Afternoon roundup

The closing of the browser tabs:

• The Commerce Commission blocks NZ DJ software company Serato from selling out to Japanese DJ product company AlphaTheta. One lesson: don't do tech startups in NZ if your exist strategy is selling out to a larger company.


• New Zealand's bureaucrats have apparently been considering a harmonised set of plain packaging rules on infant formula with Australia, which would force an important part of dairy processing overseas. Hopefully the government stops this one while issuing a pretty hard "please explain" to the officials involved. 


• Aaron Smale's reporting on the Inquiry into Abuse in Care has been superb throughout, and is great again this morning at Newsroom. He asks the right questions about state accountability. I expect that those who helped cover up the state's abuses are more likely to earn knighthoods than to face charges. 


• Gas shortages have Huntly importing more coal. 


• The Department of Conservation has more opportunity than any other part of govt I can think of to realistically improve its own finances through user charges and concession auction. Newsroom reports this morning that they're facing "huge financial pressure". There is an obvious solution here.

Food fights

Hoisted from the comments, here's Donald Ellis's take on NZ's food safety regime.

This is a slightly nuanced situation. The newspaper report seems to say that one part of the DHB shut down the operation of another part of the DHB and are using the new legislation as a reason. To be honest there is nothing new about caution over freezing food and re-heating it for later service. So I read it as the DHB auditing all of their food handling practices (spurred on by the change in legislation) and finding a practice they would have been unhappy with at any time had they known about it.

Although the new Food Act is largely a re-packaging of the old Food Act there are two relevant new inclusions in the legislation. The first is a specific reference to applying appropriate standards to food prepared for "vulnerable populations". This provision clearly applies here. The second is the duty of regulatory authorities to "... promote standards and control mechanisms that are, as far as practicable, risk-based and science-based...".

The new Act was sold to the industry as liberating because compliance requirements would now reflect the actual risk of each operation. Market stallholders would be allowed to prepare food in their home kitchen. We could do away with the nasty old "one-size fits all" regulations. Unfortunately the likely outcome will most likely be the complete opposite. From what I have seen so far a multitude of standards promulgated by Foodsafety NZ will simply be enforced on everyone with no reference to actual risk (let alone science).

This story in Tokoroa is just the beginning of a general shutting down of the food industry rather than a liberation.

Not the Outside of the Asylum

Tokoroa Hospital has been freezing surplus patient meals for distribution through Meals on Wheels. Sounds great, right? But the health & safety brigade have shut it down: it would have to be frozen in a blast freezer instead of the hospital's standard freezer.

"Sometimes I have been picking up 10 meals a week. I take them out to Mangakino to some of my clients because there is no Meals on Wheels out there," she said.

"Often they may be living on their own, have dementia or disabilities so they are unable to cook their own meals and for those who can't get Meals on Wheels this is their lifesaver.

"They have everything in there a person needs. They are healthy, nutritional, tasty, and home cooked.

"I am very very saddened by the fact that this is going to stop as a lot of people rely on them."

She said the frozen meals were ideal for her clients as they could heat them up when she wasn't there.

"It is no good me taking a fresh meal from Meals on Wheels in Tokoroa because I would have to do it every day and at a specific time," she said.

"I have looked into the frozen meals at the local supermarkets but the cost is too great and the meals are not nutritionally satisfactory anyway.

"I also have clients with special nutritional needs and some of the supermarket meals don't cater for those either but these meals are made for hospital patients so they are perfect for my clients."

Better they go hungry I guess. 

Inside the asylum: food safety edition

Versions of cost-benefit that tally up all of the savings to a public health system from banning people doing things they like, and ignore the costs incurred by people banned from doing things they like, lead to this:

We reveal today that new Ministry of Primary Industry guidelines for food outlets require your hamburger to be cooked to fried or grilled to 70C internal temperature. As any home cook can tell you (or indeed, anyone with a copy of the Edmonds Cookbook sitting handy) 70C is, to all intents and purposes, nuking it to high heaven. What is left is a hunk of dried out, grey tyre rubber.

...Chefs around the country have no doubt been stewing at the new "guidelines", but it was executive chef Dan Fraser at the historic Duke of Marlborough Hotel in Russell who put a match to the flambé.

First he received an email from an MPI official. "You need to make some changes," he was told – the same stern message they were sending other restaurants and caterers around New Zealand.

And it isn't just hamburger:

Fraser said the rules will also cause issues for serving steak tartare, beef carpaccio, pate or chicken livers.

This is what you get when the government bears downside costs through the public health system and Vogons run things. If the justification is that people might underestimate risks of undercooked hamburger, then maybe you could make a case for putting warnings on menus about risks of undercooked hamburger. Maybe something like "Well done burgers are safest, but less tasty. We serve ours medium. Consider our non-burger options if that's what you prefer!" At least that version of things has some respect for individual preferences.

I'd written on this back in 2012. Minister Wilkinson was citing $162 million in costs of food-borne illness. A chunk of that was enforcement costs that, if anything, would have to rise with her new regime. As for the rest? Count the costs of illness, ignore the benefits of tastier food. Standard drill when you want a high social cost figure to justify compulsion. My post of 2012:

The bulk of the remaining tabulated costs are individuals' intangible willingness to pay to avoid a foodborne illness - about $100 million in residual private costs as estimated from NZ value of statistical life estimates. We can leave aside for now problems in that we don't have good prevalence data on non-reportable illnesses like norovirus that manifests as mild gastroenteritis; Applied Economics is very up front about the limits of inadequate data here. But by far the biggest part of the cost estimates comes out of willingness to pay measures.* That's important. Why? Because people are choosing, all the time, which dining establishments to frequent.

Suppose that there's a roadside falafel place with food I adore but that comes with completely known 1% risk that I'll get mild food poisoning. I eat there a hundred times, I get food poisoning once. But I keep going back because of the taste. If new food safety regulations mean the place shuts down, Wilkinson's measure says I'm better off because I'm saved those willingness-to-pay derived figures on the costs of mild food poisoning. But I've already specified that I knew about the risk and judged it worthwhile; I'm then necessarily worse off if I can't get a falafel. You can't easily use a willingness-to-pay measure to overturn a consumer's decision when consumer decisions underlie willingness-to-pay measures. You can perhaps make an asymmetric information argument; that tends to argue for random inspections and public posting of findings on facility cleanliness rather than for big compliance regimes.

So is the new regime worth the cost? That depends on the compliance costs that will be faced by small and mid-sized traders. Wilkinson assures us that small traders won't face onerous burdens, but I'd really prefer seeing proper analysis of the Bill from someone like Otago's Andrew Geddis. And we have to keep in mind that a substantial proportion of the costs Wilkinson cites might actually be voluntary choices consumers are making that, on lucky draws, yield tasty goodness any diminution of which consequent to regulation ought be counted against the Bill's possible health benefits. Banning me and others like me from having my hamburgers medium-rare might save the health system a bit, but it'll certainly cost me some utils. Equally bad is what a big fixed-cost regime would do to food startups. I really hope that the legislation isn't as costly on those two fronts as some folks fear; I'd love to see independent legal analysis.

Emphasis added.

Remember when National campaigned against the nanny state? I know it was a long time ago. I think they've forgotten too.

What's wrong with caveat emptor?

This was the kind of thing I was worried about when the new food safety bill came in:

Tourists flock to her [Biddie Fraser-Davies] 4.4-hectare farm 20 minutes north of Masterton to enjoy a unique, gate-to-plate culinary and farming experience. Each of her cheeses bears the name of the jersey cow whose milk was used to make it.

But earlier this month a letter from a ministry food safety official told her she had until November 1 to get a $3680 risk management audit, or be forced to close.

That sum amounts to about a ninth of her annual turnover from a business that produces less than a tonne of cheese a year and earns her about $33,000.

...

Her problems began with an appearance on TV's Country Calendar in 2009, after which government food safety inspectors visited. She said they found her hygiene and equipment were faultless, but still told her she would be closed down unless she developed an approved risk management plan and swallowed a big rise in her compliance costs.

The regime, as I understand it, scales rigour to risk so that lower risk products have fairly small compliance costs. But high fixed costs on things like cheese risks killing off small producers.

Recall that, in 2012, then-Minister Kate Wilkinson said:

The cheese that's produced from three cows or three thousand cows is still expected to be safe. ... We want the Biddies [cheese-maker Biddy Fraser-Davies] of this world to keep producing fantastic cheeses, but we also want that cheese to be safe.

Why shouldn't Biddie Fraser-Davies be able to put a big sign up outside her shop saying that her cheese is produced without an approved risk management plan and that caveat emptor applies? Who's the we in Wilkinson's statement? If it's the people buying the cheese, they should be able to judge for themselves. If it's people who don't buy the cheese, why do they get a say?

I can understand worries about industry-reputation effects if there's botulism or something in one small producer's batch. But are those effects likely to be substantial where things are sold with an explicit caveat emptor sticker?

UPDATE: I had wrongly assumed that Biddie was being chased under the new Food Act. The Food Act, passed in the last Parliament, was meant to stop some of this nonsense for small-scale operators. But Donald, in comments, usefully notes that she's being chased under the old Food Act as the new 2014 Food Act doesn't come into force for some time yet. And so there is no particular inconsistency between the former Minister's having said she wanted Biddie to be able to continue making cheese under the new Act, and that she's currently being chased. It's a bit odd that none of the officials quoted pointed to the forthcoming changes that might ease things up for those in her situation.

Mmmmm.... Nitrates

Loyal readers will recall that Manitoba's government set up rather a bit of a Catch-22 for the Cavers, farm entrepreneurs producing charcuterie. While their cured meats were safe and produced following Italian standards, they were not following Manitoba regulations. Because there were no Manitoba regulations. And so the government confiscated all their produce despite having just given them an award for agricultural innovation.

Here's the latest, from Manitoba agribusiness reporter Bill Redekop at the Winnipeg Free Press:

The case sent shock waves across rural Canada. The Cavers are trailblazers in on-farm food production and have mentored other farmers, speaking at agricultural seminars and workshops. Plus, they had just won the Great Manitoba Food Fight and $10,000 for their prosciutto, a cured meat aged and dried for up to a year,.

So when the province raided their farm, it was like Ben Johnson being caught with steroids. The Cavers' livelihood depends on their reputation as ethical food producers. Their business concept is small, transparent food production, versus factory farms and multinational corporations. The $600 fines hardly mattered -- their reputation did.

The Cavers had no intention of paying the fines. The court date was set for this October. The couple phoned the provincial government, trying to find out what evidence it had against them. They wondered if they were going to need a lawyer. That's when they learned the province had dropped charges against them three months earlier, without telling them. The province told the Free Press a technical error was discovered on the tickets issued to the Cavers, which made them invalid.

It may be testament to what people think of the government that the raid didn't hurt the Cavers' business. In fact, business shot up.

The Cavers continue selling meat, but not charcuterie.

The Cavers still aren't sure what they did wrong. Leading up to the raid, health inspectors regularly visited their meat-curing operation, they say.

The issue wasn't that they made unsafe food--the cured meat the province seized and destroyed had never been tested. It was that the Cavers hadn't documented each step as carefully as mass-produced foods, said Pam.

Examples she gave included the weight of the prosciutto prior to salting, the weight of the salt going into the prosciutto, the weight of the prosciutto before drying and the weight afterward. Instead, they only weighed the meat before and after the process. Nor did the Cavers know which pig each item came from.

Then in June, inspectors told the couple not to sell any cured meat. An inspector made a follow-up visit in July. Clint asked what they could do to make the charcuterie saleable and the inspector said he'd get back to them. Then came the raid in August. The Cavers insist they had complied with the province's order and not sold any of the meat since June.

The story's not yet over. The province is insisting that the Cavers add nitrates to their cured meats; the Cavers are rather sure they can produce safe products without it.

HT: Mom.

Cupcake Freedom

Campbell Live tonight reported on Auckland Council's shutting down of some kids' cupcake stands at a local mall. Because the mall ran the kids' day once a month, according to the story, it then counted as a commercial market. And so the kids had to produce their food in a commercial kitchen.

I initially thought that the new Food Bill was to blame. It was introduced back in 2010 and got a fair bit of push-back in early 2012. But that cannot be the case. Submissions on the Bill closed only a month ago. Since I had never heard of Councils in NZ hitting kid bake stands like this, and as Auckland was blaming national regulations, I incorrectly assumed that the Food Bill had to have gone through. And so I apologise for blaming the Food Bill and its sponsor, Kate Wilkinson.

I still would very much like to know whether there is basis in existing national regulations for Auckland's rather heavyhanded actions in this case. Either the regulation has existed and hasn't been enforced elsewhere, the regulations have changed, or Auckland's interpretation is incorrect.

The original post follows below. It is based on an incorrect premise. I have run a strikethrough tag through it so that it's obvious that it ought not be relied upon.

Update: And I thank @mellopuffy for the correction.
Update 2: More detail here.

Kate Wilkinson promised us this wouldn't happen. And yet here we are.

Her op-ed of January 2012 sought to put to rest petitioner fears that the Food Safety Bill would shut down a lot of small scale entrepreneurship. She wrote:

Those behind the online petition opposing the bill claim it will seriously impede initiatives like community gardens, food co-ops, heritage seed banks, farmers' markets and roadside fruit and vegetable stalls. This is nonsense.

At most, people involved in such activity, where it presents a low risk, will be provided with information.

Events such as sausage sizzles, home bake sales, and other fundraising events will still occur as they always have.The bill is intended to protect, not harm such events, as the bill's critics would have us believe.

Bartering of food is currently included in the Food Act 1981. The proposed bill simply clarifies that those bartering with food, as part of a food business, must ensure it is safe and suitable.

Many small-scale bartering activities will only be subject to food handler guidance – for example, those bartering home-grown produce for goods and services. However, larger scale bartering of food exists and it is appropriate that those enterprises are subjected to the same risk-based measures as those selling their food products in a more conventional manner.

I wrote:

So is the new regime worth the cost? That depends on the compliance costs that will be faced by small and mid-sized traders. Wilkinson assures us that small traders won't face onerous burdens, but I'd really prefer seeing proper analysis of the Bill from someone like Otago's Andrew Geddis. And we have to keep in mind that a substantial proportion of the costs Wilkinson cites might actually be voluntary choices consumers are making that, on lucky draws, yield tasty goodness any diminution of which consequent to regulation ought be counted against the Bill's possible health benefits. Banning me and others like me from having my hamburgers medium-rare might save the health system a bit, but it'll certainly cost me some utils. Equally bad is what a big fixed-cost regime would do to food startups. I really hope that the legislation isn't as costly on those two fronts as some folks fear; I'd love to see independent legal analysis.

So: I was worried about compliance costs on small traders; Wilkinson promised there was nothing to worry about.

Tonight's Campbell Live has Auckland Council shutting down a mall's efforts to support young entrepreneurs. Once a month, they let the kiddies set up little stands selling their cupcakes. Council says that they're forced to shut it down because of Kate Wilkinson's Food Safety Bill. Hit the link to watch the video.

Kate, if you were serious about what you wrote in 2012, you will fix this, right? If your op-ed was right, Auckland shouldn't be interpreting your legislation this way. Please tell them, and tell every other Council, that they are not required to do what Auckland is doing. The problem is Auckland's interpretation, right? Because when I tweet stories from the States about Council health people knocking over kids' lemonade stands, I usually append an #emigrate tag.

Surely here in New Zealand we're not going to need a cupcake equivalent of this?

Food Bill revisited

I wish I knew the likely effects of the upcoming food bill. NZCPR asked me for a short piece based on my prior post; here's what I gave them. One link didn't make it through there: 3 News on the Food Bill.

I wonder whether both Minister Kate Wilkinson and the bill's critics couldn't both be right. If the current de jure rules aren't strenuously enforced against small traders, or only are so irregularly, then the de jure loosening of restrictions on small traders could be a de facto toughening if enforcement is tightened.

Radio New Zealand last week featured one small cheese producer on the costs of the prior regime and her worries about the new one. Minister Wilkinson's comments there really aren't reassuring. [HT: Gonzo] She emphasizes that even small-scale cheese-makers will come under the regulatory apparatus:

The cheese that's produced from three cows or three thousand cows is still expected to be safe. ... We want the Biddies [cheese-maker Biddy Fraser-Davies] of this world to keep producing fantastic cheeses, but we also want that cheese to be safe.

But let's recall that the vast majority of costs of food-borne illness are the individually borne intangible costs of being sick. Those costs are very real and the Applied Economics study tabulating them seems pretty sound. But why oughtn't I get to choose to buy cheese from a small producer and take that individual risk without Wellington getting involved? The costs of head injuries from skiing may well be high, but if I'm the one bearing them, oughtn't I be the one who decides to wear a helmet? Wasn't this supposed to be the government of individual responsibility that defeated Helen Clark's Nanny State?

Wilkinson worries about ensuring that people can be confident in the local food system. If information asymmetry is the problem, all the government needs to do is give out stickers to producers wishing to produce under regulatory guidelines so that they can advertise as such; absence of that certification then says you have to be sure you can trust the producer. And, anybody who's paranoid about food poisoning can always choose to purchase from big producers at supermarkets instead of small guys selling home-made stuff at farmers' markets. And, frankly, I'll trust Biddy Fraser-Davies, the small cheese producer interviewed, over Wilkinson's bureaucrats.

I wrote for NZCPR:

Perhaps worse than my potential loss of choice as consumer is the loss of an easy pathway to small-scale entrepreneurship. Even if the monetary costs of registration as a food producer are low, Wellington often weighs too lightly the discrete hurdle thrown in front of a potential entrepreneur who has never otherwise had to worry about compliance regimes. The dread costs of figuring out which forms to fill out, and the fear of getting something wrong, can be very real barriers to would-be new small-scale entrepreneurs. When you’re really not sure if you’ll be able to make a go of a new venture, adding a hurdle of having to seek permission can provide a burden much larger than the nominal $50 registration fee.

Muriel Newman at NZCPR (link currently here, but likely to suffer linkrot) also comments:

For a government that claims to be committed to encouraging wealth creation and reducing compliance costs on small business, the Food Bill could be a major step backwards. It appears to be being driven more by bureaucratic considerations rather than the need to encourage entrepreneurship in the food sector - within the bounds of stringent food safety imperatives. It is also not clear what the answer is to a fundamental question that should be asked of all new legislation: Is there a problem to be fixed and if so will this Bill fix it?

At least raw milk doesn't seem likely to be killed under the new bill.

Food Bill

Kate Wilkinson, Minister for Food Safety, justifies proposed changes to New Zealand's food safety regime by citing the costs:

"The bill is designed to simplify 30-year-old food safety regulations and ultimately aims to reduce our high level of food-borne illness and corresponding economic cost.

"It's estimated that food-borne illness caused a $162 million loss to the New Zealand economy in 2010."

Wow. The economy lost $162 million due to food-borne illness. About $40 per capita. Seems a bit high, but not prima facie implausible. But let's have a look.

Australia's Applied Economics produced the report for the New Zealand Food Safety Authority a little over a year ago (HT: Squid expert Luis). The summary table at p. vi tallies costs of $161.9 million from foodborne disease. But $16.4 million of that is government outlays on food safety regulation. Unless the legislation specifically reduces the government's monitoring costs, which seems rather unlikely with a more onerous regime, that portion of cost cannot be saved. Similarly, cited industry costs of $12.3 million include both compliance costs and costs to business in case of outbreak; the effects of the new legislation here are then ambiguous as outbreak costs may fall but compliance costs will rise. Kate Wilkinson's citing of a total cost figure that includes enforcement and compliance costs as argument for stricter regulation is a bit of a problem; the more the government spends on food safety regulation, by that argument, the greater the argument for spending even more. Just like when the New Zealand Police include the costs of drug interdiction efforts as a benefit of drug seizures. I'm certainly not saying that the government's $16.4 million outlay was a waste; it's just not properly seen as something that can be abated by the new legislation. Fortunately, that's only about a sixth of the total.

The bulk of the remaining tabulated costs are individuals' intangible willingness to pay to avoid a foodborne illness - about $100 million in residual private costs as estimated from NZ value of statistical life estimates. We can leave aside for now problems in that we don't have good prevalence data on non-reportable illnesses like norovirus that manifests as mild gastroenteritis; Applied Economics is very up front about the limits of inadequate data here. But by far the biggest part of the cost estimates comes out of willingness to pay measures.* That's important. Why? Because people are choosing, all the time, which dining establishments to frequent.

Suppose that there's a roadside falafel place with food I adore but that comes with completely known 1% risk that I'll get mild food poisoning. I eat there a hundred times, I get food poisoning once. But I keep going back because of the taste. If new food safety regulations mean the place shuts down, Wilkinson's measure says I'm better off because I'm saved those willingness-to-pay derived figures on the costs of mild food poisoning. But I've already specified that I knew about the risk and judged it worthwhile; I'm then necessarily worse off if I can't get a falafel. You can't easily use a willingness-to-pay measure to overturn a consumer's decision when consumer decisions underlie willingness-to-pay measures. You can perhaps make an asymmetric information argument; that tends to argue for random inspections and public posting of findings on facility cleanliness rather than for big compliance regimes.

So is the new regime worth the cost? That depends on the compliance costs that will be faced by small and mid-sized traders. Wilkinson assures us that small traders won't face onerous burdens, but I'd really prefer seeing proper analysis of the Bill from someone like Otago's Andrew Geddis. And we have to keep in mind that a substantial proportion of the costs Wilkinson cites might actually be voluntary choices consumers are making that, on lucky draws, yield tasty goodness any diminution of which consequent to regulation ought be counted against the Bill's possible health benefits. Banning me and others like me from having my hamburgers medium-rare might save the health system a bit, but it'll certainly cost me some utils. Equally bad is what a big fixed-cost regime would do to food startups. I really hope that the legislation isn't as costly on those two fronts as some folks fear; I'd love to see independent legal analysis.



*Most of these costs come from more serious instances where people do go to the doctor, so the potential for being orders of magnitude out on actual instance of "treat at home" norovirus doesn't do tons to the bottom line.

Ok, who hit the stupid button this morning?

Front page of today's Christchurch Press urges the adoption of warning and nutritional labels on foods:

A warning that alcohol is bad for you will appear on glitzy liquor and wine labels if proposals for trans-Tasman food labelling laws are adopted.

An alcohol warning is one of many proposals made by an independent panel, commissioned by the Australia and New Zealand Food Regulation Ministerial Council.

The panel also recommends fast-food outlets highlight the calorie counts of their burgers, chips and other foods.

The Press then goes to the usual suspects for comment about how critically important this move is. Except that we already know it doesn't work. People do not change behaviour when they read the calorie counts on fast food. Some eat more, having previously figured fast food had to be really really full of calories and being informed that the calorie count isn't as high as they'd previously thought. Evidence is accumulating.

Canterbury Community and Public Health nutritionist Janne Pasco said people would be "astounded" to see the calorie content of fast food.

Yup - it's not as bad as you'd thought, so have more.

Lion Nathan, one of the two big NZ breweries, has moved defensively:

In response to the report, brewer Lion Nathan promised to "voluntarily adopt consumer health messages that support responsible drinking choices, including during pregnancy".

The real killer though would be if they forced calorie counts on beer. That's a reasonable fixed cost. Lots of the smaller brewers here do unique one-offs that might well not be economical if they had to submit all their brews to nutritional analysis. And that's the Commission's Recommendation 26. NZ's craft brewers might want to keep an eye on this one. How much does it add to the cost of your new seasonal brew to have to submit a sample to the lab at time of bottling, wait on results, print up new labels with the calorie count, then label before shipping? This pushes brewers to having a set stable of beers rather than interesting and changing portfolios.

Any chance the brewers will be allowed to note the health benefits of moderate drinking on their bottles while putting on the official warnings?

The Commission also recommends mandatory GE labelling - tough call when there's easy potential for unintentional presence. Who bears the lab costs? Doesn't it make more sense to run certification for those wanting to advertise as GE-free for folks with strong preferences? It's not like non-organic foods have to advertise the pesticides that have been used.

Item the second. Wellington taxi companies try on having the City Council cartelize them, and Council seems interested. Fortunately, they may not have the power to do it directly. Here's the Dom:

There are too many taxis in Wellington and it is time to put a limit on them, the mayor says.

The taxi industry agrees and has called on the Government to introduce legislation to cap or reduce numbers in the city.

Celia Wade-Brown believes part of the problem stems from "overqualified" immigrants being funded by Work and Income into an industry that has hit saturation point.

"There seem to be too many for the city and they aren't getting a good living wage in some cases."

The New Zealand Transport Agency issues taxi licences, but legislation that deregulated the industry in 1989 does not allow the agency to set limits.

There are 1237 taxis licensed for Wellington City. About 400 were on the road before deregulation. This tripling of taxis in the past 20 years has led to overcrowded taxi stands and dubious parking practices as drivers clamour for business, especially in the late-night Courtenay Place party zone.
...
Mr Tyler [Taxi Federation Wellington branch secretary and rent-seeker] said the only solution he could think of for Wellington's taxi congestion woes would be for the Government to introduce legislation to cap the number of taxis at current levels.

"It would mean they [NZTA] couldn't issue any more licences in Wellington until it could be demonstrated that there is a need for it."

A less palatable option would be to return to full government regulation, which would pre-set cab numbers.

"Then they would have to reintroduce fare fixing. If you are going to limit the supply, then you have to control the costs as well."

Fortunately, it seems illegal for NZTA to set quantity restrictions. But you can have similar results by ramping up compliance costs, like they did last year with mandatory cameras. If any other industry made a bunch of claims that amount to "Please help turn us into a cartel", would NZ journalists take it at face value?

Food inspection: Quality floors and ceilings?

Don Boudreaux's post on food inspections reminds me of an interesting American case. During the "mad cow" scare a few years ago, which hammered Canadian beef exports to the US and American beef exports to Asia, Creekstone Farms decided to give the customer what he wanted: beef fully tested for BSE. They built a testing lab, trained up the staff, and were ready to start testing 100% of their animals at slaughter.

Now, if the point of USDA food inspection is to ensure that all food consumed is of at least a certain quality - helping to help prevent food-borne illness - you'd expect them to have supported Creekstone's move. Or at least been indifferent to it. Of course, you'd be wrong. The USDA banned Creekstone from implementing its testing regime.

The USDA's line is that random testing is sufficient to ensure food security; moreover, as the tests aren't as reliable on younger animals, testing of all animals could not guarantee BSE-free product. False positives could cause alarm.

This has been working its way through the courts since 2006. Last September, the DC Circuit sent it back to the District Court; Creekstone hasn't yet announced whether it will continue with the case.

I can imagine a public interest story consistent with the USDA's position. I just don't believe it. The public interest story would be built around that Creekstone's move looks like an off-diagonal in a prisoner's dilemma game where the social optimum is testing of downer cows and older beasts and little testing of younger ones but where the Nash equilibrium is the (costly) 100% testing of all animals driven by irrational consumer fears. I don't find the story too plausible: guaranteed "GE-Free" or organic products haven't taken over the food market. Folks weigh quality, safety and "solidarity in consumption" against price. Another public interest variant would be that false positives in the 100% testing regime could lead to foreign demands for 100% testing of all beef and further restrictions on US exports. Again, I don't buy it. Surely Creekstone's first move on seeing a positive result would be to double-check with another $20 test kit. And perhaps even a third test to arbitrate if the results of the first two were in conflict. I can believe restrictions following a confirmed positive case, but false positives would be sorted out prior to that stage. I'm having a hard time seeing a reasonable public interest case; it looks more like the stifling of competition through quality ceilings.

The case has had plenty of coverage in the usual outlets. Boudreaux's post just brought it back to mind.