There are lots of theories on how to succeed in business. But here’s one that never occurred to me: Poison your customers.
This strategy sounds counterintuitive, since the dead don’t do much buying, but some people think it accounts for periodic outbreaks of food-borne illness. They say you can’t trust the private sector to keep pathogens out of our food, making it incumbent on the federal government to protect us.
The recent episode of lethal pet food is Exhibit A in this case. Adulterated wheat flour made its way from China to factories in the United States and Canada that produce food for dogs and cats. The contamination killed or sickened thousands of animals and led to the recall of more than 100 brands of pet food.
Many liberals, however, insist the only remedy is more regulation. "If we expect to have our spinach uncontaminated, our pet food safe, Congress has to give the FDA more resources," says Donald Kennedy, former commissioner of the Food and Drug Administration.
But this case also shows that, when a product goes wrong, everyone in the supply chain has a big stake in making it right. Chinese exporters stand to lose a vast amount of sales if they don’t raise their safety standards. Pet food makers will face rejection from retailers unless they can show their products pose no danger. Stores that continue to sell tainted goods will send their patrons to the competition.
But no one wants poisoned food, and in the age of the Internet, bad news travels at the speed of light. A company invites disaster if it harms consumers. Customers can leave, and lawsuits can exact ruinous judgments.
After a 1993 E. coli epidemic caused by Jack in the Box hamburgers, the parent company had to pay tens of millions of dollars to victims. When Hudson Foods was implicated in a 1997 outbreak, it lost its biggest customer, Burger King, and soon had to sell out to rival Tyson Foods.
Major corporations like Kraft Foods and Nestle, reports BusinessWeek, now make a priority of knowing where their ingredients come from and testing them for safety. ConAgra Foods, which had to recall Peter Pan peanut butter because of salmonella, spent $15 million to prevent a recurrence.
After last year’s outbreak of E. coli was traced to California spinach, handlers of leafy greens forged an agreement whose signatories must adopt tough sanitary practices — monitored with inspections that they pay for through voluntary assessments. Some 99% of the state’s leafy greens are now covered.
Does the private sector do a perfect job on food safety? Of course not — but no system created by human beings is infallible. Government falls way short of perfection in all sorts of areas, whether it’s leaving New Orleans vulnerable to hurricanes, operating crime-infested public housing projects or building bridges to nowhere.
Those advocating a busier FDA take it for granted that more federal enforcement would mean safer food. But history offers few grounds for such faith.
In his new book, "Government Failure Versus Market Failure," economist Clifford Winston of the Brookings Institution strongly questions the effectiveness of government safety regulation of workplaces, consumer products and medicines. In all these areas, he says in an interview, "there is little evidence that 1) there’s a major problem to be solved or 2) the government has significantly benefited consumers and workers."
One reason is that no government agency can monitor everything that needs monitoring. Food imports alone amount to 25,000 shipments every day. David Acheson, recently named to the new job of FDA commissioner for food protection, told The Baltimore Sun, "Right now, we inspect 1% of food imports. If we were to inspect 2%, would that problem go away? I don’t think so."
Notwithstanding the relatively small federal role, Americans understand that the food supply is exceptionally safe. Even during an outbreak of food-borne illness, we continue to shop with great confidence. If E. coli is found in spinach, we assume we’re safe eating hundreds of other foods — and with very rare exceptions, we’re right.
No surprise there. As the father of economics, Adam Smith, wrote in 1776, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." Their own interest forces them to worry about safety, and that incentive is the best protection we could have.