Thursday, 2 June 2011

On New DOH Regulations

"The Department of Health (DOH) yesterday said it was in the process of proposing regulatory changes to require food and beverage manufacturers of a certain scale to hire technical experts to ensure that their food safety is up to par."
Oh really? And where are these "technical experts" going to come from?
"Based on government statistics released last week, the nation’s unemployment rate was 4.29 percent last month, the lowest in 31 months. However, the unemployment rate for college graduates was 4.24 percent last month and 4.8 percent for university graduates or above. The same data also showed the number of overall unemployed was 477,000 last month, including nearly 220,000 people holding college degrees or above."
I must remember to inquire as to the age, educational background and starting salaries of these "technical experts" when they are eventually hired by the food companies.

Anyway, will this new regulation, plus the increased fines and prison sentences for violations, actually solve the problem - i.e. significantly decrease the risk of an unscrupulous or incompetent manufacturer using potentially toxic additives like DEHP or DINP?

I don't think so: forcing employers to hire extra staff to check the chemical ingredients of their products will not only increase their costs (and trying to avoid increased costs was exactly what was presumed to have motivated Yu Shen to add DEHP rather than palm oil* in the first place), but is an open invitation to corruption. An employer determined to cut costs by adding illegal additives could simply find some excuse to fire an uncooperative "technical expert", or to otherwise induce his or her cooperation - for example by suddenly becoming "unable" to supply the necessary testing equipment. Unscrupulous employers will also surely see the new regulation as a convenient means of shifting any legal fallout from their irresponsible cost-cutting onto the failure, incompetence or corruption** of the "technical experts" (likely to be wet behind the ears, 21 year old graduates of "food science" departments). I can just see this coming a couple of years down the line from now.

The Taipei Times' headliner today quotes the FDA's food division chief Tsai Shu-chen (蔡淑貞):
“Chemical engineers may not be as familiar with food sanitation regulations as food scientists, who should be at manufacturing sites to ensure that the food products manufactured by a company adhere to the standards set forth by authorities...”
Unless this is the flimsiest of buy-you-off stories, then I don't understand it. Surely such familiarity is easily achieved by simply having chemical engineers read the damn regulations? The regulation on emulsifiers I mentioned last night, for example, is simply a list of legally approved food additives which can work as emulsifiers. Their chemical formulas and properties are all in the public domain and can be easily acquired by anyone. What is required is the appropriate chemical testing equipment which will surely become "difficult" to supply either through costs or other "temporary inconveniences".

*Why was DEHP used instead of palm oil? Because the rise in the price of palm oil made it cheaper to use DEHP? And why has the price of palm oil been rising? Western demand for those stupid f*cking biofuels.

**Perhaps falsely alledged, or the result of entrapment (i.e. either the supplier or the food manufacturer pressurizes the young "technical expert" into speeding up their supervisory approval either with bonus inducements or some veiled threat of contract termination).


  1. Hi Mike,

    How would the situation be better under a deregulated system with a minimalist government?


  2. Steve,

    It would be better in that the market consequences would likely be swifter and more proportionate - is the short answer.

  3. Steve,

    I'm not sure how much of an answer you want, but you mentioned "deregulated system" and "minimalist government", so...

    It's not that it would be a "deregulated" system - if anything, it might even be somewhat more tightly regulated (especially if the businesses involved tended to attract the "health nazi" types). It might be more accurate to describe it as a "destatified system", or "marketized system".

    At any rate, any system of food safety regulation produced by the market could only be as strong as consumer demand for it, which in turn, presupposes access to information (and I think also, forums for public debate in which people can evaluate the information). Within a certification company, trade-off decisions will have to be made about which chemical compounds to ban and why. Let's say you're a division manager of one of these companies faced with the task of deciding whether to recommend a certain chemical compound for drinks be prohibited under the certification requirements. On the one hand, you have information on toxicity of a chemical compound relative to concentration for a given product. On the other hand, you have the safety concerns of your client's customers to consider (i.e. the retailers). Let's run some scenarios...

  4. 1) If your toxicity report declares the chemical dangerous at your client's desired range of concentration, then your decision is easy: you decide to prohibit and thereby increase your client's costs. But suppose your client consequently seeks out another, more lax, certification company in order to decrease his costs, will your decision come back to bite you? Perhaps - in the short run. Your former client is now having his product certified by another company and sold to retailers. Or is he? It depends on how strong the retailers' demand for safety standards is, which in turn, depends on the strength of demand from their own customers - the people who will drink the stuff. If consumer (and thus retailer) demand for safety standards is relatively weak, then perhaps your former client can get away with this. However, perhaps you think his business wasn't worth staking your company's reputation on; should the drink later cause upset among the buying public, then your competitor certification company will suffer the consequences thereby giving an incentive to both you and others to keep safety standards high.

  5. 2) Let's say your toxicity report shows that, at the low end of the concentration range acceptable to your client, the chemical compound is unlikely to pose any significant health risks to adults, but does pose something of a risk to children. Do you decide to approve its use at that concentration, on the proviso that the drink is marketed to adults, not children and carries a warning label about giving the drink to children?
    Or do you decide to prohibit anyway? Well it depends on the costs. How much does your client stand to save by using this chemical compound instead of the "safer", but more expensive alternative, and more importantly, can he fulfill your requirment to market the drink to adults rather than children? These questions are of course compounded with the question of how many such clients do you have and what proportion of your revenue do they comprise? Let's call it 40%. You probably can't afford to lose that business, and ultimately, you're not going to be able to certify every single product that comes to you as "100% safe", and neither are your competitors (neither is any government system). Some degree of reasonable trade-off is going to be necessary: you want to secure this large client's business, but on the other hand, you don't want to stake your entire company's future on it.

  6. 3) Let's say you decide that your client's business is so large that you are prepared to gamble your company's reputation and certify his products which you know contain that chemical compound in a concentration that is a potentially significant health risk to consumers. How likely are you to get away with this, and for how long? Well your competitors will already be suspicious for a start (or they should be), and will likely start buying your clients drinks in order to run their own tests on them and release any incriminating evidence to the newspapers. If your client's drink were to go on sale with your certification on the Friday, I'd bet your competitors could have you done up like a kipper by the following Monday. Of course, this presupposes that the journalists would actually be interested in reporting this sort of thing and that they would do so with integrity (i.e. not blow a story way out of proportion in order to further their own interests). But in a free market, journalists and investigative reporters will be subject to the same restraints as everyone else; since there is no chance* of your competitors using the journalists to appeal to the public for a government agency to be set up to monitor food safety "independently", the journalists would have to be content with what is supposed to be their function anyway: telling the truth with all the accompanying virtues that implies.

    *With a "minimalist government", the range of actions which a government can take (e.g. in interfering with the food industry) is limited - formally, by a constitution, and informally by the broader culture and the development of institutions such as law enforcement on the market. Whether such an arrangement is "meta-stable" is the subject of the anarchy-minarchy debates.

  7. Couple of other things I should mention, which I forgot:

    1) Advertising - your company's reputation for safety is what you are trading on and the ground on which you are competing with others and it may thus make sense for you (or your clients, or retailers) to advertise this. A high public profile due to advertising might help to increase your market share, but at the same time will make you more vulnerable to exposure of corruption and/or error. Same goes for your competitors.

    2) Let's suppose that your CEO decides to collude with your market competitors to certify products they know to be somewhat dangerous, but share the resulting spoils - what happens? He's either going to get found out by someone else within your company if it is sufficiently large (e.g. large shareholders, or large groups of shareholders, will probably have people inside the company to keep an eye on things), or the newly formed cartel will be extremely vulnerable to the possibility of the good people within those companies breaking away to set up new companies and undermining their former employers by exposure of their wrongdoings.

    3) On the stability of a minarchical government - perhaps one of the most important aspects to that would be the abolition of the demagogue-ically elected legislature. Remember, neither the U.S. nor the U.K. constitutional forms were created as "democracies" - the former was a "constitutional republic" whilst the latter was "constitutional monarchy". My use of the past tense is deliberate because "democracies", and effectively unlimited ones, are what they have become.


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