By refusing to allow private meat packers 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 its beef for Mad Cow disease but state regulators refused to sell Creekstone the necessary testing kits to test all of its meat. The firm built a first of its kind testing facility directly in their meat packing facility and hired the necessary personnel to do the testing, but when they tried to buy the test kits, they government refused to sell them any. The state claims that testing all the meat is unnecessary, but this begs the question of why not allow Creekstone to buy the kits and do it anyways, even if it is unnecessary?
Obviously the state took this position because other meat packers didn’t like the thought of competition from Creekstone so they put political pressure on the USDA to prevent Creekstone from conducting its inspections. Further, the USDA was happy to oblige because it doesn’t want to see other meat packers begin inspecting their own meat since this would put USDA inspectors out of work.
Just as an FYI, a 1999 study reported that 76 million people are impacted by food borne illnesses annually in the US. The CDC has since changed how it calculates food borne illnesses to reflect a lower number that it reports to the public annually. Clearly government inspections are working!
In the following presentation, starting at time 46:00, historian/economist Murray Rothbard targets the meat packing hysteria of the early 1900s when Upton Sinclair’s The Jungle was released. You can listen to Rothbard explain the true nature of food regulation in the US at time 46:00 here.
Some of the highlights include:
1. Government inspections added a large fixed operating cost to producers due to the administrative overhead. While this may sound counter-intuitive, this effectively serves as a large barrier to entry into the meat packing business. The smaller packers do not have the economy of scale to be able to absorb this fixed cost so they end up being run out of business by the large producers because the small guys necessarily need to raise the price of their meat higher to account for the additional cost.
2. The Europeans, at the time, 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 US meat packers had to have their meat inspected anyways by private inspectors if they wanted to be able to export their meat. By lobbying the US government to inspect their meat, the US large meat packers could pass the cost of this inspection process, that had to happen anyways, on to US tax payers. This served to socialize inspection costs for the large US 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 meat packing operations out of business.
3. The inspection seal effectively serves as a fantastic marketing gimmick. It provides a false sense of security to US consumers and legitimizes the meat processed as being approved by the US government.
Jonathan Ogden Armour, President of Armour and Company, one of the largest meat packing 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 price food since 1900.
This article first appeared on PolicyMic.com. This is the unedited version submitted by the author.