E.coli Breakout In AB: Another Failure of the Corporate Welfare State

[This article originally appeared on the mises.ca blog on October 1, 2012]

As sure as the seasons change every year, so comes news of bacterial contamination in one CFIA-monitored processing plant or another. This time around the blanks are filled by “E.coli infested meat products” and “XL Foods, from Alberta.” The average person is daily indoctrinated by notions that Rotten Capitalists will do anything for a buck. Thus, conventional wisdom says that governments need to intervene and protect the gullible public from predatory corporations. So, when it comes to our food it has to be marked with the Government’s stamp of approval. Enter the Food and Drug Administration (USA) and the Canadian Food Inspection Agency—two of the most powerful and overreaching agencies in North America. How did they come to be?

The mainstream record of history regarding meatpacking holds that the meatpacking industry was unregulated before the passage of the Federal Meat Inspection Act (USA), which resulted in unsanitary conditions placing the public at risk of disease. Upton Sinclair’s The Jungle increased awareness of the terrible conditions in the meatpacking industry and the awakened public urged a revolted Theodore Roosevelt to pass meat inspection legislation. The large meatpackers were against the legislation and did not support the actions of Congress. Indeed, the Neill-Reynolds report confirmed the disgusting picture of the meatpacking facilities and sealed the nail in the coffin, reaffirming the need for regulation and the inability of the free market to regulate itself. (Source)

The meatpackers, however, were not all that unhappy:

The big packers were actually enthusiastically in favor of the regulation. At a government meeting with the large packers, the packers responded to the regulatory proposition with loud applause and praised as a “a wise law” which must be enforced universally and uniformly.
The packers had lobbied for regulation of the industry for decades. The book by Sinclair gave them an opportunity to get their bill passed through the Congress at last. There were a few reasons for the meatpackers to want government regulation:
1) Government inspection increases operating costs – Though this seems counter-productive, imposing a large fixed cost on competitors is advantageous to big businesses, because it establishes market barriers that prevent new players from entering the market, thus helping the large trusts gain a larger market share (perhaps this was in retaliation against antitrust claims made by smaller, local meatpackers against the trust, which were proven false as well). The imposition of a fixed cost is significant because entry into the market had in fact been relatively easy without many barriers.
2) Stamp of approval to overcome European embargo of meat – Europe had begun passing protectionist bans on American meat under the guise of “diseased meat.” The large packers were troubled by this, as they did not want to lose the foreign markets. To circumvent this measure and combat claims of the European governments, the meatpackers wanted a government stamp of approval that would signal safe meat and hence tear down European barriers to meat importation from America. (Emphasis added) (Source)

According to the Canadian Press: “E.coli bacteria was first detected at the XL plant in Brooks, Alta. on Sept. 4, but it wasn’t until three weeks later that the CFIA suspended the plant’s operating license until measures are implemented to ensure its products are safe.” In the meanwhile “the Canadian Food Inspection Agency made dozens of additions on Sunday to its list of possibly contaminated beef products which came from an Alberta plant.” So, the publically funded agency whose task we are told is to prevent the sale of possibly contaminated food to the taxpaying public allowed product to flow out of a plant where a bacterial outbreak was occurring. So much for Government looking out for the public. Having all it can do, the CFIA has resorted to depending on the free market to soften their blunder: it “has made the list of stores and products affected by the potential E.coli contamination so long that consumers are now advised to inquire at the point of purchase whether the beef they’re buying came from XL Foods.” [Emphasis added]

A combination of ignorance of how free competition works, socialist indoctrination in schools and the overwhelming propaganda in the media by the Government-Industrial Complex ensure that people can’t look at the issue in a rational light. There is a simple question that a person needs to pose: Would I buy food from a source that I don’t trust? Communities got along just fine with their local butchers and corner store grocers for quite a while before the Government got their sticky fingers into it. People frequented the shops of those who provided sanitary products, and became acquainted with their owners. It’s how communities were built. Person-to-person relationships become unnecessary when we look for the FDA’s or CFIA’s stamp instead of building relationships with our food suppliers. This is no coincidence. Tight knit communities are the bane of Big Government’s existence. People’s loyalties to family, church, or local organization cut into Government’s ability to draw support for its schemes, which naturally revolve around graft, kickbacks and generally unearned profits for those close to the ruling circles.
According to CP, former Finance Minister, Liberal MP Ralph Goodale has unsurprisingly “blamed the E.coli scare on changes to the meat inspection system introduced by the Harper Conservatives.”

Despite a hundred year-long involvement, Government supervision of food producers has not stamped out instances of the most common food poisoning causing bacteria, such as Salmonella, Listeria, E.coli O157, Campylobacter or Clostridium perfringens. A major reason why this is so, is the lack of open competition. To be sure, the limited number of players on the market at present have the safety net of the de facto cartel to keep them safe in case of a major failure. Case in point was the Maple Leaf Food’s listeriosis outbreak of 2008 when despite the grand scale of the outbreak, Maple Leaf was able to restore itself on the market, because the competition did not have the capacity to sweep in and punish them for the slip up.* The lack of capacity among the competition was a direct result of the entry barriers imposed on newcomers in the industry: your local butcher or pig farmer can’t pay the licensing fees and figure out the administrative labyrinth to get Big Brother’s stamp of approval. For similar reasons—time lag and cost to approve additional facilities—Maple Leaf’s big-time competitors could not ramp up production enough to drive them out of the market.

Deregulation is not the dirty word it has come to be. Next time you hear someone calling for more regulation to industry, ask yourself who stands to benefit from it, because you, the consumer, sure as hell won’t. In the particular case of the food industry the lack of competition due to regulation allows the existing suppliers to keep prices higher and quality is allowed to be kept lower than it would be in perfectly free competition.
This latest episode of food contamination in a government supervised plant proves yet again the point that when Big Brother watches over the public, he does it strictly for his own benefit, not the public’s.

*Some would argue here that Maple Leaf’s employees would have been the victims here, since they would have been left jobless. There are two things to consider: (1) The competitor moving in to replace MLF would need to hire experienced personnel, and the persons who lost their jobs would have an advantage over other candidates. (2) The listeriosis outbreak was their fault. Perhaps no-one’s in particular, but the fault of the collective body of MLF’s employees. Therefore, them being kept out of the food supply industry may be a service to the community. In a free market those people are sure to be re-hired somewhere else.