Big Goverment and Small Potatoes

That was the tentative title of a chapter in my forthcoming book, Food Police, that ultimately wound up on the cutting room floor.  I spent a good portion of the book, and have many posts here on the blog, where I defend Big Food and Big Ag.  That's not because they are blameless or perfect, but because they are so often mischaracterized and are the scapegoats for many of societies perceived evils.  

But, it would be a mistake to think that food freedoms are threatened only by government regulation of Big Food and Ag.  In fact, one can often see the plain injustice at work when you look at the impacts of intrusive government regulations (and the crony capitalism sometimes promulgated by Big Food) on small potatoes - food trucks, farmers markets, and small operators just trying to make a buck.  I chose not to focus heavily on this in the book because they represent such a small part of our overall food economy, but I'm glad to see some attention being devoted to the issue.  

The American Enterprise Institute is hosting a conference title "Big government and big food vs. food trucks, foodies, and farmers markets."  Here's their promo:

If you like your food local, organic, or from a truck, government regulation might be your biggest obstacle. American restaurants lobby to choke off food trucks, and federal regulation of food safety leads to more consolidation in the industry. Moreover, farmers markets struggle to survive under the heavy hand of government.

What if food safety regulation is not about limiting the germs in our dinner, but is rather about limiting competition in America’s food industry? What if federal and local rules actually protect incumbent businesses instead of consumers?

​If you want to whet your appetite, I highly recommend this article from a few weeks back, entitled, Tea Party Libertarians and Small Organic Farmers Make Strange Political Bedfellows.  Here are some spinets:  

Laura Bledsoe didn't set out to join a political movement, she merely wanted to serve what she considered a sustainable meal.

In October 2011 she and her husband Monte decided they wanted to host what they called a "farm to fork" event in their home. They own a small farm 50 miles outside of Las Vegas.

then:​

Trouble began two days before the event was to take place. They received a call from the Southern Nevada Health District Office, who wanted to know if the farmers had secured a health permit for the event. "We didn't know we needed to," Laura says.

Then a health inspector came:​

The health inspector raised several concerns, but chief among them was the meat the Bledsoes were preparing to serve. Because the event was advertised as a "zero mile footprint," the meat hadn't been sent through a USDA processing plant, as is required for any meat purchased at a grocery store or restaurant, so the inspector deemed it illegal to serve.

The article tells several stories of a similar nature - check it out.​

Our Research on Menu Labeling

For the past couple years, I've been working with one of my former graduate students, Brenna Ellison at the University of Illinois, on some papers related to effects of calorie labels on menus (for those who may not be aware, "Obamacare" mandated that chain restaurants include such menu labels but the FDA has yet to release the final rules and implementation date).  

The first part of that research was finally published last week in the International Journal of Behavioral Nutrition and Physical Activity, where we report on a smaller sample from the larger study which includes the group of people Brenna interviewed after they ordered.  The results have been picked up by a couple news outlets, including this one from Reuters: 

Showing diners how many calories are in restaurant food items may influence how much they eat - especially among the least health-conscious people, a new study suggests.

That's true - but only partially true.  We find that the numeric labels mandated by "Obamacare" do not have a statistically significant effect on the number of calories people order.  The labels that we find to be (somewhat) effective are stop-light labels, in which we put a red dot next to the high calorie foods, a yellow dot next to the medium calorie foods, and a green dot next to the low-calorie foods.  As the story suggests, the labels are less influential among people who we rate (based on their survey answers) as health conscious.  The result isn't terribly surprising - people who are health conscious are probably already familiar with the caloric content of the foods they eat, and as such, adding labels are unlikely to provide new information.  Still, we'd want to know something about the cost of the label to know whether the policy was a net-plus (this is an issue we take up in our other papers still in the works).    

The result I found most interesting from the whole study was only discussed in the conclusions (and was missed all together in the news story) is the following:

Interestingly, despite the calorie+traffic light label’s effectiveness at reducing calories ordered, it was not the labeling format of choice. When asked which of the three labeling formats was preferred, only 27.5% of respondents said they wanted to see the calorie+traffic light label on their menus. Surprisingly, 42% preferred the calorie-only label which had virtually no influence on ordering behavior. These responses imply diners may want more information on their menus (the number of calories), yet diners do not want to be told what they should or should not consume (i.e., green = good, red = bad).

Fast Food Restaurants Getting Healthier

One of the reasons I’m often critical of government policies that attempt to force healthy eating on the public (say through ingredient bans or fat taxes) is that I have a different view of “Big Food” than many foodies.  Big Food is often portrayed as powerful, nefarious entity preying on helpless consumers.  I’m more apt to seeing fast food restaurants as responding to consumer demand for convenient, inexpensive, quick food.  They offer burgers and fries because this is what consumers are willing to pay for. 

However much we may want McDonald’s et al. to offer healthier alternatives, at the end of the day they must make enough money to stay afloat.  If more salads are offered than consumers want or are willing to buy, that’s a recipe for disaster.  As one organic farmer put it: the first rule of sustainability is that you have to make enough money this year to do it all over again next year.  I have little doubt that the McDonalds of the world would offer a lot more salads if they thought they could make money doing it. 

Against this backdrop, I noticed a recent study by the Hudson Institute that examined the offerings of fast-food restaurants over the past five years (it was covered by the WSJ here).  Here’s what the study found:

“between 2006 and 2011, lower-calorie foods and beverages were the growth engine for the restaurants studied. In 17 of the 21 restaurant chains evaluated, lower-calorie foods and beverages outperformed those that were not lower-calorie. In addition, chains that increased their servings of lower-calorie items saw positive returns as a result. These chains generated:

• a 5.5 percent increase in same-store sales, compared with a 5.5 percent decline among chains selling fewer lower-calorie servings;
• a 10.9 percent growth in customer traffic, compared with a 14.7 percent decline; and
• an 8.9 percent increase in total food and beverage servings, compared with a 16.3 percent decrease.”

The lesson is that you don’t always need government regulation.  The market will deliver healthy foods when the public decides that’s what they want.

The Economics and Politics of Obesity

That was the title of a talk I gave last week at the University of Alabama-Birmingham in the seminar series run by the Nutrition Obesity Research Center.  I talked about emerging trends associated with obesity (some of which defy popular narratives), the government's role in "combating" obesity, reasons why I find justifications for government action in this area less compelling than many public health professionals, evidence from empirical research on effectiveness of policies designed to "fix" the obesity problem, and finally I concluded with my thoughts on what caused the rise in obesity and what "we" should do about it.  

If you'd like to watch my talk (which runs about 50 minutes), click here.  

Food Socialism

From Bloomberg.com, we learn:

At a bustling food market in downtown Caracas, armed officers belonging to President Hugo Chavez’s National Bolivarian Guard marched by boxes of lettuce and tomatoes, checking prices and storage rooms.

and

“This is the worst it’s ever been, I can’t find any eggs, rice or flour,” Noreli de Acosta, a 55-year-old housewife.  

What is behind it all?

Chavez suffered his only electoral defeat in 2007 when voters narrowly rejected a referendum to change 69 articles of the constitution amid shortages of beef, milk and sugar. He subsequently accelerated the nationalization of farms and food industries. Since taking office in 1999 he’s seized more than 1,000 companies or assets.Capital controls have exacerbated shortages by limiting the amount of foreign currency Venezuelans can obtain to import goods.

Yet, rather than freeing up capital controls, here is what the socialist government is up to:

Last year the government ordered companies such as Procter & Gamble Co. (PG) and Unilver Plc (ULVR) to lower the price of shampoo, soap and other personal care products to contain inflationary pressures. Authorities regulate prices for a wide range of products including chicken, cheese and coffee.

The government blames producers and merchants for hoarding products and this week carried out televised raids of warehouses. Among goods confiscated were 9,000 tons of sugar, part of which was imported by a supplier to the local unit of PepsiCo Inc. (PEP)

Shockingly, Chavez supporters are undeterred:

At a nearby poultry store, display cabinets were half empty and one shopper complained that prices were twice what the government mandated.

Morela Tirado, a 53-year-old housewife, said such shortages are only a small inconvenience and have not undermined her support for the Chavez government.

“So you switch meat for chicken, pasta for rice, what’s the big deal? Nobody is going hungry,” said Tirado. “It’s not that there’s no food, you just don’t always get what you want.”

It's too much of a stretch to say that calls for fat taxes, large soda bans, and veggie subsidies will lead to this kind of outcome.  But, I'd at least hope that situations like this in oil-rich Venezuela at least serve as a cautionary tale for those who think we can top-down engineer everyone's weight, health, and eating patterns.  After all, it is hard to imagine that Chavez and his advisers thought their capital controls, import restrictions, price-caps, and confiscations would lead to such bad outcomes.  These were - I'm sure - well meaning (but short sighted) plans to control the economy in one way, all the while forgetting that interventions in one area cause unexpected disruptions in another.