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Friday, June 06, 2008

Running From the Government

(One update below.)

So yesterday I took my son to a Pizza Hut for some good wholesome toddler food. (It's pretty convenient because this particular location has a table of toys so I don't have to continually block the doors to the parking lot as in other fast food joints.) I ate with gusto, and now today...let's just say I exceed the regularity of an atomic clock.

This prompted me to think back to the actual employees who were in there that day. They were friendly enough, but in retrospect I'm not sure why I put our lives in their hands.

Fast food chains are a great illustration of the perversity of government regulations. In a truly free market, where people didn't think the government was "guaranteeing" safety, you wouldn't have to worry about something basic like, "I wonder if the employees here wash their hands before cooking?"

It's true, people won't patronize restaurants that seem dirty. But this is mostly a relative comparison; in the abstract, it's quite horrifying when you think about the bathrooms at most places on the interstate. Surely in a country as rich as ours, a tiny sliver more of our GDP should go to sanitizing high-volume restrooms?

So what happens is that this blunt instrument of boycott is rather weak, because consumers don't really have that much information (both about health issues in general, and specifically how bad conditions are in the Wendy's back kitchen) to make pinpoint decisions, and because it's an all-or-nothing thing. (Well, not really; if a place gets dirtier and dirtier, more and more customers will boycott it. Fair enough.)

I bet what happens is that these places devote their sanitation practices to meet the standards; just how in grade schools they "teach to the test" because of No Child Left Behind etc. So if you can imagine how counterproductive those government-administered standardized tests are, why would you expect the health codes for restaurants to actually be sensibly designed?

Under a truly free market, I think there would be much more finely honed consequences to a restaurant for various infringements. Most important, the really dangerous practices would be dealt with first. (I'm not going to figure out the exact mechanism for this. It is left as an exercise for the reader. Hint: I think you can do it with insurance companies.)

Another major factor in all this is the minimum wage. Simply put, the minimum wage forces gas stations, restaurants, etc. to design their stores to be largely run automatically, and then they staff them with the bare minimum of human operators.

This is a problem because it prevents the strategy of hiring one really responsible, talented manager, and then giving him 3 semi-serious adult underlings and, say, 50 goof off teenagers. Then on top of that, you are allowed to pay the kids on a piecework basis. E.g., "John, you and Bill are on patties tonight. We're going to keep track, and I'll give you a nickel for every burger you make during your shift, and whichever one of you makes the most burgers, will get a $5 bonus. Oh, for every order you make wrong, I'll dock you a quarter."

Really, there could be traveling experts who come in and rehabilitate your restaurant franchise in a month.

A lot of ivory tower economists who have never really interacted in an environment like that probably think, "Well, responsibility and hard work are scarce items. You get what you pay for. Apparently people would rather get quick burgers for a buck rather than good service and quick burgers for $1.50."

But no that's insane. How much extra would a soft taco have to be, especially at a busy Taco Bell, in order to pay for a bathroom that's kept clean? Gee whiz, all the store manager would have to do is tell the guy who's job it is, that he gets an extra $20 on the spot, if the bathroom stays immaculate. So let's see, an extra $20 per day...I don't think that it's the cost keeping bathrooms so despicable, nor do I think it's stingy motorists who will drive clean places out of business in a race to the bottom.

This is government intervention, pure and simple. I managed dozens of other students in college when I worked at the cafeteria.* If you can get a few trustworthy people at the top, and so long as the head honcho is a Nazi about cleanliness, the food will be safe to eat. It might be gross, but safe. The minimum wage forces a corner solution (mathematical econ jargon warning) where the restaurants hire precisely zero responsible people. They are too afraid / lazy to keep those punk kids in line when they're on the job.


*Granted, these were college students at a fairly expensive private school, so it's not totally the same thing. But still.


UPDATE: OK I put my finger on it. Restaurants are allowed to compete on the basis of price, taste, play areas for the kids, prizes in the Kid Meals, etc. But they are not allowed to compete in terms of sanitation. No, in this area, the government says, "We're not leaving this to the vagaries of the Invisible Hand. We are guaranteeing a floor of basic cleanliness."

Now let's step back and determine which approach has yielded better results. Are there any fast food places with ridiculously high prices, or food that tastes awful? Nope, I don't think so, not among the relevant crowd. (I.e. if you love McDonalds you can probably get by in another fast food place. They have similar "quality" if that's your kind of food.)

But do you ever go to a restaurant and find that the bathroom is simply unacceptable? Yeah it happens all the time.

Let me put it another way: If you were forced to either buy a random meal or use a random toilet from a fast food chain, which gamble would you rather face? Seems like those areas where competition is allowed, are the most pleasing to the customer. In contrast, the government is botching its assumed duty to guarantee clean facilities.

7 comments:

  1. dude, you ATE AT PIZZA HUT.

    all bets are off.

    jeez. I read you people because you're supposed to be smart. ;-) the empirical evidence is in the toilet.

    seriously, Chick-fil-a is worth the extra cash. far better food, far better service, and guaranteed delicious and safe.

    ReplyDelete
  2. Sidney3:38 PM

    Let me get this.

    People have been saying on this blog that you are full of shit.

    Now, you agree with them, but blame it on Pizza Hut?

    ReplyDelete
  3. I'm glad you guys were able to sink to my potty humor. I don't think I have ever seen a blog thread before--EVER--where every single comment made me laugh out loud.

    Crash Landing rocks.

    ReplyDelete
  4. OK, Bob, is this a challenge??

    ReplyDelete
  5. I had a further thought, upon reading this gripe: Whenever I see a cockroach in a restaurant, I relax: they're not spraying inicticide enough to--least--harm them, I know that they are way beyond us in surviving, but, still.

    ReplyDelete
  6. Sidney3:43 AM

    Update: OK I put my finger on it.

    So how did it feel?

    ReplyDelete
  7. Anonymous1:14 PM

    Free market wingnuts always make this mistake. They assume that since competition creates lower prices that it could also create lower rates of mad cow disease.

    This is simply not true. For the vast majority of businesses, it is far cheaper to kill off a few customers each year than to protect every single customer.

    If you are counting on insurance companies and adverse publicity to do the job, then you are grasping at straws.

    Insurance and bad publicity rely on effective data collection, and effective use of knowledge, both of which are relatively inexpensive to defeat, compared to the cost of inspecting food.

    More to the point, your controls only work when a company is killing a measurable percent of its customers for so many years that the increased costs are quantifiable.

    By that time, you are long dead.

    ReplyDelete