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Pundit’s Mailbag — Are Public Sector Food Safety Inspectors More Apt To Cut Corners Than Private Inspectors?

Jim Prevor’s Perishable Pundit, August 10, 2010

Our piece, Pundit’s Mailbag — The Ethics of Employees in Private Enterprise Versus Public Institutions, brought this note:

1. While FDA and FSIS have no official authority to inspect foreign establishments, some of the import regulations require that a foreign manufacturer’s safety system be substantially equivalent to those in the US. And foreign countries will allow US inspectors into their facilities to verify such claims.

2. Your assumption that “….we would suppose that the incidence of crookedness among government employees is pretty similar to the incidence of crookedness among private sector employees…” may be true but the consequences of being discovered can vary. A private employee might just suffer loss of a job, while the federal employee could be subject to prosecution. It’s been my observation, having worked in both sectors, that the former might be a little more apt to “cut corners” than the latter.

Walter A. Hill, Ph.D., FAAM
Dean
College of Agricultural, Environmental and Natural Sciences
Director
George Washington Carver Agricultural Experiment Station
Tuskegee University
Tuskegee, Alabama

We deeply appreciate Dean Hill taking time out from what must surely be a most hectic schedule to share his insights with the industry.

Dean Hill is, of course, correct that even without legal authority to go inspecting around the world, many countries have found it in their interest to allow US inspectors onto their soil.

Often these are government-to-government affairs where the US regulators gain confidence that, say, the Swiss regulatory system is as good — or better — than ours.

In places where the FDA is not satisfied that the foreign standards are equivalent to the US, the approach is problematic.

First, the whole practice of getting permission and authorization makes the kind of surprise inspections one wants to see almost impossible.

Second, the cost is tremendous. USDA inspectors are in meat plants every single day. Even assuming we could get authorization to do this, creating a corps of expatriate USDA (and FDA and FSIS) inspectors would cost a fortune when adequate housing, schooling for their children, trips home to visit family, etc., are taken into account.

Third, the cost itself may be an illegal trade barrier if we try to pass it on to the exporter.

Fourth, we have no basis to assume that isolated government inspectors will be immune to corruption anymore than we should assume that private sector inspectors are immune to corruption.

Fifth, the whole program depends on one knowing far in advance that one wants to export to the US, and so US government clearance is important. The advantage of private global standards is that anyone can decide — “I’m willing to accept product certified to BRC Standards.” If the Spanish broccoli crop is wiped out, one can buy EuroGap certified broccoli from California, if we needed broccoli precleared by a particular government, we wouldn’t be able to respond to a crop failure. The same goes for US attempts to purchase overseas.

Sixth, any requirement that foreign product be certified by US government inspectors would be seen as a trade barrier and reciprocated.

So, while government inspectors can be useful in verifying government inspection standards in other countries and even useful on dealing with specific food safety issues — as when they flew down to Honduras to try to deal with the melon situation — they are unlikely to be useful as the day-to-day international inspection standard. So, to the point of our article, private companies and organizations are going to be used, and the government’s role is its traditional police power of protecting against fraud.

To Dean Hill’s second point — the relative likelihood of private sector vs. public sector employees being corrupt — the Professor makes a good point in saying that government employees may face stiffer penalties if corruption is discovered.

Countering this is that lower salaries in government may create both need and resentment. Plus private organizations are more likely to suffer serious consequences from corrupt employees than government agencies and so have serious incentives to act to prevent corruption. If a local “Weights and Measures” inspector is corrupt, weights and measures will still be here tomorrow. A private audit company could close credibility in the marketplace and have to close.

One important issue is opportunity. We worked in retail and found a fairly high level of corruption among local government inspectors. First, in these massive stores there is typically some violation if you want to find one. Second, the cost of the violation — either directly such as fines or indirectly through business closings and reputational damage — is often paid by the shop owner who is on premises.

So, if the cost of keeping the inspector happy is that you let him walk out with a case of frozen chicken, many storeowners aren’t going to put up a fight. If he demands more, many will feel obliged to pay it.

All of this strikes us an important distinction between private and public corruption. If a buyer demands a payoff and a vendor doesn’t want to get involved, the vendor walks away. He may lose some upside in dealing with that company, but, as the saying goes, there are other fish in the sea.

In contrast, if a government inspector is corrupt, one is compelled to deal with him. Accusations of corruption are tough to make and hard to win. To a still-unappreciated extent, the whole Forbidden Fruit investigation was every bit as much of an extortion story as a bribery story.

In any case, our contention was that food safety advocates and others involved in public policy often assume that private actors will act in their own best interests while they assume that public employees will always act in the public interest.

Regardless of which sector of employees is more likely to be corrupt, it is not debatable that, sometimes, public employees are mistaken, negligent and, yes, corrupt. Therefore any estimate as to the efficacy of a public policy that depends on public employee intervention needs to incorporate such expectations in anticipating the efficacy of the measure.

Our point was that, instead, advocates looked at real world failures of the private sector and contrasted them with idealized performance records for the public sector. An equalization of approaches would be more accurate and would lead to different policy outcomes.

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