Thursday, March 17, 2011

Maine town deregulates safety laws for local food

Earlier this month the town of Sedgwick passed an ordinance to exempt local food producers from various food safety inspection requirements and other consumer protection rules.

Despite the supporters being the usual nutty locavore Luddites arguing the same pseudoeconomic drivel, I think this story stumbles in a positive direction by bringing some deregulation into the marketplace.

I don't know about specific examples in agriculture, but most large industries pull something called "regulatory capture" where big companies write the regulations to drive out competitors. It's the small companies that usually lose because they can't pay the higher overhead costs created by the regulations. It's a classic Bootlegger and Baptist story.

This ordinance attempts to circumvent that. I don't like that it gives special rights to small companies. I would like to see all companies treated the same under the law, but at least this move gives some companies justice, while others are still harmed. As I've written before, regulation is often unnecessary because companies that wish to keep customers must consistently put out a good product. It doesn't matter what size the company is

What I find unrealistic about this ordinance is that it declares the town has the power to overrule federal and state laws. Section 6.1 reads:

State and Federal Law. It shall be unlawful for any law or regulation adopted by the state or federal government to interfere with the rights recognized by this Ordinance. It shall be unlawful for any corporation to interfere with the rights recognized by this Ordinance. The term “corporation” shall mean any business entity organized under the laws of any state or country.

Emphasis added is mine.

I'm not a legal expert, but it's my understanding that lower municipalities can not declare that state and federal laws no longer apply to them. Look at the federal raids on marijuana clinics after California legalized medical use of cannabis. The FDA may strike back.

If town ordinances could nullify existing laws, wouldn't there be a push to buy a few plots of cheap land in one of Maine's unorganized territories, declare it a municipality and legalize drugs, gambling and prostitution?

The ordinance was written as a template to be passed in multiple towns in Maine, and if enough towns attempt to succeed from food safety laws, federal and state agencies will crack down on them. Until then, it looks like Maine will get a taste of the free market.

The locavores like to make a big deal out of things being "natural." Well, this ordinance will create a great natural experiment in free markets. Even though I don't think smaller farms are any cleaner or safer than large ones, I don't expect to see hobbled masses schlepping to the hospital after consuming raw milk and grass-fed beef.


  1. Mike, out of curiousity would it change your opinion at all if you found out some larger, factory farms and cooperatives in other parts of the country did have regulatory captures in place? (That literally wasn't a rhetorical questionn by the way). But the way some of these lager farms and cooperatives operate it wouldn't surprise me in the least. Not to mention that in your piece you already established that regulatory captures are used to essentially do nothing more than drive out smaller competitors.

  2. Let me be clear. That wouldn't change my opinion much because I believe regulatory capture is the default position of most large industries. I simply don't know the specifics in this case, but I already assume it's there. There are also farm subsidies that distort the market as well.

    The reason I don't give this my full support is it is a band aid, not a cure. I don't like using unfair legislation to fix other unfair legislation; I would rather have the original unfair legislation taken away.

  3. I've always said we need less regulation. Let's let a few more Decosters loose on the world. The magic market will sort it all out.