Monday, November 29, 2004

Making Polluters Pay

A proposed German law would force biotech farms to compensate GM-free farmers for transgenic contamination. It's basically a version of the "polluter pays" laws that are so common in Europe, and so unpopular in the USA.

I've often seen such laws described by free-market purists as examples of "central planning," or some other form of allegedly socialistic deviance. Really, nothing could be further from the truth. These commentators are confusing the libertarian's bogeyman of "anti-business regulations" with the basic concept of facing personal responsibility for the results of one's own noncompliance with de minimis regulations. Even in a society that tolerates a maximum of self-regulation, there's always a regulatory goal that must be met: for instance, a self-regulatory regime will probably not allow chemical plants to dump spent chromic acid in public playgrounds. In classic libertarian terms, the plant's rights end where other people's rights begin. If corporations are "people," legally speaking, then their rights must be legally constrained by the rights of other people. This is precisely the de minimis standard that regulatory agencies would follow in a truly representative government.

In other words, if I'm growing rare heirloom tomatoes in my backyard, my next-door neighbor clearly doesn't have any right to sneak over my fence and replace them with a variety he thinks is "better." The science of agriculture - and our conflicting views about it - are not at issue. The issue is my personal and property rights, and my right to choose what kind of tomato I want to grow on my own property. My neighbor's decision to ignore my rights can and should end in punishment; his belief that he was "doing me a favor" doesn't enter into the case on any level, nor do his opinions about the law or globalization or agricultural science or the inner nature of trial lawyers.

Another example: If the United States legalized methamphetamine production tomorrow, that wouldn't mean that my meth-producing neighbor could dump his leftover red phosphorus onto my property. Should he do so, he'd quite rightly be liable for all damages; neither I, nor society at large, should have to foot the bill for cleaning up his mess. But being as the costs of chemical spills are high, and can include loss of life and property, sensible societies mandate that certain precautions be taken before chemical production begins, and that the process and premises be periodically inspected.

That's basically what this German PP law says. GM manufacturers must meet certain standards and take certain precautions. If they don't, and another farmer's business is harmed as a result, the GM farmer must pay the other farmer compensation. The relative merits of GM and organic or conventional farming don't enter into the debate at all, because in a free market the non-GM farmer has an inalienable right to grow and sell GM-free crops to that portion of the market that wants them, even if GM foods are proven to be perfectly safe. The only pertinent legal principle here is that the GM farmer's rights end where the organic farmer's rights begin.

Some observers object that it's virtually impossible to avoid transgenic contamination between GM and conventional crops, and that the German law would thus put an undue burden of risk on GM producers. I'm sure that's true, which is one reason you won't catch me going into such an inherently risky business! Still, such problems are often handled by insurance policies; the cost of liability insurance thus becomes a cost of doing business, which must be - and here's the real point of all this rambling - factored into the final cost of the product.

Though I'm personally opposed to GM crops at this time, I think that a great deal of the discussion about their potential danger misses a simpler point. The reality of the marketplace is that GM foods are incredibly unpopular with consumers all over the world, and people simply don't trust the companies and governments who say they're safe. So long as that situation persists, transgenic contamination will hurt the business of non-GM farmers, and it's perfectly natural that the laws regarding GM crops should reflect this. Otherwise, an unscrupulous GM concern could willfully contaminate GM-free farms in order to put them out of business. Or on a grander scale, the United States (for instance) could decide to allow transgenic contamination of GM-free crops in an entire market.

1 comment:

echidne said...

In economics the problem you are describing (and very clearly)is called the external effects or externalities. The idea is that some of the costs and/or benefits of a transaction or of a productive or consumptive act can affect third parties, people who are not part of the contract that causes the sale or production or consumption. The traditional examples are about negative external effects such as the possibility that a consumer buying coal and a coal-producing firm can pollute the air that other people breathe, yet are not required to pay for this pollution or to stop it.

The problem with markets is that they have trouble with taking into account the external costs, and in most cases they are not included, so people considering consuming, buying, producing or selling tend not to care about the negative external effects on the rest of the world. That's one of the traditional justifications for government intervention in markets: to put in laws or regulations which make the external costs payable by those who benefit and not by third party innocents.

But the free-market fundamentalists don't see any of these problems because they assume markets are somehow a religious thing.