Comment by vkou | Hacker News Reader

Comment by vkou | Hacker News Reader

Parent Full thread

That's a beautiful theory that completely falls apart when cause and effect between bad behaviour and consequences is not immediately clear to the person buying the service.

Which, in the real world, is the case with almost everything.

Vendors don't tend to cheat or cut corners or perform malfeasance on shit that's easy to spot.

Worse yet, the customer often can't tell the difference between malfeasance and bad luck. Without an independent regulator looking into this crash, I will have no idea if the airline operating it was staffed by morons and cutting corners, or it did everything right and got unlucky.

And no, the legal system doesn't solve this problem, because any sane company will have a strong preference towards a quiet, confidential settlement, to expose as little of their dirty laundry as possible to the public and prospective customers.

Libertarianism collapses upon contact with the real world, because it depends upon informational symmetry. Yet the way businesses actually operate, it's all informational assymmetry. I don't have the time to devote my life to trying to pick out which vendor will try the least hard to fuck me over, and even if I did have that time, I wouldn't have the information necessary to make an informed choice.

It also falls apart when the consequences of bad behavior are death. The satisfaction of showing everyone exactly how unsafe Airline X is, is a small consolation if my family is dead.

It's not so much a theory as it is an attempt to understand what we already observe in the real world.

Why is it that restaurants, barbers, car washes, and other small business industries have thrived for so long despite minimal regulation?

One reason is the high competition. If you've ever run a restaurant, you know the importance of making customers happy. Because customers have so many other options to choose from. They can easily take their business elsewhere. So you have to perform.

Boar's Head is performing just fine, despite having the walls of their meatpacking facilities covered in flies and maggots. That killed eleven people last year, but guess what, every friggin' deli in the country is prominently displaying their products, and sales are doing great. And for all I know, half the other brands on the shelf are owned and operated by them.

If it weren't for regulators, that facility would still be operating and poisoning people. And the reason it got so bad was because regulator alarm bells were ignored for two years.

I wouldn't even know that they were poisoning people if it weren't for regulation. And while this has lost me as a customer for life from them, what am I going to do when the other giant national meatpacker turns out to be doing the same damn thing?

Not eat meat, I guess. It'll be a libertarian success story.

We're actually in complete agreement over this scenario.

In my original comment, I discussed why you can't have no regulations in an industry that's highly concentrated.

Deregulating only works if and only if the underlying industry is highly competitive.

The meatpacking industry is not highly competitive: https://www.ers.usda.gov/amber-waves/2024/january/concentrat...

Hence, regulations are needed.

You're completely missing the root of the problem, which is informational assymmetry.

Having multiple vendors to choose from doesn't do anything for me when I can't make an informed choice.

When you eat at a restaurant, are you making an informed choice?

I'd argue no. I have no idea if the cook that made my meal 30 seconds ago actually followed proper safety guidelines.

However, I think in general, the probability is decent that they did, as they are highly incentivized to do so. Because a failure to do so could mean the end of their business.

What I'm getting at is that there are specific scenarios where market forces are stronger than the ability to make an informed choice. And protect you as the consumer better.

> When you eat at a restaurant, are you making an informed choice?

Given that they don't give me a tour of the kitchen, and that I can't actually verify that they haven't been using meat knives to cut my salad, no.

I take it on faith that the food inspectors will ruin their business[1] if they are regularly pulling those kinds of stunts. I take it on faith that the staff have regulations to lean on when they push back on systemic unsanitary practices.

And no, Joe Somebody complaining on reddit that Earl's gave him food poisoning last week and that we should stay away from Earl's doesn't actually inform me that I should avoid Earl's. I don't know Joe, I have no reason to believe him. For all I know, he's just a disgruntled shill who is just making stuff up. Or maybe Earl's bought a batch of contaminated products from further upstream. Or maybe he caught a stomach bug from somewhere else, and is blaming them. Or maybe he's right, but Earl's actually has a lower incidence of food poisoning than the chicken joint across the street, and they just got unlucky.

I have a lot more confidence in an inspection, than in some noise someone's making on the internet, or in some celebrity endorsement on the TV.

---

But there is some aspect of eating at a restaurant where I do make an informed choice.

Does the food look good? Does it taste good? Is it cheap?

These are the easy to observe bits of information about it. I can actually meaningfully express my preference there, and make an informed decision.

And guess what? There aren't any inspectors for any of that. My town doesn't employ a taste comissar, or an art critic for their FoodSafe team. Because I can tell at a glance which I prefer.

I can't tell at a glance which restaurant is less likely to have the kitchen staff poison me.

---

[1] In practice, they'd much rather work with the business to bring it into compliance. You know, positive-sum sort of interactions that leave everyone who is acting in good faith better off.

> However, I think in general, the probability is decent that they did, as they are highly incentivized to do so. Because a failure to do so could mean the end of their business.

Yes, their business will end because they'll fail an inspection. As it turns out, these incentives are provided by regulation, not by the free market.

There's abundant history of market forces totally failing to end food businesses that didn't follow food safety practices. The Jungle was published in 1906 documenting meatpacking's horrors and not a single change was made until the Pure Food lobby pushed through regulation, and that was at a time when meatpacking wasn't a concentrated industry. In Upton Sinclair's time, there were at least 9 companies operating in the Union Stockyards where he researched meat packing (it's unclear to me how many there were total).

Look around at food safety inspection reports for your town and you'll very quickly find restaurants that were doing great financially until regulators stepped in and cited them for dangerous practices. Restaurants are, again, a highly competitive industry.

It seems like you're starting with your favored economic ideology and pretending it tells you anything about reality, instead of just looking at reality and seeing what's there.

Why do you think restaurants have minimal regulations? First, I would say they are indirectly heavily regulated, as the food chain in most countries is highly regulated (health inspectors, care & expiry rules, etc.). Second, most places have direct rules on how to run a safe commercial kitchen. And, the best places (NYC, I know about) have regular kitchen inspections by public officials with public results.

Reply on news.ycombinator.com