Informing Consumers
When arguing with those on the left about regulating certain industries, oftentimes the discussion turns to whether the state should mandate that information be provided to the consumer. On the face of it, this kind of argumentation on the left comes off as reasonable. Whats the problem with insuring that companies provide important information that will allow consumers to make informed decision about their products. These kinds of regulations are very common in food industry.
For example, the recent health care reform legislation included mandates on food vendors to provide caloric information on their menus. That way consumers will be aware of how many calories each item is worth. With the so called epidemic of obesity it seems reasonable to have fast food companies post their calories on the menu items. Why would anyone oppose that kind of regulation. Its not like the state is being coercive, its simply making restaurants provide information that enables the consumer to make an informed decision.
The problem is that the cost to provide that information can be really high for a restaurant. As a result, larger restaurants changes, through economy of scale are able to diffuse the cost more effectively, than smaller chains. This makes the industry more static as the cost for innovation becomes greater and helps favor established chains over up and coming restaurants. Over Hot Air they do a good job of looking at the costs of this kind of mandate and show that its not as reasonable at it first appears.
This is just a part of the long discussion I had with Ken about the problems faced in this law. We both speculated whether a calorie disclaimer amounted to advertising, and whether restaurants would have to put lawyers on retainers as consumers (and perhaps competitors) drag them into court to substantiate the claims. For that matter, how will restaurants calculate these calorie counts? Can they simply use the numbers from their suppliers to calculate the nutritional data for the end product, or will they have to get lab testing done? As the video notes, every time they have an ingredient change, or even just a supplier, they have to recalculate everything — and then reprint all of their menu boards and literature in every location.
Regulation makes things less dynamic. Sometimes that a good thing other times its not such a good thing. I suspect we are going to find out that forcing companies to post the calorie values of their menu items will turn out to be bad regulation. It wont stop the so called obesity epidemic while causing food to cost more and hinder menu innovation.Ultimately this regulation like most regulation mandated at the federal level is just no reasonable.