The federal government uses protectionist country-of-origin labeling (COOL) regulations to privilege a certain segment of the U.S. cattle industry at the expense of meat processors, retailers, and consumers. Due to a successful challenge by Canada and Mexico at the World Trade Organization, and the resulting threat of trade retaliation, Congress may finally repeal the law. This is good news.
I explained last month in The Hill(Online) what’s wrong with the COOL law:
Under current U.S. regulations, meat produced in the United States and sold in American grocery stores must carry a label indicating in which country or countries the animal was born, raised, and slaughtered. In order to comply with this law, American meat processors have to keep track of where each animal was born or raised and segregate any border-crossing cattle to ensure accurate labels. The requirement imposes a significant cost on processors, which they can avoid if the only cattle they purchase are born and raised in the United States.
The WTO ruled against the labeling law because much of what the law requires burdens processors who buy Canadian cattle without conferring any benefit on consumers.
In a free market, consumers receive product information if they care enough about it to pay for that information. Sometimes providing that information is cheap and sometimes it’s expensive.
When the government comes in to mandate labels, it’s because someone wants consumers to have information that consumers don’t actually care enough about to pay for. Mandated labels also reflect what the government (and lobbyists) want people to know, not what actually matters to consumers. In the case of COOL, protectionists think Americans will buy beef from U.S.-origin cattle if they have that information thrust upon them even though what Americans really want is high-quality food at a low price. There’s a second layer of rent-seeking here, because compliance costs privilege domestic ranchers regardless of consumer response to the labels.
Supporters of the law rely largely on the claim that consumers have a “right to know” where their food comes from. A quick look at the costs and benefits of providing this “right to know” through the existing mandatory country of origin labeling scheme reveals how simplistic formulations of positive rights do more harm than good.
If Americans have the right to know what country the animals they eat were born or raised in, do they also have a right to know what state a domestic animal came from? What about the ranch it lived at or the direction it typically faced while grazing? Do we have a right to know the animal’s name or favorite Taylor Swift song?
The questions may sound silly, but can you answer them and explain why such labels should or should not be required? The answer surely depends on what limiting principle, if any, defines the contours of the “right to know.” Perhaps the right to know depends on the costs of acquiring or providing the information. The rhetoric of rights, however, implies that the costs are irrelevant. Weighing costs and benefits certainly won’t justify the COOL law, which was found to have a net negative impact on the U.S. economy by the Office of Management and Budget in 2004 and by the USDA itself in 2015.
Perhaps we only have a “right to know” things that matter—but does it matter that the animal whose meat you’re eating was born in Canada? Who decides what matters? Personally, I can’t think of a single reason to care what side of the 49th parallel my steak was on when it began its life. Why is that more important than knowing which Dakota it came from or what pitch it mooed on? Assertions of a vague right to know don’t answer any of these questions, which are at the heart of a policy debate over how strict and expensive COOL regulations should be.
What we do know is that the “right to know” is a catalyst for cronyism and inefficiency. In a free market, the simple desire to know is enough to prompt the supply of information to consumers at a price they want to pay.