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Pundit’s Mailbag — The Ethics Of Employees in Private Enterprise Versus Public Institutions

Jim Prevor’s Perishable Pundit, June 16, 2010

Our recent food safety piece questioned whether giving more power to the FDA was, in fact, an effective way of increasing food safety. In questioning the assumption that government is the solution to the problem, we seem to have inadvertently angered some government employees:

I read your article, “How to improve Food Safety,” published in The New Atlantis and, as a Registered Environmental Health Specialist, I’m offended at your assumption that we are all crooks. That assumption is the most absurd and unsubstantiated claim you made. You owe all of us that you have offended an apology.

— Jim Schmidt
Registered Environmental Health Specialist (REHS)
Deschutes County Environmental Health Division
Bend, Oregon

We certainly do apologize to Jim Schmidt and to anyone else who felt we made an assumption they were “all crooks.” This being said, we have to confess that we have reread that piece many times and can’t possibly conceive of how anyone could think that the piece accuses any group of people of being “all crooks.”

We assume Jim Schmidt is referring to these three paragraphs from the piece:

The best federal agency to enhance food safety is not the FDA but the FBI. Few buying operations have the capability to have their own personnel inspecting and monitoring producers along today’s global supply chains. The solution is to rely on third-party certification agencies. Trade buyers can establish their own standards or agree to accept other well-recognized standards, such as those of the British Retail Consortium. Adherence to these standards is then confirmed by various independent auditing groups. This is essentially the same mechanism the USDA uses to implement organic certification. The problem is that there is widespread corruption associated with these certifications, especially in areas such as China, Eastern Europe, and many developing countries, though auditors that are less than rigorous are also well known in the United States.

The corrupt sale of certifications poses a fundamental threat to food safety, and switching to government inspectors doesn’t solve the problem. First, the U.S. government has no authority to run inspections in China. Second, if the government were to use locals in other countries to run inspections, it would face the same problems as a private auditor — keeping the loyalty of local employees whose family, clan, and national interests all compel them to approve facilities and products. Third, whether through sloth or corruption, there are all too many examples of government inspectors not doing their jobs right here in the United States — from rats running wild in a KFC that had been inspected just the night before to horrid conditions at the 7th Street Market in Los Angeles to a payola scandal at the Hunts Point Produce Market in New York.

Beyond establishing a proper liability regime, increasing the reliability of food safety certifications by rooting out bribery and corruption is perhaps the single most valuable contribution the federal government could make toward food safety.

Jim Schmidt’s letter is a little unclear as to who, precisely, he thinks was accused of all being crooks. We take it to mean that he is saying there was an implication that all government employees are crooks.

For the record, we would suppose that the incidence of crookedness among government employees is pretty similar to the incidence of crookedness among private sector employees. Yet it strikes us that such a claim — hardly objectionable — if in fact widely recognized and incorporated in the selection of different policy options would actually cause a sea change in the weighting of private vs. public based options.

What advocates of more governmental authority often do is contrast an idealized world in which government is presumed to suffer from no flaws with a real world standard for business behavior in which people sometimes make mistakes, sometimes are co-opted, sometimes are corrupt, sometimes operate without budgets capable of doing what they might like to do, sometimes pursue personal selfish motives rather than follow institutional policy and sometimes are downright evil.

So, if the many private inspectors and auditors that visited the Freshway Foods plant did not prevent a food safety outbreak, many turn, almost instinctively, to suggest that we should have a government inspector there.

Yet this is completely unsupported by any facts. We know that meat plants can’t operate without government inspectors on the premises — yet this doesn’t stop E. coli outbreaks in hamburgers. More broadly, we just suffered a meltdown in the banks — despite an intensity of bank regulation almost inconceivable in the food industry.

We can have a lengthy discussion of why this is so; there is a long list of academic literature on how regulatory agencies come to be co-opted by those they regulate, and theologians and ethicists have long opined on the challenge human beings have in practicing virtue.

The important thing, though, is to realize that this view of the world — the private sector is presumed to be flawed whereas the government is assumed to behave correctly — is not an accurate view of the world, and holding this view functions as a kind of unfair “thumb on the scale” weighting public policy in favor of governmental solutions.

A more rational approach would see both private and public actors as subject to error, corruption, etc., and so would see plans to change the incentive structures as crucial to the ultimate success of the policy.

We never said, and don’t believe, that all government inspectors are crooks, just that crookedness is a failing of both those in the public and private sectors and that recognizing this has profound implications for the choice between various public policy options.

Many thanks to Jim Schmidt and the Deschutes County Environmental Health Division for taking the time to write.

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