Government regulators are keeping you safe from mad cow disease by refusing to allow private meatpackers to inspect all of their meat. You might think I'm joking, but I assure you that I am not.
I refer you to the case of Creekstone Farms. Creekstone attempted to test all of their beef for mad cow disease, but state regulators refused to sell Creekstone the necessary testing kits to test all of their meat. The firm then built a first-of-its-kind testing facility directly at their meatpacking facility, and hired the necessary personnel to do the testing. However, when they tried to buy the test kits, the government still refused to sell them. The state claims that testing all the meat is unnecessary, but this begs the question, why not allow Creekstone to buy the kits and do it themeselves ... even if it is unnecessary?
Obviously, the state took this position because other meatpackers didn't like the thought of competition from Creekstone; they then put political pressure on the U.S. Department of Agriculture (USDA) to prevent Creekstone from conducting their own inspections. The USDA was happy to oblige because they did not want to see other meatpackers inspecting their own meat as this would put USDA inspectors out of work.
A 1999 study reported that 76 million people are impacted by food borne illnesses annually in the U.S. The Center for Disease Control and Prevention has since changed how it calculates food borne illnesses in order to reflect a lower number that it then reports to the public annually. Clearly, government inspections are working!
In a presentation, starting at minute 46:00, historian and economist Murray Rothbard targets the meatpacking hysteria of the early 1900's when Upton Sinclair’s The Jungle was released. You can listen to Rothbard explain the true nature of food regulation in the U.S. here.
Some of the highlights include:
1. Early 19th century government inspections added a large fixed operating cost to producers due to the administrative overhead. This effectively serves as a large barrier to entry into the meatpacking business. The smaller packers do not have the economy of scale to be able to absorb this fixed cost, therefore they end up being run out of business by the large producers. The small guys need to raise the price of their meat to account for the additional cost.
2. The Europeans, of the era, had begun barring meat imports to protect their own meat producers profits under the guise of preventing “diseased meat” from being imported. The Europeans required that all imported meats undergo an inspection process. Thus, the U.S. meatpackers had to have their meat inspected anyways by private inspectors if they wanted to be able to export their meat. By lobbying the U.S. government to inspect their meat, the U.S. large meatpackers could pass the cost of this inspection process, that had to happen anyways, on to U.S. tax payers. This served to socialize inspection costs for the large U.S. meat exporters.
Since the smaller producers did not generally engage in export, they didn’t bother to have their meat inspected — thus, the smaller producers were able to compete with large producers in local markets. By forcing all meat packers to undergo inspection, the government basically ran the small meatpacking operations out of business.
3. The inspection seal serves as a fantastic marketing gimmick. It provides a false sense of security to U.S. consumers and legitimizes the meat processed as being approved by the U.S. government.
Jonathan Ogden Armour, President of Armour and Company, one of the largest meatpacking corporations in America, wrote the following in a March 1906 Saturday Evening Post article:
"To attempt to evade government inspection with beef from a purely commercial viewpoint is suicidal. No packer can do an interstate or export business without government inspection. Self-interest forces him to make use of it. Self-interest likewise demands he shall not receive meats or byproducts from any small packer either for export or other use unless that small packer is also official (under government inspection.) This government inspection thus becomes an important adjunct of the packers business from two view points. It puts the stamp of legitimacy and honesty upon the packers product, and so is to him a necessity, and to the public as an assurance against diseased meats."
A 1906 report by the Bureau of Animal Industry refuted Sinclair’s severest allegations, characterizing them as, “intentionally misleading and false,” “willful and deliberate misrepresentations of fact,” and “utter absurdity.”
Government: Keeping you safe from the dangers of high quality, low priced food since 1900.