4. The role that the FDA plays in setting food safety requirements is inherently costly to the economy. The function is not based on economic concerns but rather public health concerns -- the FDA's mandate dates to Congressional concern about the Elixir sulfanilamide disaster and traces its roots to Upton Sinclair's The Jungle, which documented meat production in Chicago at the turn of the 20th century (FDA.gov, 2009). Thus, decisions about FDA regulations are not made on the basis of economic good, but rather public good. Increased regulations would impose increased costs on business. In classical economics, these costs would act as a form of tax, increasing risk and discouraging investment. Eliminating these requirements would lower these costs, which would allow for an expansion of the food business. It could be argued that the threat of litigation today would counterbalance the need for regulations, but that claim has not been proven. Moreover, the risk such a situation would put on Congress and the FDA would be politically untenable.
Hot dogs may not be healthy, but reducing regulations on their content would carry significant irony in light of The Jungle being the impetus for the original Food and Drugs Act that founded the...
Economically, this would theoretically lower the price of hot dog production and give producers the flexibility to lower prices to the consumer. This may spur a short-term increase in the number of hot dogs sold, but the impact to the economy overall would be minimal, unless the additional health care and litigation costs that would stem from toxic hot dogs arriving on the market are also included in the calculation.
Works Cited:
Roubini, N. (1997). Supply side economics: Do tax rate cuts increase growth and revenues and reduce budget deficits? Or is it voodoo economics all over again? Stern School of Business. Retrieved April 24, 2010 from http://pages.stern.nyu.edu/~nroubini/SUPPLY.htm
No author. (2010). Classical economics. TheShortRun.com. Retrieved April 24, 2010 from http://www.theshortrun.com/classroom/doctrines/classicals.html
McCallum, B. (2008). Monetarism. Concise Encyclopedia of Economics. Retrieved April 24, 2010 from http://www.econlib.org/library/Enc/Monetarism.html
FDA.gov. (2009). FDA history part I. Food and Drug Administration. Retrieved April 24, 2010 from http://www.fda.gov/AboutFDA/WhatWeDo/History/Origin/ucm054819.htm
