Information wants to be free — but it’s not!

In the comments to yesterday’s post about food regulations, my friend David distinguished rules that limit consumers’ choices (bad) from rules that give consumers more information (good). I agree that the former are worse than the latter, but I’m still skeptical of both. That’s because information isn’t free. Labeling and sorting cost money. Some information is obviously good, but how much? The answer isn’t always “more.”

The solution is to treat information like any other good, subject to the workings of supply and demand. Experience shows that when consumers demand specific information, producers are glad to provide it. “Atkins friendly” and “trans fat free” foods are two recent examples of labels responding to diet concerns. The extremely specific details of origins and processes that go onto many artisanal goods tap into the desire for information at a higher level. Granted, markets don’t always deliver perfect results, but they usually do better than government regulators. Generally the best way to arrive at the optimal communication between producer and consumer is to let the market sort it out.

In yesterday’s post we were talking about origin labels for meat and other products, but a proposal to require detailed nutritional information on alcoholic drinks demonstrates the problem even more clearly:

The Treasury Department is considering a new rule that would require companies to put alcoholic content, serving sizes and nutritional information on all alcoholic drink packaging.

According to the proposed rule being published Tuesday for public comment, labels on all alcoholic beverages – from beer cans to wine bottles – would include a statement of the drink’s percentage of alcohol by volume.

The labels would also include a “serving facts” panel, which would list the number of calories, carbohydrates, fat and protein for a standard serving size.

This would be a reversal of current laws that actually prohibit distillers, vintners, and brewers from putting this kind of information on their bottles. Among the groups advocating the change is Diageo, the world’s largest liquor company:

Diageo North America has listed nutritional information for its alcoholic beverages on one of its Web sites for the past two years because it was illegal to put such “serving facts” on the label.

Yesterday, the Norwalk-based unit of the world’s biggest liquor company praised the federal Alcohol Tax and Trade Bureau for issuing a proposed regulation requiring serving facts labels on all alcoholic beverages.

Diageo, joined by the National Consumers League, the Center for Science in the Public Interest and other consumer groups, initiated a movement in 2003 seeking a uniform facts label…

“Consumers want more information – not less,” said Guy Smith, Diageo North American executive vice president, in a statement. “Today marks a major victory for consumers and a win for our industry. We are one step closer to providing consumers the information our research tells us they overwhelmingly want about carbs, calories, alcohol content and alcohol per serving size.”

If Diageo wants to put nutritional information on its labels, it’s stupid to forbid them from doing so. That part of the current law should definitely go. But Diageo wants more than that. They want everyone to be forced to follow their lead. Why? Are they that concerned about public health? I doubt it.

When you’re a massive corporation like Diageo selling standardized products around the globe, providing detailed nutritional labels is pretty easy. But for smaller craft producers, obtaining that kind of information could be more expensive and time consuming. Perhaps the folks at Diageo are just looking out for consumers’ interest, but it seems a lot more likely that they’re lobbying to get regulations in place that are light on them and burdensome on the little guy. Throw in the seal of approval from CSPI and it’s a classic case of bootleggers and Baptists each getting what they want: the Baptists provide the moral reasoning for the law while the bootleggers reap the financial rewards.

David recognizes that this sort of thing is a problem, but suggests we regulate better, not less. I’m not convinced that’s possible. If even a proposal as seemingly benign as putting calorie counts on a bottle of wine is going to be corrupted by special interests, the problem is endemic to regulation.

Whether it’s calorie counts in fast food restaurants or nutritional labels on wine, the best way to defend consumer interests is to remove barriers to communication. Let Wendy’s advertise healthy salads and let Diageo market low-carb wines* — and allow talented chefs and artisan drink producers to focus on their work, not their paperwork.

[For more discussion of the proposed regulation, head over to Tom Wark's great wine blog. Note also his mock-up of what new wine labels may look like, with the space that could have been used for interesting information or design taken up instead by an ugly nutrition table.]

*All wines are low-carb, silly! But Diageo knows mass marketing.

Comments

  1. Barzelay says:

    Regulate better, rather than less was meant to solve specific situations where there are particularly stupid regulations (i.e., prohibiting alcohol bottlers from putting info on bottles). I certainly agree that, in general, we need to regulate much, much less. But in certain areas, there are problems that are not inherent to regulation, but adhere only to badly implemented regulation.

    However, as I said then, you might be right that corruption is endemic to efforts in the U.S. to regulate, at a federal level, at the present time. And I agree that, if we can’t regulate better, we should regulate less. But I’m not hopeless about our abilities to improve the implementation of our regulatory schemes.

    As for something like origin labels for meat, the market works as long as consumers can afford to make choices. For instance, Niman Ranch meats are hugely popular precisely because of their origin- and quality-control. I think the market for controlled-origin meat is actually pretty well-served these days. But at the low end of the market, consumers can’t afford Niman Ranch. Are you prepared to say that anyone below middle class shouldn’t have the right to know what kind of meat they’re eating? Or am I missing something?

    In truth, I suspect that there is little correlation between meat quality and origin. Livestock practices obviously can vary widely within a certain geopolitical area (i.e., the United States), so I’m not sure that it’s useful information. Some designations are useful (i.e., Prather Ranch, Kobe, Wagyu), and those designations are already working. If I’m buying the $2/lb ground chuck from Safeway, I’m already aware that it’s probably not grass-fed Oregon cattle. So I guess I’m mostly in agreement that it’s not a broken market.

    But what about consumers who can’t afford to purchase quality beef? Should anyone below middle class have to remain ignorant to the origins of their meat? I’m sure there’s a standard answer from the Market-loving camp to that question, but I’m hoping it isn’t just “Tough luck, bums!”

  2. Bob Skilnik says:

    “All wines are low-carb, silly!”

    No, not really. According to current standards set up by the USDA, the serving size for a glass of wine is 5-ounces. In order to be legally declared low-carb, a serving size of wine must by 7 grams of carbs or less. Considering that wine runs from dry, semi-sweet, sweet and sparkling, you can’t make such a generic statment that all wine is low-carb. Add to this is the current Alcohol, Tobacco, Tax and Trade Bureau (TTB), the agency regulated by Treasury that actually handles the labeling and advertising restrictions on wine, beer and booze and confusion reigns supreme.

    Here’s some still and sparkling wines with the carb counts for a 5-ounce serving:

    Andre Blush (Pink) 9.5 g carbs
    Ballatore Rosso 15.5 g carbs
    Livingston Cellars
    Red Rose 10 g carbs
    Peter Vella White Zin 8.5 g carbs
    Arbor Mist
    Peach Chardonnay 21.25 g carbs

    None of these wines or wine products can legally be considered low-carb. I could on and on with this, but I hope you get the point. If I know what the nutritional value in a Hostess Ho-Ho is, why not beer, wine or booze?

    More about all of this at my URL.

  3. Jacob Grier says:

    Hi Bob,

    Thanks for the information. I’m aware of the legal distinction, I just meant that it’s a fairly useless one, wines being generally low-carb to begin with.

    But thanks, it’s interesting seeing some exceptions — and having one more reason not to drink Arbor Mist.

  4. Jacob Grier says:

    David,

    I’m not convinced there’s a great demand from people wanting to know the origins of commodity beef. And if there’s not, I don’t see why we should impose regulations that could increase the cost of the food. (Though admittedly, I don’t know offhand how much of a cost increase this might impose.)

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