A friend of mine mentioned to me today that they are in favor of regulations that force restaurants to display the nutritional info for all of their menu items. I was mulling that topic over on the way home, and like I did regarding an "assault weapons" ban
decided to write a post articulating my views.
As opposed to my friend I am against such regulations, and for a handful of reasons. Here are a few of those:
Such regulations misallocate capital in our economy
- Such regulations misallocate capital in our economy
- Laws like these always have contrary unintended consequences
- You don't need to coerce people to act in their own self-interests-- they do that automatically
- Every law inhibits our freedom-- the trade-off simply isn't worth it in this case
On the first point, let me provide a very real scenario that plays out every day all across the world. There is a restaurant owner, let's call him Joe. He operates Joe's Bar and Grill, which he founded fifteen years ago and has been expanding through investment. On average, he has a thousand dollars per month in profit-- capital-- which he spends to grow his business.
What might he spend that capital on? Well, a nearby competitor introduced some new menu items that he knows are doing quite well-- so one month he invests in new ingredients to experiment with some new items of his own. Another month, he invests in some new knives, so he can more efficiently cut the onions that are in so many of his dishes. Another month he expands his seating area because business has been so brisk. Another month he hires a bus boy to keep the new tables clean. He's had a number of people calling in asking about wheel chair access, so he saves six month's worth of profits and installs wheelchair access to his restaurant.
What do Joe's customers not value? Well, not one person
has asked Joe to print nutritional information for his meals. And so he hasn't ever invested the capital in doing so-- it's not worth it because his customers don't care about it as compared to other priorities.
At each juncture, the one person in the entire world
who knows best about what to invest into Joe's Bar and Grill is Joe
. He's the one most vested in making his customers happy. He's the one with his own monetary and psychic capital on the line. He's the one dealing with and talking to his patrons day in and day out. He's the one that best knows the local status of his community and competitors. Joe is, by a mile
, the one who is most able to make decisions regarding his restaurant. And the allocation of capital, by Joe and into his own business, is going to be the most efficient when made by him
Now, let's say we pass a regulation requiring Joe to create new menus with nutritional information every time he changes a recipe, creates a new entree, or switches sourcing for an ingredient, such as his bread. Let's say these costs come up to 300 dollars per month.
Instead of expanding his menu to stay competitive, Joe has to spend that capital-- both dollars and time-- filling out government paperwork, getting all of his food tested and retested for caloric contents, and maintaining and printing new menus. His competitors, who have entrees that change less frequently, or who are much larger (McDonald's) and can take the hit more easily, get ahead, and Joe's business suffers. Rather than expanding his seating over three months, between the regulatory costs and his now slowed business, it takes him a whole year to expand. And because it took him so long to expand his seating, rather than building that wheel chair access, he eschews the idea altogether.
Rather than Joe-- the person closest to, most vested in, and most knowledgeable about-- deciding how to allocate his finite profit, a bureaucrat has decided for him. And the capital is hence wasted on something that Joe's customers, frankly, don't care about-- otherwise he'd have already printed the nutritional info on his own.
Joe is a small restaurant owner. But the same example applies to restaurants managed by large corporations. They are coerced, forcefully, to expend capital towards things they wouldn't normally have. This malinvestment has a very real, serious cost to our economy.
During Obama's first term, 11,700 new pages of regulation were added to the books, pushing the capital cost of compliance across the economy to 1.7 trillion dollars
. As you can see in the case of Joe's Bar and Grill, that's 1.7 trillion dollars that was malinvested into either partly or wholly unproductive uses. That means fewer businesses, less profitable investment, and fewer jobs. What's more, every last one of those 11,700 pages came about in "nickle-and-dime" fashion via well-meaning laws just like this "nutritional info" regulation. Slippery slope indeed.
Laws like these always have contrary unintended consequences
After the recent school shooting in Connecticut, Obama and his Democrat allies started pushing for additional gun control. Simultaneously, gun and ammo purchases skyrocketed
, with firearm stores and vendors seeing business the likes of which they'd never seen before, and manufacturers totally unable to keep up with the flood of demand.
Ultimately, the Democrats utterly failed in their quest to pass even a single sentence of additional regulation at the Federal level. But even with just the talk
of new laws, their crusade ended in the exact opposite
of what they'd intended; indeed, their purported goal was to have "fewer guns on the streets"-- and instead they wound up with record numbers
of guns on the streets.
You could go through practically every law ever created by a politician and find the same story of unintended consequences. No human being is omniscient enough to know what the outcome of coercive laws, enforced at the point of fines or imprisonment, will actually be when put into motion. Therefore, the number of laws passed should be as few as possible-- it's better to leave well enough alone, and let local communities and individuals solve their problems.
The same logic applies to forcing local restaurants to print nutritional info. Who knows what kinds of strange and detrimental, totally unforeseen consequences would stem from such a law?
You don't need to coerce people to act in their own self-interests-- they do that automatically
This one is self-explanatory. I don't necessarily agree with, but can at least understand the reasoning behind, laws that prevent people from not acting in other
people's interests. For instance, a business owner might have a smoke-belching factory that's poisoning the populace, even if he happens to live in another city and isn't necessarily impacted negatively by the pollution.
But if the pollution is poisoning his own products and, thus, customers
, there is absolutely zero point in passing regulation forcing him to fix his products-- he'll do that all on his own!
In general, there is no purpose to inhibiting the freedom of everyone to coerce people to act in their own
self-interest. The entire concept makes no sense.
Every law inhibits our freedom-- the trade-off simply isn't worth it in this case
As I wrote about here
, every law we pass is, by definition, a reduction in our freedom. Liberty should be the one thing that we hold most dear, and sacrifice only when the probable gains far
outweigh the loss of freedom.
In this case, I simply do not see-- as I explained with the previous points-- the gains worth having a bureaucrat tell every single person in the entire country who happens to own a restaurant what they can and cannot invest their profits-- earned by their own hands, hard labor, and entrepreneurial foresight-- in.
In fact, not only can I not
see that the gains outweigh the costs, but I can't see any gains at all; rather, I think the institution of such laws would be an absolute net loss
to society, on top of the reduction in freedom!