to get here, it may not be better for the planet.

Contrary to popular belief, ''food miles'', or the distance food has travelled before we buy it, is a poor indicator of our food's total greenhouse gas emissions, or ''carbon footprint''.

More important is the way our food is farmed and produced, and how far we drive to buy it....

It turns out that stuff like economies of scale really matter

''Local food can often have a higher carbon footprint than food from afar,'' says principal researcher Brad Ridoutt.

He says even home-grown vegetables, with ''zero food miles'', do not necessarily have a smaller carbon footprint than those bought in the supermarket.

''With my veggies, I drive to Bunnings to buy fertiliser, and I go away for the weekend and forget to water them, and in the end I only harvest a few things that I can actually eat.

''By contrast, big producers, who can invest in the latest energy-efficient, water-efficient technology, and make use of all the parts of food, can be much more efficient,'' he says.

Of course, transporting food from producer to retailer still burns fossil fuels that release greenhouse gas emissions, in turn accelerating global warming. But freight emissions are only a fraction of those released during production, meaning even imported food, sustainably produced, can have a smaller carbon footprint than local alternatives.

Even the most rudimentary reading of economics should have given greenies a clue.  In commodity products like most foods, prices tend to be driven down to a point that they reflect resources (and their relative scarcity) that went into the product.  The cheapest foods tend to be those that use the least, and least scarce, resources in production.  So buying locally grown food, which often tends to carry a price premium, should have been a flashing red light that maybe this was not the least-resource-intensive choice.

Food activists on the Left often point to the use of High Fructose Corn Syrup (HFCS) as one of those failures of capitalism, where rapacious capitalists make money serving an inferior product.  But HFCS resulted from a scramble by food and beverage companies to find some reasonable alternative to sugar as the government has driven up sugar prices through a crazy tariff system that benefits just a tiny handful of Americans, and costs everyone else money

For the last 10 years or so, HFCS-42 has actually traded at a price higher than the world market price for sugur, but lower than the US price for sugar.   There is a lot complexity to prices, but this seems to imply that HFCS would not be nearly as attractive a substitute for sugar if US sugar tariffs did not exist (not to mention subsidies of corn which support HFCS).  This can also be seen in the fact that HFCS has not been used nearly so often as a sugar substitute in markets outside of the US, even by the same manufacturers (like Coke) that pioneered its use in the US.

President Obama used a lot of his state of the union address again teeing up what sounded to me like a new round of protectionism.  Protectionism is the worst form of crony capitalism, generally benefiting a handful of producers and their employee to the detriment of 300 million US consumers and any number of companies that use the protected product as an input.

For some reason, Phoenix is in the midst of frozen yogurt wars.  A few years ago a store opened with a new concept - they set up about 12 self-serve frozen yogurt machines so you could fill your own bowl, and then gave the customer direct access to heaps and heaps of toppings (e.g sprinkles, chocolate sauce, m&m's, gummie bears, etc).  At the end, you weigh your bowl and pay based on weight, exactly as one might do in one of those salad bar restaurants.

Over the last few years, the market has exploded with new stores in the same model.  We must have at least 10 different chains.  We have about 6 within a short drive of our house.  Already, the price per ounce they charge has fallen by over half.

I have learned from my out-of-town visitors that this is not a concept that is common in other parts of the country.  Which leads me to ask why so many restaurants with the same concept are piling into Phoenix.  Is it just people in the local market thinking it is a great idea and deciding to copy the idea in their neighborhood? I can sort of see the appeal - these stores were (initially) popular, had low barriers to entry, and probably elicit dreams of creating a franchisable concept.  Which leads me to two questions:

• Why is the tenth or twentieth incremental store being opened in Phoenix?  I would find some place like Georgetown or Harvard Square that has not seen this concept yet and open it there.  Or even better, open one on Sand Hill Road or wherever retail investors work.
• Seeing the low barriers to entry and the quick proliferation in this market, combined with sagging visitation as the novelty wears off and steeply falling prices, why is anyone attracted to this at all?  One guy will probably get out ahead on this and establish a national brand, and everyone else will likely get slaughtered  (and the first mover will probably go bankrupt anyway as many fast-growing franchise model from Jiffy Lube to Boston Chicken have).  Is it the lottery value?  Or am I too much like the joke about Milton Friedman, who refused to pick up a twenty dollar bill on the ground because he argued that the money couldn't be real since in a free market someone would have already picked it up.

Maybe its because I live in Phoenix, but the local food movement has always seemed silly to me.  To somehow argue that food grown in our 6 inches of annual rainfall is better for the environment than trucking product in from more suitable growing regions has always struck me as crazy.  Russ Roberts links several good articles on the local food movement, one of which included this nice snarky observation:

The result has been all kinds of absurdities. For instance, it is sinful in New York City to buy a tomato grown in a California field because of the energy spent to truck it across the country; it is virtuous to buy one grown in a lavishly heated greenhouse in, say, the Hudson Valley.

I was reading through some leftish/alarmist environmental blogs, and I was struck by how many desperately want to buy into the story line that poorer nations are the true heroes of Copenhagen, holding the rich nations feet to the fire so they will commit to deeper CO2 cuts.

Really?  A bunch of dictators who demonstrably have little concern for their citizens and spend most of their time trying to figure out how to divert state funds into their Swiss bank accounts suddenly care about the effects of anthropogenic climate change on their nations?  Hugo Chavez, whose nation currently is avoiding following Zimbabwe down the toilet only by its oil revenues really wants the world to wean itself off oil?

Here is the perfect analogy for the Third World's sudden interest in climate:  The "I will work for food" sign.  Beggers learned that (at least for a while) this sign was a good marketing tool.  They had no intention of doing any work  (I had a friend who used to drive up to all of them and offer them landscaping work in exchange for lunch, always to be turned down flat) but they knew it made potential donors more sympathetic -  see, they really want to work but are just down on their luck.   If you haven't seen the movie Interstate 60, you really need to.  Relevant clip below:

This is exactly the equivalent of the Third World's sudden interest in climate change.  Up to this point, their leaders have shown no interest in stopping the raping of their own local ecosystems.  These guys are certainly not conservationists, but they know a good marketing tool.  Copenhagen is about these guys putting their hands out, and using climate as the marketing tool to soften up their marks in the West.  These nations certainly have no intention of having any targets or restrictions placed on their countries.   And it looks like they may succeed, at least in the treaty phase.

Obama has positioned himself in such a way that he feels that he has to have something he can call a win at Copenhagen.  So he goes to the politician's traditional playbook, which is to use taxpayer money to buy a deal to try to make himself look better.  He is working to do this with the passage of the health care bill and he probably will do this in Copenhagen, agreeing to $100 billion a year in payoffs to third world kleptocracies so he can look like a winner to western socialists.

I just couldn't bear to post this at my climate site, which I really try to keep science-based.  Since this doesn't have even a sniff of science to it, I will post it here for your entertainment:  According to the UN, Global Warming Causes Prostitution

The effects of climate change have driven women in communities in coastal areas in poor countries like the Philippines into dangerous work, and sometimes even the flesh trade, a United Nations official said.

Suneeta Mukherjee, country representative of the United Nations Food Population Fund (UNFPA), said women in the Philippines are the most vulnerable to the effects of climate change in the country.

"Climate change could reduce income from farming and fishing, possibly driving some women into sex work and thereby increase HIV infection," Mukherjee said during the Wednesday launch of the UNFPA annual State of World Population Report in Pasay City.

It is good to see that you have found a tangible way to respond to the editorial written by the Whole Foods CEO.  Your ability to pursue such a boycott is one of the great things about a free market. There are literally hundreds of food shopping choices in a large city, with a variety of value propositions from the low-cost but ambiance-challenged Wal-Mart or Target to the farmers market. Its great to see folks exercising their choice in the free market to take their business elsewhere.

Besides, if nothing else, it provides the majority of us entertainment value as we enjoy the irony of people exercising their free choice shopping in the highly competitive and diverse grocery marketplace to boycott someone who advocated maintaining choice and a diversity of options in the health care market. Hope all of you have great success boycotting the single payer medical system you long for when you don't like something it does, and I hope the single one-size-fits-all insurance option you have happens to match your individual preferences.

Anyway, I give you an A for political activism but an F for marketing if you believe Whole Foods customer base is all liberal or progressive. It may be so in downtown SF or Seattle. But most of Whole Foods stores are in places like Scottsdale, and Houston, and Dallas. For a large portion of Whole Foods customers, it is not some progressive statement, but it is simply a premium-priced grocery store selling premium quality foods. Though I suppose the Scottsdale country club mom in her new Jag gets some psychic boost from shopping there, kind of like buying a carbon offset.

Seriously -- I bet that most of Whole Food's most profitable customers just don't care about this progressive stuff. They don't go looking for fair trade coffee, or whatever. They don't care Whole Foods buys all wind power (in Texas, where the market allows this). They don't know how the employees are treated and paid. I shop there and I had no clue as to their HR policies until this week when they have been in the news.

Whole Foods does this stuff because Mackey and most of his team really believe in it. They are truly passionate about it, not like some company like Kraft who creates an organic cheese SKU because the consultants said there was a market niche for it. Really, are there 5 other corporate CEO's in the Fortune 500 whose beliefs and the way they manage more closely match what progressives would want to see? Is there even one? But this is the guy y'all are choosing to go after, this one company out of all the Fortune 500, because he disagreed with the progressive orthodoxy on a single piece of legislation? Jeez, this is like conservatives boycotting Fox News because they put a single liberal pundit on from 2-2:30AM.

Via Overlawyered:

Sponsored by Congress' most senior member, Rep. John Dingell (D-Mich.), HR 759 amends the Federal Food, Drug and Cosmetic Act to include provisions governing food safety. The bill provides for an accreditation system for food facilities, and would require written food safety plans and hazard analyses for any facilities that manufacture, process, pack, transport or hold food in the United States.

It also calls for country of origin labeling and science-based minimum standards for harvesting fruits and vegetables, as well as establishing a risk-based inspection schedule for food facilities. "¦

The [Cornucopia] institute claims the preventative measures [on handling of food on farms] are designed with large-scale producers and processors in mind and "would likely put smaller and organic producers at an economic and competitive disadvantage."

You hear this all the time from proponents of certain regulations -- "even _____ corporation supports it."  GE supports global warming regulation.  Large health care companies support heath care regulation.  The list goes on forever.  That is because regulation always aids the large established companies over smaller companies and future upstart competitors.  Larger companies have the scale to spread compliance investments over larger sales volumes, and the political muscle to lobby Congress to tilt regulation in their favor (e.g. current cap-and-trade lobbying in Congress).  Regulation creates a barrier to entry for potential new competitors as well.

I hate to admit it, but regulation in my own business (which I neither sought nor supported) has killed off many of my smaller competitors and vastly improved our company's competitive position.  It is no accident that the list of the largest companies in heavily-regulated Europe nearly never change, decade after decade, whereas the American list has always seen substantial turnover.

Via Eugene Volokh:

Year	Food spending as share of disposable income
1929	23.4%
1939	21.3%
1949	22.1%
1959	17.8%
1969	13.7%
1979	13.4%
1989	10.9%
1999	10.2%
2000	9.9%
2001	9.9%
2002	9.8%
2003	9.8%
2004	9.7%
2005	9.8%
2006	9.9%

My sense is the same pattern would emerge for gasoline prices, electricity (if you had it), phone service (if you had it), cross-country transportation, air conditioning, etc.

Last week I tried to explain why the choice of plant, whether it be a food plant or a non-food plant, that is used to make ethanol is mostly irrelevant to whether ethanol mandates raise fuel prices, at least with current technologies.  I wrote:

Food prices rise not because food is converted to ethanol per se, but
because the amount of grains going into the food supply decreases.  The
issue is the use of farmer's time and resources and the use of prime
cropland to grow plants for fuel rather than food for consumption.  The
actual crop used to make the fuel, whether corn or switchgrass, does
not matter to food prices -- it is the removal of farmers and cropland
from food production that matters.  The only way cellulosic ethanol is
likely to improve food prices in substitution for corn is by being more
efficient per acre in fuel yields than corn  (which may turn out to be
the case, but has not yet been proven in this country).  But even so,
incremental improvements in yield don't help much, because we are
talking about enormous (40-50% or more) amounts of US cropland that
would have to be dedicated to fuel, whatever the plant technology, to
meet the current ethanol mandates.

I almost didn't post this the first time around, because I thought it was so obvious.  But on Sunday the NY Times blundered right into the same silly assertion:

This does not mean that Congress should give up on biofuels as an
important part of the effort to reduce the country's dependency on
imported oil and reduce greenhouse gas emissions. What it does mean is
that some biofuels are (or are likely to be) better than others, and
that Congress should realign its tax and subsidy programs to encourage
the good ones. Unlike corn ethanol, those biofuels will not compete for
the world's food supply and will deliver significant reductions in
greenhouse gases.

Of course, the ability to produce such biofuels with these magic powers has never actually been demonstrated, but I am all for them when and if someone invents them.  Efficient conversion, for example, of corn stalks, rather than corn itself, to fuel would be great and would solve this trade-off.  This technology does not exist today -- and only a lot of hand-waving can translate cellulosic ethanol successes in switchgrass to corn stalks.  Also recognize that even this has costs hidden to us non farmers, because corn stalks are used for a variety of purposes today.  My guess is that cellulosic ethanol from corn may be economically feasible, but only after some genetic modifications of the plant itself.

I am exhausted by people making policy suggestions by looking at small parts of complex inter-related systems in isolation.  One such example is the recent response of some ethanol mandate defenders to recent charges that corn-based ethanol is net harmful to the environment and its mandated and subsidized use is driving up world food prices.

The response by some (certainly not in the corn lobby, of course) has been that our problems would all be solved if we switched to cellulosic ethanol, which is generally made from non-food plants.  Supporters argue that this eliminated the food for fuel problem.

Huh?  Sure, in the narrowest possible sense, I guess, since we are no longer using food crops but rather grasses and such to make ethanol.  But at any reasonably holistic level of analysis, this is simply absurd.  Food prices rise not because food is converted to ethanol per se, but because the amount of grains going into the food supply decreases.  The issue is the use of farmer's time and resources and the use of prime cropland to grow plants for fuel rather than food for consumption.  The actual crop used to make the fuel, whether corn or switchgrass, does not matter to food prices -- it is the removal of farmers and cropland from food production that matters.  The only way cellulosic ethanol is likely to improve food prices in substitution for corn is by being more efficient per acre in fuel yields than corn  (which may turn out to be the case, but has not yet been proven in this country).  But even so, incremental improvements in yield don't help much, because we are talking about enormous (40-50% or more) amounts of US cropland that would have to be dedicated to fuel, whatever the plant technology, to meet the current ethanol mandates.  And remember, the net effect on fossil fuels may still be zero no matter how much land is dedicated, since no one has demonstrated large scale ethanol operations in the US that don't use more fuel to produce the ethanol than they produce. 

Postscript:  Related to this topic of thinking about economic systems narrowly, Lubos Motl discusses the supposed positive green impact on the economy in light of the open window fallacy.

Yeah, I know they seem to care so much, but nearly every policy they actively advocate turns out to be a disaster for the poor.  Here is a great example:

In May 2002, in the midst of a severe food shortage in sub-Saharan
Africa, the government of Zimbabwe turned away 10,000 tons of corn from
the World Food Program (WFP). The WFP then diverted the food to other
countries, including Zambia, where 2.5 million people were in need. The
Zambian government locked away the corn, banned its distribution, and
stopped another shipment on its way to the country. "Simply because my
people are hungry," President Levy Mwanawasa later said, "is no
justification to give them poison."

The corn came from farms in the United States, where most corn
produced"”and consumed"”comes from seeds that have been engineered to
resist some pests, and thus qualifies as genetically modified.
Throughout the 90s, genetically modified foods were seen as holding
promise for the farmers of Africa, so long as multinationals would
invest in developing superior African crops rather than extend the
technology only to the rich. When Zambia and Zimbabwe turned away food
aid, simmering controversy over the crops themselves brimmed over and
seeped into almost every African state. Cast as toxic to humans,
destructive to the environment, and part of a corporate plot to
immiserate the poor, cutting edge farming technology is most feared
where it is most needed.

This is simply awful, and is driven by progressive politics in Europe that abhor GM food, despite reams of scientific evidence and years of experience that it has no demonstrable health effect.  (It is particularly ironic that GM corn should be the target, since corn as we know it is a man-made genetically modified food, albeit by the slow process of cross-breeding.  The very existence of corn is one of the great triumphs of pre-Columbian agriculture.)

A key element of progressive politics is to apply western middle class perspectives to Third World problems.  In this case, Europeans who are wealthy and well-fed have time and capacity to worry about problems at the margin, such as "might GM corn somehow have a negative health effect on one in a million people?"  I believe this concern is absurd even at the margin in western society, but it becomes criminally insane when applied to countries beset with abject poverty and starvation.  So we would rather let a million people starve than have one person face some hypothetical health risk?

This same approach can be seen in a myriad of other instances.  For example, progressive wish to prevent Nike from building factories in the Third World that hire locals for fifty cents a day.  Again, the middle class western perspective:  I would never take a job that paid $5 a day for ten hours of labor, so they should not either.  But this is in countries where more than half of the population makes less than $1 a day performing subsistence farming for perhaps 12-14 hours a day, and even then risk starvation when the crop fails.  The Nike factory represents incredible salvation for many.  Do we all hope they will do even better economically in the future?  Sure, but you can't step from unskilled subsistence farming for a dollar a day to middle manager at GE all in one step.

And then there is climate.  The climate change hysteria, and the associated calls for reductions 80% or higher in CO2 output, is the greatest threat to the world's poor that has existed since the bubonic plague.  And yes, I mean the hysteria, not climate change itself.  Because if the world gets warmer because of man's CO2  (an iffy proposition), the poor might or might not be worse off.  After all, it was during warm periods of the past that the poor thrived, such as the population boom in Europe during the Medieval warm period.  But if the world's governments agree to shut down fossil fuel production and reduce the size of economies, over a billion people who are set to emerge from poverty over the next few decades will instead be doomed to remain poor.  Progressive environmentalists are not even subtle about what they want -- they are seeking a poorer, lower-tech world.  They are selling poverty.

Brendan O'Neil writes in this vein:

In these various scandalous schemes,
we can glimpse the iron fist that lurks within environmentalism's green
velvet glove. "˜Cutting back carbon emissions' is the goal to which
virtually every Western politician, celebrity and youthful activist has
committed himself. Yet for the poorest people around the world,
"˜reducing carbon output' means saying no to machinery and instead
getting your family to do hard physical labour, or it involves
collecting cow dung and burning it in an eco-stove in order to keep
yourself warm.... Carbon-offsetting companies have encouraged Kenyans
to use dung-powered generators and Indians to replace kerosene lamps
with solar-powered lamps, while carbon-offsetting tree-planting
projects in Guatemala, Ecuador and Uganda have reportedly disrupted
local communities' water supplies, led to the eviction of thousands of
villagers from their land, and cheated local people of their promised
income for the upkeep of these Western conscience-salving trees....

Carbon
offsetting is not some cowboy activity, or an aberration, or a
distraction from "˜true environmentalist goals' - rather it expresses
the very essence of environmentalism. In its project of transforming
vast swathes of the developing world into guilt-massaging zones for
comfortable Westerners, where trees are planted or farmers' work is
made tougher and more time-consuming in order to offset the activities
of Americans and Europeans, carbon offsetting perfectly captures both
the narcissistic and anti-development underpinnings of the politics of
environmentalism. Where traditional imperialism conquered poor nations
in order to exploit their labour and resources, today's global
environmentalist consensus is increasingly using the Third World as a
place in which to work out the West's moral hang-ups....

Carbon-offsetting also shines a light on the dangerously anti-development sentiment in environmentalism....

In the near term, countries are already using global warming as an excuse for protectionism, and in particular are cutting off imports from poorer countries that are trying to make some economic progress:

There is little
that angers me more than disingenuous attempts to employ "˜global
warming' as an argument against trade, especially against trade from
the developing world. More often than not, blatant self-interest - that
is, old-fashioned protectionism by another name -  is being masked
beneath self-righteous, middle-class gobbledygook.               

               

Such a case is brilliantly exposed today by Dominic Lawson writing in The Independent ["˜Food
miles are just a form of protectionism. Middle-class neurosis is being
exploited to protect an archaic form of agriculture' (April 1)]:

               

"Was
Prince Charles' chum Patrick Holden, director of the Soil Association,
expecting the Kenyan High Commissioner to fall to his knees in
gratitude? It rather sounded like it yesterday morning, when the two of
them met in a BBC radio studio.

               

They
were there to discuss the Soil Association's proposals to discriminate
against the "˜organic food' which is air freighted into this country,
mostly from East Africa. "˜One option was to ban it altogether,'
declared Mr Holden, but instead he and his colleagues had decided that
such food would only be banned if it was "˜not produced ethically' -
whatever that means....

"On the whole it
is a "˜lifestyle choice' limited to middle-class mothers in the
South-east of England who are neurotic enough to believe the
insinuations of the Soil Association that little Henry and Caroline are
more likely to get cancer if mummy doesn't buy organic (at twice the
price).    

Now
another largely middle-class neurosis - we are all doomed unless
everybody stops flying! - is being exploited to protect an archaic form
of agriculture which could never feed this country, still less the
world. It
is, at best, an exercise in self-delusion. At worst, it is a way of
using food as the instrument of a deliberate policy of racial
discrimination."

Maxed Out Mamma has more on the global warming excuse for protectionism:

I am genuinely concerned
that environmental concerns are being used as a proxy for protectionist
economic legislation and may have severe consequences. I would like to
discuss this article from a Canadian source about carbon taxation:

Imposing
carbon tariffs on emerging economies with low manufacturing costs and
high greenhouse gas emissions could drive some manufacturers back to
Western countries, according to two economists.

Jeff
Rubin, chief strategist and economist at CIBC World Markets, thinks
such tariffs could emerge quickly. Countries in Europe are already
becoming publicly intolerant of emissions elsewhere and the next
president of the United States is expected to institute a cap on
greenhouse gas emissions alongside the trading of carbon credits.

...Europe is in an extremely
protectionist mood, and I believe one of the reasons for the
non-scientifically based focus on carbon is that it serves as a
justification for tariffs. If the next president does institute carbon
tariffs, the result will have a real impact on world trade.

I
believe that many politicians are being deeply dishonest about their
"environmental" concerns. I also believe that instituting a carbon
tariff will cause Asian growth to slow remarkably and further
destabilize the world economy. The rise in food prices is very
dangerous because it has an impact on the ability of emerging market
countries to support consumption increases necessary to rebalance
trade. If you add to the situation by doing something like this, you
could recreate the conditions which caused the Great Depression.

OK, perhaps it is a guilty pleasure, but I enjoy downing a couple of Mike Hard Lemonade's on a hot afternoon.  Now, it seems, the Food Nazi's at the Center for Science in the Public Interest want to stop me"

Public Citizen's blog announced that CSPI
plans to sue the beverage sellers, asking for disgorgement of profits
from flavored malt beverages, unless they agree to take them off the
market. Their theory? By making flavored alcoholic beverages that taste
good, they are effectively marketing to children. (Because, after all,
adults don't like beverages that taste good.)

For some reason, a group of people on this earth have convinced themselves that food-miles, or the distance food had to travel from the farm to the table, is somehow relevant to the environment.   Food-miles is one of the best examples of the very common environmental practice of looking at a single factor out of context of the entire system. I have written about the food-miles stupidity before.

We actually have a name for the system in which food-miles are reduced to their theoretical minimum:  Subsistence farming.  It used to be that most food was grown just a few feet from the table where it was eventually eaten because nearly everyone was a subsistence farmer (or hunter or gatherer).  We abandoned this system, and thereby increased food miles, for a number of reasons:

• It is very inefficient, not just from labor inputs but from a land use standpoint as well.  Some places are well suited to potato or rice production and others are less so.  It makes a ton of sense to grow things on soils and in climates where they are well-suited rather than locally everywhere. 
• It doesn't work very well in a lot of areas.  Subsistence farming here in Arizona is not very practical, and would use a ton of water
• It leads to starvation.  Even rich countries like France were experiencing periodic famines just 150 years ago or so.

But the main reason food miles and local subsistance farming is stupid is that it has nothing to do with environmental health.  Everyone looks at the energy to transport food, but no one looks at the extra energy cost (not to mention the land use cost) of growing food locally in climates and soils to which the food is not well-suited.  To this point:

European consumers shunning imported food supposedly to limit climate
change should not make African farmers a scapegoat, a Brussels
conference has been told.

In Britain, several supermarkets have
begun labelling products flown into the country with stickers marked
"air-freighted," to reflect concern about the contribution of aviation
to global warming.

But Benito Müller, a director at the Oxford
Institute for Energy Studies, dismissed the concept of food miles as
"an extremely oversimplified indicator" of ecological impact.

Saying
he was "really angry" with the implicit message that agricultural
produce from Africa should be avoided, Müller claimed that less
greenhouse gas emissions are often emitted from the cultivation and
transport of such goods than they would be if grown in Europe.

Strawberries
imported from Kenya during the winter, he maintained, have a lower
"carbon footprint," a measure to ascertain the effect of a method of
production on the environment "” than those grown in a heated British
greenhouse, even when their transport by air from Africa is taken into
account.

From the Washington Post, via Tom Nelson, comes a nice summary of the consequences of Congress's addiction to ethanol mandates and subsidies.  The last sentence in particular is one I have warned about for a while on this issue.

To be sure, some farmers in these countries benefit from higher prices.
But many poor countries -- including most in sub-Saharan Africa -- are
net grain importers, says the International Food Policy Research
Institute, a Washington-based think tank. In some of these countries, the poorest of the poor spend 70 percent or more of their budgets on food.
About a third of the population of sub-Saharan Africa is
undernourished, according to the Food and Agriculture Organization of
the United Nations. That proportion has barely changed since the early
1990s. High food prices make gains harder.
...
It's
the extra demand for grains to make biofuels, spurred heavily in the
United States by government tax subsidies and fuel mandates, that has
pushed prices dramatically higher. The Economist rightly calls
these U.S. government subsidies "reckless." Since 2000, the share of
the U.S. corn crop devoted to ethanol production has increased from
about 6 percent to about 25 percent -- and is still headed up.
...
This
is not a case of unintended consequences. A new generation of
"cellulosic" fuels (made from grasses, crop residue or wood chips)
might deliver benefits, but the adverse effects of corn-based ethanol
were widely anticipated. Government subsidies reflect the careless and
cynical manipulation of worthy public goals for selfish ends. That the
new farm bill may expand the ethanol mandates confirms an old lesson:
Having embraced a giveaway, politicians cannot stop it, no matter how
dubious.