When I talk about wanting to dismantle government agencies people often claim that some regulatory agencies need to stay in place for our safety. One such agency that is often brought up is the Food and Drug Administration (FDA). People will tell me that without regulatory agencies such as the FDA all our food would instantly become poisonous and we would all die of every food born pathogen ever. Another agency that seems to be loved is the United States Department of Agriculture (USDA) who are in charge of various agriculture related regulations such as the process of certifying certain produce as organic. Neither of these agencies have proven themselves to be effective and, as this Mises Daily article explains, private certification entities would be far more effective:
Apparently, the FDA and the USDA have a stellar and unblemished track record of keeping the populace safe from tainted food and dangerous medicines.
Both lists are notable in length. What’s interesting when you think about it is the fact that neither agency received any form of punishment for failing to keep Americans safe. An utter lack of accountability is the biggest problem with government agencies. When a government agencie fails to fulfill its mandate they are usually given more power, more money, and more enforcement agents which creates an interesting conflict of interest as failures lead to rewards while success leads to more of the same. The reason for this inverse reward system is because government agencies usually receive funding based on the amount of fear they can generate and major failures generate a great deal of fear. As the article explains the same is not true for private agencies:
Private, third-party certifiers could inspect livestock and produce and affix their seal of approval only when certain standards are met. That the reputations of the inspectors and the farmers are truly on the line would preclude much of the graft and inefficiency that is a constant feature of the current system.
When a private ratings or certification agency screws up it’s their reputation that’s on the line and in such markets reputation is everything. If your agency is in charge of ensuring food safety and tainted foods certified by your agency get out in the open then it’s likely people will lose trust in your agency and thus you’ll not be in business for much longer. Thus private agencies receive rewards for performing well as more people will want that agency’s certification as it becomes trusted by more buyers. The accountability that is nonexistent in government agencies flourishes in the private sector.
The other problem with government agencies is that they’re overly bloated and extremely inefficient in providing their services. These inefficiencies lead to higher levels of expense as people who deal with the FDA and USDA know all too well:
There is a general consensus among those who are deeply devoted to such things that the USDA Certified Organic sticker is, at best, a limited indicator of the agricultural practices involved in the production of various foodstuffs. The USDA program is, like any government agency, bloated, inefficient, and inconsistent. It is rife with corruption and requires expenditures of time and money that preclude many small farmers from participating.
As a result, many small producers are eschewing the USDA label as simply not worth it.
The same is true of the FDA. Getting a drug or medical device approved by the FDA costs an exorbitant amount of money and takes many years. What this means is only large corporations (such as the much hated big pharmaceutical companies) can bring drugs and medical devices to market and the cost of those drugs and devices is extremely high in part to make up for the research and development costs of getting FDA approval. On top of that the years it takes to get FDA approval can cost lives when the drugs and medical devices are designed for use against life threatening ailments. Several years of approval time can literally means the difference between life and death for somebody who has been diagnosed with cancer.
In the case of USDA certification the free market is still allowed to operate and thus private certification agencies have sprung up that serve food growers who don’t want to deal with the expenses and headaches of getting USDA approvals:
The farm that runs the CSA (community-supported agriculture) to which I belong is explicit in their disclosure of their growing methods, all the while explaining that they have not received “official” organic certification. In short, there seems to be a general consensus among advocates of organic and sustainable agriculture that the government seal of approval is limited in its value.
In the absence of a reliable government organic-food regulatory agency, the market has provided several voluntary options. The Certified Naturally Grown program offers “a non-profit organization offering certification tailored for small-scale, direct-market farmers and beekeepers using natural methods.” They rely on voluntary participation and a peer-review system that is less expensive, less paperwork intensive, and more efficient than the USDA program.
Whole Foods Market has developed their own alternative for certifying certain production techniques for livestock and poultry, through a partnership with an animal-welfare nonprofit.
As I explained earlier these certification agencies has everything to lose which means motivation exists to ensure only those complying with their regulations receive their certification. Likewise these agencies do not have infinite funding and must ensure their operations run as efficiently as possible which lowers the cost of the services they provide. Though the best things about these agencies in my opinion is the fact that they’re voluntary and you only need to interact with them if you choose to do so.
Unfortunately the government has claimed a complete monopoly on the approval and certification of drugs and medical devices so no private competition to the FDA exists in the United States.
The next time somebody tells you that agencies like the USDA and FDA are absolutely critical to the safety of the American people remind them that the free market can not only provide the same services but can do a better job for less money.