Monthly Archives: November 2013

Obamacare Kills the Family Farm

Obamacare is poised to put the family farm out of business. Although not directly applicable to the food industry, it has spawned sibling legislation whose ends are aligned with the Obamacare mandate of lowering health care costs for the nation – by any means necessary. Toward that end the “Food Safety and Modernization Act” was passed in 2011 which has now spawned a new round of FDA rulemaking known as proposed rule “Current Good Manufacturing Practice and Hazard Analysis and Risk-Based Preventive Controls for Human Food.” The primary stated goal of this proposed rule (according to the FDA) is to “reduc(e) the public health burden of foodborne illness associated with contaminated produce.”  A worthwhile goal, I’ll grant that. However setting aside for now the question of constitutionality of a federal agency laying down rules to govern activity that is wholly intrastate in nature, there are a number of problems with both the implementation, results and costs associated with this end goal.

Some of the more absurd components of this proposed rule include (a) WEEKLY testing of water “before it touches the surface of any fruit”, (b) where manure has been spread one must wait 9 MONTHS before harvesting, and (c) the maintenance of DAILY clipboards of records of every event that takes places on the farm related to food production. As with any regulation there is a cost involved. Irrespective of the industry it is always the large entity that has the advantage relative to its smaller competitors in terms of bearing the additional costs of new regulation. Therefore it should come as no surprise that this proposed rule would have the effect of putting many small farmers out of business (there are exemptions for “small” farmers, however these merely delay the timeframe of implementation). But don’t take my word for it, you can read the comments of such farmers themselves at the FDA’s comment site.

Now at this point the progressive may be protesting, “But, but, this rule will save lives and if some small farms must be sacrificed to achieve that goal then as long as the greater good is being served this is an unfortunate side-effect.” Although seeing as how most progressive types are proponents of buying locally grown produce (itself not a bad concept) I imagine their heads will explode when they realize this “greater good” will have the net effect of putting so many small farmers out of business it will all but kill the “buy local produce” industry.

Even by FDA’s own best estimates this rule would potentially reduce the incidence of food borne illness by 2-5% (i.e. save no more than 67 lives per year or about $14 million per life). And while I would gladly spend $14 million to save the life of a loved one, I don’t have $14 million nor do I (or anyone) have the right to use government to fleece my neighbors pockets for that $14 million on the off chance it might save a life I care deeply about.

The emotional response of “we can’t put a value on a human life” runs afoul of the economic law of diminishing returns. Whenever a brand new type of regulation was introduced (pollution, car safety, etc) we witnessed massive improvements – because nothing existed before that (not that such regulation was necessary however, seeing as how these types of regulations were merely a response to prior government induced market distortions). As a hypothetical example, seeing that $1 billion in regulatory costs reduces deaths from 1 million to 1 thousand legislators naturally will assume even tighter regulations costing another $1 billion will do the trick – but it doesn’t work like that. Those new regulations reduce deaths to only 900, another billion to 850 and so on. The low hanging fruit was picked with the initial round of regulation; the minuscule amount of fruit at the top takes exponentially more effort to pick.

Ok, fine, you may say, a human life should not have a dollar value attached – we should spend and spend to stop all deaths. Although publicly we may profess such sentiments, our actions speak very differently. If our safety were paramount to the exclusion of all monetary and non-monetary costs then we would either choose to drive at 1 mph at all times or spend hundreds of thousands of dollars to drive a military grade armored tank. But we don’t do that because safety is a luxury and we can only afford luxuries to the extent we have produced above more than the bare essentials. This, by the way, is why human conditions were so much less safe years ago and are so in third world countries today – not due to any lack of government oversight but rather due to lower productivity, which puts luxuries (such as safety) out of reach. So although we are bound by our productive capacity when determining how much we personally want to spend on safety, government knows no such bounds. Whether it might cost $100 billion or $100 trillion to potentially save one life is of no concern to those that bear none of the costs.

Marietta Braves?

Unless you are a baseball fan or local politics wonk you may have missed the big news last week: the Atlanta Braves will be leaving Atlanta for greener fields in Cobb County beginning with the 2017 season (speculation has already begun whether they will change their name to the Marietta Braves). This move has created a teachable moment concerning bureaucrats who credulously believe they can derive a net benefit by subsidizing the profits of private business via the public tax trough.

The particulars of this prospective Braves relocation are rather interesting in light of the epidemic of head-in-the-sand disease that is sweeping through Cobb County government. The Braves have released an infographic that details the massive extent to which Cobb County will be bribing, err, supporting them. The Cliff Notes version is this: Cobb will cover 45% of the overall $672 million cost of the project through a mix of new and increased taxes amounting to $18 million per year over the next 16 years. This tax expense will however be offset by increased local retail spending that will bring in an (estimated) whopping additional $89 thousand per year in sales tax revenue. I don’t know, maybe I’m being unfair: Would you pay $180 a year for the opportunity to possibly earn as much as a cool 89¢? The math for this deal just does not work. Cobb County would have to realize an ADDITIONAL $1.8 billion in retail sales just to break even. Given that the current total amount of retail sales in Cobb County is $2.1 billion that seems a bit of stretch to imagine that a mere baseball team could nearly double the entire retail economic output of the county.

There is nothing wrong with the Braves relocating to wherever they desire. However, they should bear 100% of the cost of their relocation speculation. It’s lose-lose for the taxpayer. If the move goes well for the Braves then the taxpayer has paid for something the Braves could have paid for themselves. If the move goes poorly then the Braves are shielded from the effects of that bad decision via the taxpayer picking up nearly half the tab. Some will invariably argue that the local community should bear some of the costs to lure the Braves to their neck of the woods because the local community will indirectly benefit. To accept such a flawed argument one must also accept the premise that Walmart should likewise demand to be subsidized by other businesses nearby because those businesses will derive increased traffic owing to the “anchor” location of the Walmart. Everything each one of us does will conceivably benefit someone else indirectly. This argument, taken to its logical conclusion, demands that we should all attempt to extort money from our neighbors before we do anything.

But, we can’t really blame those in charge over in Cobb County for making such absurdly wrong-headed decisions; they are simply following precedent. Those who can think, think, those you can’t, follow precedent. Local (and national) governments have been hooked to the same economic voodoo for decades. They wish/hope/believe that if they offer up financial support to a private business looking to relocate within their territorial boundaries that the potential increased economic activity will provide a net benefit to them and their constituents. Unfortunately wishing for something doesn’t make it so. In fact there has never been a situation where such subsidization has bore net economic fruit. So why do governments keep making the same mistake over and over? Because government has no feedback mechanism to correct their mistakes. There is no profit and loss test. If they subsidize some boondoggle and it doesn’t pan out (a loss), oh well, the taxpayers will still have to continue paying for it for years after the private entity they were subsidizing is gone and those elected officials have left office. Government legally can’t go out of business, so they are free to make the same mistakes over and over. The people may “vote the bums out”, but the institution remains. The aphorism “Those who fail to learn from history are doomed to repeat it” is nowhere more true than with government.

Where’s the beef? Sorry, it’s been banned.

This past week the FDA proposed an outright ban on artificial trans fats in prepared foods.  Trans fats occur naturally and artificial ones have been used for decades in foods. As a foodstuff they are safe insofar as they don’t make you sick upon ingestion and have known physiological benefits in proper amounts (and known harms if consumed to excess, which is the case with all food components). The FDA is not banning some new dangerous unknown substance. They are banning something that has, in large part, already been voluntarily reduced in the past few years to the point that average US consumption of trans fats is now half of what the American Heart Association recommends as being safe. So if it’s already hardly used, where’s the harm in a ban you might say? Setting aside the ethics of the ban, the direct type of harm that can be envisioned would be a situation wherein the use of trans fat solves a problem for which there is no good substitute. Furthermore any substitutes might very well themselves be more harmful than the trans fat. That’s called “unintended consequences” and occurs with every single government mandate ever issued.

Some examples where trans fats are used include cake frosting, microwave popcorn, frozen pizzas and various fried foods. These are mere treats, things eaten a handful of times in a month if even that (how many cakes have you eaten in the last month?). But given the government’s penchant for quixotic battles against virtually riskless activities (trillions of dollars spent fighting terrorism even though jaywalking kills more people each year than terrorism) it should come as no surprise that Uncle Sam would relish the role of micromanaging the minutiae of our lives (“exactly how many calories are in the candy bar sir?”).

Lifelong dependency of the citizen ensures eternal power for the state.

 

There is nothing wrong with the FDA educating the public about the healthiness or lack thereof of certain kinds of foods (although forcing the public to pay for such education through taxation rests on ethically dubious ground). However, the outright banning of this or that substance crosses a line. The metric upon which prohibitions have been based (such as drug prohibition, however ill conceived) is one of “imminent harm”, i.e. if someone is about to jump off a bridge we can plainly see their free will is immediately deleterious to their own well being therefore one could argue intervention is justified. However, the bar has been moved from “imminent” to “eventually possible” i.e. should we tear the bridge down so as to make it impossible for anyone to ever jump off it? Should we now ban every conceivably risky activity?  If so, that’s going to be a mighty long list! Nearly every action in our daily lives carriers some level of inherent risk.

The FDA’s justification for this ban is a mere estimate (i.e. best guess) that it will result in 20,000 fewer heart attacks and 7,000 fewer deaths each year. The rationale is of course the “Greater Good” argument. This ban will naturally lead to lower health care costs for the nation. Why stop there? Perhaps the FDA could implement other policies that have the net effect of lowering health care costs. Perhaps they could ban foods that naturally contain trans or saturated fats (all meat, cheese and dairy). Next they could ban all foods that are not considered to be “healthy” (according to the whim of whoever happens to be in power at the FDA). These directives would surely save more lives, so how can one object? Eventually the government could require all citizens join a gym and exercise each day… because this would lead to fewer deaths each year… so how can one object? Oh, and what of those that refuse to do their quota of exercise? Well, we’ll just levy a fine, err, I mean tax on those that refuse the directive of the collective.

This trans fat ban is just the first step in sacrificing the individual on the altar of the collective state. If you agree to take what the collective offers (free or subsidized health insurance), then you must submit to having your life directed by that same collective. Children accept the care of their parents and thus are obligated to follow their rules. Likewise government demands we follow their rules because they view us as but children. Lifelong dependency of the citizen ensures eternal power for the state.

Lost in translation

Like millions of Americans you probably have received a letter like this (see below) from your health insurance provider (for both individual or group plans). As the farmer said to the pigs about to be slaughtered, “We’re going to be transitioning you to an environment free of worldly concerns.” Reading between the lines can often be critical to our own well-being, therefore, in that vein I shall endeavor to offer a translation of the following:

 Dear Subscriber:

The federal Affordable Care Act (“ACA”) has been changing how Americans get their health care coverage. The next big step begins in 2014. For many individuals like you with coverage through their employers, it includes important changes to coverage.

 ACA requires us to make significant changes to our health benefit plan designs. We have redesigned our entire employer portfolio to include new health benefit plans that comply with 2014 ACA requirements.

 There is nothing for you to do at this time. Your employer’s existing policy will continue until your next renewal. We are unable to renew your employer’s existing plan in 2014, but your employer can purchase any of our new plans with the 2014 ACA requirements for your coverage.

 We value you as a member and look forward to a long-standing relationship with you.

Sincerely

Health Insurance Company

 

Dear person-now-required-to-buy-our-product-under-penalty-of-law,

Obamacare has transformed a government manipulated healthcare market into a government controlled healthcare market. Unadulterated fascism rears its ugly head once again in America in 2014 (fascism = state control of a putative private market). For those of you who already get insurance through your employer, the paltry level of choice you used to have will be whittled down to next to nothing.

Obamacare requires us to add on coverage options we formerly begged you to buy but now you are forced to buy, therefore we have the perfect excuse to inflate premiums as high as possible. Apparently Nancy Pelosi thinks you are too stupid to make your own decisions when it comes to buying health insurance, therefore she has empowered bureaucrats to make those decisions for you. Do not fret gentle citizen; you will be well cared for in Obama’s gentle bosom.

You are helpless to avoid this, so sit back and enjoy the ride. You have a few months left to see your doctor before multi-hour waiting room camp-outs and month long waiting lists for medical procedures turn the US into Canada 2.0. We are unable to renew your employer’s existing plan in 2014, but that’s just fine with us because we’re content to get in bed with the government and be more tightly regulated if it means we will be guaranteed a steady stream of customers and profit. Crony capitalism and fascism is what made this country great after all!

We value you as our cash cow and look forward to milking this relationship for all its worth until either the federal government collapses under its own weight or the American public becomes so irate that they finally elect people that will remove all government influences from the medical market so that prices can naturally fall until medical insurance is no more costly than auto-insurance.

Sincerely

Health Insurance Company (a wholly owned subsidiary of the Federal Government, Inc.)