Should Government or the Free Market Fix This?

red states rule

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Free Market Busts Taco Bell $1 Billion, But Times Wants More Bureaucrats

Posted by Mark Finkelstein on December 9, 2006 - 06:43.

"The expanding outbreak of E. coli poisonings in New York, New Jersey and several other states underscores the need for more rigorous regulation of the whole supply chain for fresh produce . . . Surely it is time to give government regulators the power and resources they need to ensure the safety of fresh fruits and vegetables." - NY Times editorial, Sickened by Fresh Produce, 12/09/06

"[Taco Bell owner] Yum Brands is feeling the financial fallout on Wall Street, as two analysts downgraded its stock, citing the potential effects of customers' food safety concerns. Shares fell $1.36 to $59.72 on Friday. The stock has fallen 5.6% in the last three sessions." - Taco Bell feels fallout from E. coli outbreak, LA Times, 12/9/06

Two NYC streets, two reactions to the outbreak of E. coli sickenings among people who ate at Taco Bell. On W. 43rd street, the Gray Lady of the New York Times looks at bad news as an excuse for government to expand its power. A few miles downtown, Wall Street exacts its own revenge, busting down the stock of Taco Bell's owner, Yum Brands.

Society obviously has an interest in preventing outbreaks of food poisonings. So let's consider which solution, the big-government one proposed by the Times, or the free-market one imposed by Wall Street, is likely to be more effective.

Under the Times' plan, we' have more government regulators overseeing the fresh produce supply chain. What happens to a bureaucrat who fails to detect a bad batch of lettuce? Probably nothing amidst all the mutual finger-pointing. At worst maybe a small black mark on someone's record, perhaps followed by a union grievance proceeding to fight it. And from perspective of producers or restaurant/supermarket chains? Some fines, that can always be appealed. How much would the fines be? Several thousand? $100,000? $1 million? $5 million?

In contrast, how has the free market punished Taco Bell and its corporate owner? You'll note the LA Times story reports the stock has lost 5.6% of its market value in the last three sessions. I checked YUM's market cap. It's currently $15.83 billion. That means before losing 5.6% it was $16.76 billion. You might say the free market has imposed a "fine" of . . . $930 million - close to $1 billion. It's also likely that from quality managers on up some YUM-Taco Bell people will wind up losing their jobs over this.

Some would point to the occurrence of the outbreak despite the predictable market reaction as proof that the free market doesn't work. The fact is that no system is perfect. The question is, in the long run, what does a better job of focusing the mind of corporate executives - a few more government employees picking through the lettuce, or the prospect of a Wall Street execution in the morning?

http://newsbusters.org/node/9559
 

Hobbit

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You know that this is a direct result of the organic food thing, don't ya? Growing veggies meant to be consumed raw in manure.
That's what I was thinking. I trust the chemicals far more than some of the 'natural' alternatives.
 
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red states rule

red states rule

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That's what I was thinking. I trust the chemicals far more than some of the 'natural' alternatives.
When they use this organic crap the food does not taste as good either.
 

William Joyce

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I just saw some British dude on TV telling me it's OK to go back to Taco Bell. Thank God. I missed the spicy chicken cruchwrap supreme. That thing is delicious.
 

Deornwulf

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I can remember when their slogan was make a run for the border. More like make a run for the bathroom. Now it could be make a run for the hospital!

Seriously though, free market will correct the problem.
 

glockmail

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I can remember when their slogan was make a run for the border. More like make a run for the bathroom. Now it could be make a run for the hospital!

Seriously though, free market will correct the problem.
The only time I've been inside a Taco Hell was to use their bathroom.
 

SpidermanTuba

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The question is, in the long run, what does a better job of focusing the mind of corporate executives - a few more government employees picking through the lettuce, or the prospect of a Wall Street execution in the morning?
The threat of massive fines and possible prison time can often influence the decisions of corporate executives, especially considering how much they have to lose.

This threat is part of the reason most corporations don't employ children, or screw people out of their overtime pay, or dump vats of toxic waste into the water supply.
 

glockmail

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The threat of massive fines and possible prison time can often influence the decisions of corporate executives, especially considering how much they have to lose.

This threat is part of the reason most corporations don't employ children, or screw people out of their overtime pay, or dump vats of toxic waste into the water supply.
Yes, yes. Save us, Queen Pelosi. :cuckoo:
 

wiggles

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The threat of massive fines and possible prison time can often influence the decisions of corporate executives, especially considering how much they have to lose.

This threat is part of the reason most corporations don't employ children, or screw people out of their overtime pay, or dump vats of toxic waste into the water supply.
Just see what happens to the profit margins once they've killed all the customers. That'll show 'em.
 

wiggles

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You know that this is a direct result of the organic food thing, don't ya? Growing veggies meant to be consumed raw in manure.
You think industrial farms have no manure on them?
 

trobinett

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I can remember when their slogan was make a run for the border. More like make a run for the bathroom. Now it could be make a run for the hospital!

Seriously though, free market will correct the problem.
Ever wonder why they stopped using that slogan?
 

glockmail

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You think industrial farms have no manure on them?
Having worked with farmers for several years, I can tell you that most large scale operations use chemical fertilizers because they are easier and cheaper to use. Having grown veggies myself for decades, I can also tell you that manure is the best and easiest on a small scale. The logistics of manure use on a large scale, however, are difficult, and as we now see, present some risk to the consumer.

My point is that the organic crowd championed this whole concept based on food safety, and due to the law of unintended consequences, ended up with a product that may be less safe, and I don't see them backing off on their stated claim. If this crowd was honest with the public, they would state their true intention, which is simple fear of chemicals and corporations.
 

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