Thursday, January 29, 2009

Peanut Butter And Jelly

What could be more American? Sadly, recently this might be:

The Georgia food plant that federal investigators say knowingly shipped contaminated peanut butter also had mold growing on its ceiling and walls, and it has foot-long gaps in its roof, according to results of a federal inspection.

More than 500 people in 43 states have been sickened, and eight have died, after eating crackers and other products made with peanut butter from the plant, which is owned by the Peanut Corporation of America. More than 100 children under the age of 5 are among those who have been sickened.


Officials from the Food and Drug Administration and the Centers for Disease Control and Prevention traced the outbreak to the Peanut Corporation of America plant in Blakely, Ga. On Jan. 9, investigators descended on the plant for a thorough inspection, which was completed Tuesday.

The report from the inspection, first posted on the Internet by Bill Marler, a lawyer, cites 12 instances in 2007 and 2008 in which the company's own tests of its product found contamination by salmonella.

In each case, the report states, "after the firm retested the product and received a negative status, the product was shipped in interstate commerce."

It is illegal for a company to continue testing a product until it gets a clean test, said Michael Taylor, a food safety expert at George Washington University.

The believers in the free market religion argue that we don't need government regulation of businesses; it just burdens them down with red tape. Instead, if consumers don't like a firm's products the firm goes bankrupt. The free market polices itself!

And it does, in a way. But note that it took eight deaths for us to get to that point, and the firm's self-testing was not used to keep the consumers safe. Self-regulation always has that problem of mixed incentives having to do with costs and revenues when the firm acts one way rather than another way. This particular firm decided that the positive results could be ignored. It has now paid the higher cost of doing so. But someone else paid a far, far higher cost.

This is all related to the way the financial markets were allowed to function, by the way. As I have written before, it helps to think of markets as card games. All such games must have rules and the rules must be enforced. We have decided to do away with most rules and now we are reaping the harvest from that.