Tuesday, June 23, 2009

Ryan: Further Arguments on Government Regulation

Last week, Justin played devil's advocate with regards to government regulation. We here at TPS enjoyed the exchange that followed, so now it's my turn to step up to the plate, suppress the gag reflex and play the role of government supporter.

So here it goes...

Typically, when we think of harmful products hurting consumers, we describe a feedback mechanism that allows the market to correct the problem. A good example is when a restaurant doesn’t practice proper food preparation practices; as a result, food gets contaminated and makes people sick. This isn’t a problem because people aren’t going to a restaurant repeatedly that makes people sick, the restaurant will lose money, and there will be no more tainted food offered to the public. Problem solved.

But what if there’s a time inconsistency inherent in the situation? Let’s take the specific example of salt. Salt had a tremendous impact on society for years; in the past, it was used to keep meat edible longer, and therefore had great value. And while its preservation qualities are not as highly demanded as before, it is still (arguably) the most widely used spice in the world today. Salt has the unique quality of bringing out the flavor of other flavors, so no matter what you’re cooking, you’d be hard pressed to find a meal that couldn’t benefit from a little salt. Ceteris paribus, if you had the choice between two dishes, you’d likely choose the one with salt. This leads to the market result of salted dishes winning out in the competition game.

The problem is, eating a lot of salt isn’t the best for your health. It’s connected to a range of health problems (the specifics aren't important, though the list is here) that take years, if not decades, to experience. Many of these ailments are serious medical problems. Just as important, many of these effects are nonreversible.

With or without public health care, this is a problem. There exists no quick feedback mechanism in the market to help rectify this situation. Furthermore, since the process of feedback is particularly slow, without active medical research into the effects of salt, the problem is likely to linger, not unlike the situation of lead being used for pipes in the Roman Empire.

Granted, we know about salt, so its use here is just for example. However, there are certainly a number of unknown effects caused by everyday products we encounter throughout our normal lives. It is therefore the role of the government to actively search out goods that could have potentially harmful effects through medical research and, further, to remedy these harms via protective regulation.

What do you think?

1 comment:

Justin Ross said...

Other relevant salt regulatory facts, that I have learned here at SPEA:

Substituting salt with iodized salt has been shown to be substantially healthier for cardiovascular systems and for iodine deficiency.

Table and iodized salt cannot be distinguished in blind taste tests.

Iodized salt is about 5 times more expensive, but the price is so low it is sometimes referred to as being perfectly price inelastic. It costs about a dollar or two to idodize one ton of salt.