Excellent example of how free markets can go quite badly without regulation. The strong color of lead tainted turmeric had stronger sales. If you sold non-poison you were likely to go out of business, being outcompeted by your competitors.
The core issue I have with free market absolutist arguments is their reliance on perfect information across parties and perfectly rational actors. Those constraints make any system of governance viable, and in my view, are a defining feature of extremist ideologies.
This is sort of what happened with welfare too. For a long time, we depended on private charities to take care of the less fortunate. We decided the system sucked, so we established a government-operated safety net. But in this reality, it can be worse if you slip through the cracks of government programs. People around you by and large no longer think it's their duty to help.
Anyway, I wouldn't write it off as extremism. It's just we need to pick an option and stick to it. In a "nanny-state" world, you can't decide that you're not going to regulate food safety anymore and hope that the market will sort it out.
The introduction covers food regulation from Biblical and Roman times to the present. If you think about how many of the Biblical rules are devoted to food handling in some sense, it starts to become clear how food regulation is civilization and the state, as much as any other kind of ancient law. I will never understand the Libertarian dream of a "prelapsarian" world where everyone is free to sell poison to everyone else with no consequences.
All customers always checking all food for poisons is not reasonable at all.
And look, I'm not arguing that this is a better solution. But I think it makes sense to attack the strongest version of that argument, not the weakest one.
The world has had millennia of not regulating very much, and the market very rarely sorted it out.
The one exception is weights and measures. There is a long tradition of regulating these strictly, because experience has shown that the market is incapable of driving the cheats out of business and that there must be trust in the markets because else trade will slow down.
https://www.rand.org/content/dam/rand/pubs/notes/2006/N2505....
https://faculty.haas.berkeley.edu/stadelis/tce_org_handbook_...
The arguments are usually about whether equity/fairness/outcomes are better, but cost in money and time is always higher.
> People around you by and large no longer think it's their duty to help.
GoFundMe raises about $650 million for medical costs each year[0]. That's just one little thing, I suppose, but there are many, many NGOs, charities, religious institutions and unaffiliated individuals providing personal care inside their communities and outside. There's plenty of care that /cannot be provided/ by these organisations, and was not provided in the past by private charities either. Neither could provide cancer treatment or cure a patient with major injuries from a car accident. That's a job for institutionalized healthcare.
[0]: https://en.wikipedia.org/wiki/GoFundMe#Medical_fundraising
You're coming up with a scarecrow and then tearing it down and pretending it's the real thing.
The actual free market answer to these things is that if poisonous turmeric is such a big issue, it will be noticed (by some people dropping dead if nothing else) which will result in consumers prioritizing "knowing if the turmeric is poisonous", resulting in a "food safety rating industry" being created which either consumers or producers can fund in order to accurately determine the safety of the food.
We can see stuff like this happen all the time in the financial industry with ratings agencies, and we saw it prior to government based agencies that fullfil that role.
Branding was big in the 1800s as a response to precisely that sort of behavior.
Even if we assume safety ratings for a complex food supply chain resulting in tens of thousands of one man businesses selling to people earning a dollar a day is a massive market opportunity, brands and safety labels are trivially copied by sufficiently people selling adulterated food, so they alone fundamentally don't solve the problem. Only a government can step in and regulate that IP, and at that point they might be better off just banning the poisoning...
Did you just use the rating agencies as a POSITIVE example? The financial crash that partly came about because those rating agencies were 100% corrupt and didn't work at all you know...
Exactly. The market is the decentralized method by which information is distributed.
>Straw-man
Yes, agreed. I wonder how much laissez-faire material some of these commenters have actually read. Perhaps they read from a different flavor of "market absolutism", which brings the question of unnecessary generalization.
In my reading of the Rothbardian ancap canon, insurance companies, liability for damages and private certification boards are advanced. Under this system imperfect information is taken as a given. Market participants like private food safety inspectors have an incentive to have better information than their competitors.
Contrast the above to the government regulation schemes where acceptable levels of adulterants are not necessary to report. Similarly, polluters can freely pollute within the EPA guidelines without liability. One could make the same leap of attributing "perfect information" to government regulators. If not for perfect information, how else can the FDA know the acceptable level of a contaminant?
Private regulatory and certification bodies would give consumers choices for cleaner standards than the government monopoly. I hope it goes without saying that the existence of a state backed regulatory body makes it harder for a private one to enter the market.
Finally, in response to the top level comment, it is worth noting that if a similar comment were made in favor of markets rather than regulation, one could reasonably expect it to be flagged into oblivion. Perhaps rightly so, because the topic has derailed the discussion. It speaks to the depth of the discussion when market opponents haven't even bothered to read what they are criticizing. HN isn't the place for this.
The real thing is a society with a government that takes care of these problems outside of a market...
Polluters don't contribute individually to climate change just for themselves or their customers, they contribute -- each in a small way -- to the problem for everyone on the planet.
If factory pollution was somehow isolated to just the factory or people buying things from that factory, instead of just going into everyone's air, regulation would be much less necessary, because in that case yes, consumer behavior would change. People wouldn't want smog inside their homes because they bought a new widget from a polluting manufacturer.
This is the inherent problem with people complaining that they have the right to pollute with their cars or factories or what have you as an argument against regulation. The pollution doesn't just stay next to the person creating it! If someone invents a box that captures all the fumes that car puts off and localizes it to the car itself, then sure, pollute all you want.
Bangladesh example: Consumers didn't know about lead in turmeric. After the information campaign consumers know about lead in turmeric but not whether a specific seller offers lead-free turmeric. After the raids consumers know that they can usually trust turmeric to be lead-free.
The assumption of perfectly rational actors is not so useful.
However there's another solution. State actors should control confusopoly. That's a lot more difficult, but if the market is not too complex, one can assume consumers are mostly rational.
In other words: in reality the assumptions are not assumptions but preconditions for a free market.
I am a Princeton trained economist from the 1980's and not once, not ever do we talk about non-cooperative behavior not existing. Rather, it is sub-optimal and self-defeating in the long run and that's why economies that evolve into hierarchical control eventually result in rebellion.
And bewilderingly about the last claim, but yes, I know, racism/sexism is sometimes considered irrational by some economists, because, um, you know, it is?
1) Capitalism is the only reliable route for a nation to escape poverty. Bangladesh has socialism as one of the central tenants of the 1972 constitution, but abandoned it in the 21st century. And economic growth has increased dramatically since then and transformed the lives of people.
2) Government can play a significant role in a capitalist society through investing in public health, education, and infrastructure. The Bangladeshi government has been active recently, thanks to Russian and Chinese funding, building railroads, power plants, etc. This is an economic approach to development—combining a free market with an active government that facilitates business and builds infrastructure—that goes back to Abraham Lincoln in the US.
3) The government can play a large role in eliminating shady business practices, violent political extremism and crime, and generally making a society where people are safe to engage in commerce and build things.
The fourth leg of the chair is government efforts to wipe out corruption, as in China. But Bangladesh isn’t there yet, and may never get there.