Let’s Stipulate: Some Regulations Are Good

One GOP senator says restaurant workers shouldn’t be required to wash hands after going to the toilet.

From WaPo:

Once we’re done debating whether children should be vaccinated, we can move on to other pressing public health questions, such as whether eateries can force their employees to wash their hands after they use the bathroom.

At least one freshman U.S. senator thinks, “nah.” Because freedom.

Sen. Thom Tillis (R-N.C.), at the end of an appearance Monday at the Bipartisan Policy Center, volunteered a story about “his bias when it comes to regulatory reform.”

Tillis said he was at a Starbucks in 2010 talking to a woman about regulations and where businesses should be allowed to opt out. His coffee companion challenged him, asking whether employees there should be required to wash their hands.

“As a matter of fact I think this is one where I think I can illustrate the point,” he recalled telling her. “I don’t have any problem with Starbucks if they choose to opt out of this policy as long as they post a sign that says we don’t require our employees to wash their hands after leaving the restroom. The market will take care of that. It’s one example.” (Is requiring a sign not a regulation?)

I hope on at least this point, we can agree: hand-washing after going to the toilet is a good idea, and requiring food service workers to do so is a good regulation.

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55 thoughts on “Let’s Stipulate: Some Regulations Are Good

  1. Bruce Bartlett

    So why isn’t it regulatory overreach to force companies to post signs saying their employees don’t wash their hands?

    1. CB

      And what about those that can’t read English? And what about those that can’t read at all? And what about those that can’t see? And what about young children? Do we just let the free market take care of them too?

  2. The Peoples Pawn

    90%+ of foodborne illnesses are spread by bare hand contact. 100 years ago diarrhea was the 3rd leading cause of death in the US. It’s no longer like that precisely because of sanitary regulations in food and drinking water. I guess the Senator misses the good old days.

    1. Jay

      That change from 100 years ago has ABSOLUTELY NOTHING TO DO WITH increased standard of living being spent on more sanitary restaurant conditions.

      1. The Peoples Pawn

        Public health regulation reaches down the entire chain of food production and service. Same for drinking water. We’re a healthier society for it. And in the 150 years since public health regulation of our many sectors of food industry began, supplies have risen and prices have fallen.

  3. Lord

    No one has suggested letting them compete to post signs saying they make their employees wash their hands, no regulation necessary? Still a bad approach to public health.

  4. Jay

    My favorite one is if the government did not FORCE auto makers to include seatbelts they NEVER would have.

  5. Billy B. Beamer

    Appears you missed his point entirely. I think he was saying that he, too, agreed that hand washing was a good thing. And adding that the market would take care of any restaurateur who disagreed. Fair point on requiring a different sign.

    1. Menzie Chinn Post author

      Billy B. Beamer: I caught that. My corollary is that the market does not always work magically to solve problems, especially when negative externalities exist. (“Externalities” are a market failure after all, at least in so far as the textbooks I’m familiar with indicate.)

        1. Menzie Chinn Post author

          Steven Kopits: Are you asserting the incidence of food-borne illnesses would go down if the requirement was eliminated? That seems to be your point.

          1. Menzie Chinn Post author

            Steven Kopits: Well, then, we should dispense with regulations requiring food service workers who prepare the food that goes to restaurants (you know, chop the lettuce, etc.) and also see if we can get a statistically significant effect.

            Question: Have you ever worked in a restaurant prior to implementation of modern regs such as wearing gloves? I haven’t, but since my father did (and was a part owner once), I have seen plenty. Had you had the same experiences, I should think you would want as many of these regs (and public health inspections) as possible.

          2. Steven Kopits

            I would tend to argue that all the members of the supply chain have an incentive to provide safe food. The costs are largely internalized. Just ask Chipotle.

            Now, I did not say anything about all regulations. At issue is whether the hands washing regs pass a cost-benefit test. I’ll have a longer response below.

          3. Menzie Chinn Post author

            Steven Kopits: Where have I heard this argument that firms will do what is necessary to ensure survival via good risk management. Oh, I think Alan Greenspan said something to this effect about banks and shadow banking system entities around 2005. For documentation, and additional unfortunate statements, see my book, Lost Decades.

          4. Steven Kopits

            Let me continue, to Tillis’ point:

            The great problem is that regulations tend to regulate inputs, not outputs. What is our goal? To prevent material food borne illnesses, and in particular, the externalized portion of these losses.

            OK, so why not regulate outputs, not inputs? Make a regulation that any restaurant is strictly liable for any illness-related costs, plus a fine equal to 100% of such losses. This would cause restaurants to seek insurance, and one could stipulate that restaurants are allowed, but not required, to display poor of food safety insurance. Now you’ve privatized essentially the whole system and not dictated how the restaurant meets those goals.

          5. Menzie Chinn Post author

            Steven Kopits: Two comments. (1) Self-regulation only works partially as long as downside risks are truncated by bankruptcy laws, and the fact we do not allowed indentured servitude. (2) Outputs are imperfectly measured, often measured with more noise than inputs. Hence, regulators often try monitoring and regulating both.

            On (1), I thought the financial crisis of 2008 (do you remember that) would have been instructive. Since I’ve just finished teaching money and banking, I’ll just mention truncated downside risk is one of the key highlighted explanations for excessive risk taking.

            On benefit-cost analysis, just curious if you ever took a course in the subject. I’ll await that answer, and the answer to my previous question about whether you ever worked in a restaurant, which you have not yet answered.

        2. dilbert dogbert

          And never use the bathroom with gloves on? Never pick their noses with gloves on? Never touch a contaminated surface with gloves on? MMMM??? Interesting.

          1. Steven Kopits

            Have you ever seen anyone ever in a public restroom with gloves on? I mean, really, ever?

            Have you ever eaten at Subways or Chiptoles? The preparers change gloves quite frequently.

          2. Menzie Chinn Post author

            Steven Kopits: I have seen people answer phones with their gloves on, in front of me, in the middle of preparing a brat. At airport. Less than three months ago.

          3. Menzie Chinn Post author

            Steven Kopits: Do you think the Senator was specifying only the hand-washing reg should be a voluntary one? I doubt it. Given the Senator doesn’t think proposed clean water regs pass the benefit-cost test, I suspect he’d want the entire supply chain to be “gloves” voluntary.

          4. Steven Kopits

            I’ll take the win on that debate.

            Managing food safety, as you correctly point out, is a complex matter. Most chain stores have PPP’s in place to manage these. However, much depends on culture, including the culture of the employees themselves, as well as the nature of the food prepared. For example, Chipotle uses a good number of natural ingredients served raw (tomatoes, lettuce, guacamole, etc.) which are more prone to food borne illness. On the other hand, McDonald’s has solved this problem by eschewing carbon-based compounds in their food, best I can tell.

            Independent restaurants–Chinese, for example–are as good as their managers. Some of them are pretty dodgy. OK, they’re pretty much all dodgy, but I’ve never gotten sick eating in one (except in Peru, but that’s another story). Here in Princeton, we have Hoagie Haven , a veritable institution. Even the cockroaches stay away. Now, I would guess you’ll find that hand washing sign in both our Chinese and Hoagie places here. You think it helps? I sincerely doubt it.

        3. TedK

          According to Health Code Regulations employees are to wash their hands prior to donning gloves. Also gloves should be changed periodically. It is a regulation to wear gloves and wash hands when handling food just as there is a regulation to wash hands after using a restroom and prior to returning to work.

      1. Bruce Hall

        Yes, indeed. You might be interested to know that the genesis of the Flint problem is actually road salt that dissolves from nearly all northern paved roads into inland waterways and ground water. The Great Lakes are so large with so much flow out of Canada that they are not as affected. The sodium and chlorine atoms ionize in the water and the chloride ions leach metals from copper and lead lines. Lest you think reverse osmosis is the total answer, those systems must use all stainless steel pipes and fittings, or plastic, because the very pure water will also leach high levels of copper and lead.

        Now, we can regulate water treatment so that the chloride ions are neutralized, but that doesn’t solve the problem for communities that extract their water supply from nearby surface or ground sources that have been contaminated by road salt. So, the most effective way to ensure the problem is solved is to eliminate the use of any chlorine compounds in road deicers. However, that could be a significant burden on the budget for northern states because non-chlorine deicers can get quite expensive. Avoiding deicers would require going back to the 1950s and 60s with sand trucks and studded snow tires, but sand is a problem for sewer systems and studded snow tires destroy roads. So avoiding that would require replacing all water pipes containing copper and lead, but that could be a hard sell.

        Nothing is ever as simple as it first seems. But the upside is there is an opportunity for so many more regulations.

        1. Menzie Chinn Post author

          Bruce Hall: Thanks. But why weren’t we poisoning the people of Flint two years ago, and we are now? I think it has something to do with (1) money, (2) taxes, and (3) ideology.

          1. Bruce Hall

            You are correct. Money was the issue for a cash-strapped Flint government. The Detroit water rates had just been raised 6% and Flint and its residents couldn’t afford it. The alternative was the local river water. The Detroit water was abandoned and the river water was connected as an interim effort until Flint could get its own pipeline to Lake Huron installed. Unfortunately, while the water tested okay in the treatment facility, a very small amount of money was saved by not treating it with a chlorine neutralizer.

            So, yes, money was an issue.

            As far as taxes go, do you think you could have convinced Flint’s residents to go for a tax hike before they encountered a problem? If you think “yes”, you haven’t been to Flint.

            Ideology? No, in this case I think it was incompetence. The Michigan DEQ director resigned in December, 2015.

          2. Menzie Chinn Post author

            Bruce Hall: Two questions: Who appointed Michigan DEQ Director Wyant in 2011? Who appointed Darnell Earley Flint’s emergency manager in 2013. I think the answer to these two questions (it’s the same person) speaks testaments.

          3. Jay

            When the Detroit Water and Sewage Department found out that Flint was planning on buying water from another source (being built right now) they A) threw a hissy fit B) terminated the contract to supply Flint with water (1 year notice) C) offered to extend the contract but only under prices that could be considered price gouging D) left Flint high and dry until the new pipes to get water from Lake Huron reach Flint.

            Let us get a list of names and political affiliations of everyone on the DWSD.

          4. Bruce Hall

            Jay’s point about political appointees is correct: politicians are not great managers. Just look at Flint’s abysmal record under Democratic mayors Don Williamson (D) 2003-09 and Dayne Walling (D) 2009-15. Most of their years were under Democratic governor Jennifer Granholm. The city went down, down, down. But, hell, we could go back from there. Woodrow Stanley (D) was mayor from 1991-2002. Flint had Democratic Party mayors going back to 1975 under Flint’s new charter of 1974.

            So, why didn’t these mayors DO ANYTHING about Flint’s deteriorating condition for 40 years? There were plenty of Democratic governors during that time. But Democratic Party malfeasance or incompetence… you can pick the poison… ran Flint into the ground financially by 2015 so that it couldn’t get by anymore. There wasn’t much choice by then to do anything except try to cut costs and salvage what could be from the wreck.

            That doesn’t excuse the incompetence of Snyder’s political appointees, but there’s enough blame to go around.

          5. Menzie Chinn Post author

            Bruce Hall: Plenty of blame throughout history; but adding in Legionnaire’s disease deaths to long term illnesses and disabilities implies a particularly egregious failure.

          6. Bruce Hall

            Menzie, as you said there is plenty of blame to go around. 40-years of inept leadership culminating in financial crisis. Detroit raising water rates in retaliation for Flint and Genesee County deciding to build their own water network. Flint’s forced decision to use river water and failing to treat it properly. Flint politicians, state politicians, and federal agencies all contributing to the disaster.

            Going back to the premise of this post, how exactly did regulations and protection agencies fail so miserably? It certainly wasn’t because Gov. Snyder told them to go out and be stupid. In the end, not only did the Michigan DEQ fail, but the U.S. EPA as well. Why? Because regulations are not a perfect substitute for good leadership. Sometimes, they are just not worth the paper they are written on. http://www.nbcnews.com/storyline/flint-water-crisis/epa-administrator-quits-amid-flint-water-crisis-n501561

            So we end up with the typical political solution: fix the blame, not the problem. And now the state has been forced to reconnect Flint to the Detroit water system at a higher cost than by subsidizing Flint at the higher rate Detroit demanded… and people are sickened and the infrastructure damaged. Yes, Flint mayors failed for 40-years, Michigan governors failed to demand responsible leadership in Flint (and Detroit) for decades, stopgap measures were poorly thought out and mismanaged, and protection agencies with their multitude of regulations looked the other way.

            Sound like a full-blown clusterf— by all parties.

  6. Ricardo

    This is such a red herring. Government’s job is to enforce contracts actual and implied. Sanitary conditions in food facilities are implied contracts with customers and violations should hold serious penalties, but the penalties should not go to government but to the victims. When the proceeds go to the government there is a incentive for the government to find bogus penalties so they can receive the proceeds.

    But by far the largest expenditures of government and the worse regulations have little to nothing to do with sanitary conditions. Usually they are rules, not laws, to enforce behavior.

    If we limit government to its best and most important duties it would cost nearly nothing.

    1. Robert Hurley

      Ricardo: You make some grand sweeping statements like your last paragraph and supply zero proof.

      1. ottnott

        No kidding.

        Ricardo: “Government’s job is to enforce contracts actual and implied.”

        US Constitution: “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution”

        1. Dick Fox

          ottnott,

          Glad we agree. Everything in the constitution is enforcing contracts with the American people.

  7. ottnott

    “I don’t have any problem with Starbucks if they choose to opt out of this policy as long as they post a sign that says we don’t require our employees to wash their hands after leaving the restroom”

    Ah, the favorite myth of libertarians and anti-government conservatives — adequately- (and timely-) informed consumer blessed with appropriate influence on those who produce or sell products and services.

    When this myth is pointed out as fantasy, the favorite response is that people should make more effort to take responsibility for their own safety and well-being. I’d rather not bother explaining why a concept that might have worked pretty well in an agricultural, largely immobile, society of the late 18th century is very far from adequate today. I will just note that the country, over time, has already voted against pretending that we are in libertarian utopia. Voters have opted for professional oversight combined with enforcement power. They have done this in every modern society.

    And, it works. These regulatory-rich countries have built prosperous societies with enormous economies. Economies work better when buyers and sellers don’t need to fully vet every party with which they do business. Societies benefit when businesses who take shortcuts, such as by careless dumping of hazardous or nuisance waste materials, do not prosper at the expense of businesses that take more care.

    Tillis treats a philosophy like a religion, and has it dictate policy rather than guide it. As we should expect, this treatment results in illogical behavior, such as believing that requiring a sign about hygiene policy is superior to requiring good hygiene.

  8. Joseph

    “Two questions: Who appointed Michigan DEQ Director Wyant in 2011? Who appointed Darnell Earley Flint’s emergency manager in 2013. I think the answer to these two questions (it’s the same person) speaks testaments.”

    And who appointed the Detroit emergency manager who got into a snit with the Flint emergency manager and raised water prices prompting the water source change that started the whole mess?

  9. Steven Kopits

    Let me propose a different topic for regulation.

    Much of the east coast is being pounded by a blizzard just now. One of the big problems is road travel, and clearing the roads is made much more difficult by cars, and in particular trucks, stranded on the highways.

    Why are the trucks out there? This storm was forecast well ahead of time; the trucks should have been off the road. But we know why. Because the trucks are owned by independent operators gambling that they can get through and make a couple days’ wages. They lost the bet, and now roads are blocked as a result.

    Truckers should be actively discouraged from using roads, particularly highways, when travel conditions are perilous. We should fine them if they are stranded. But we need objective conditions for the fine. Thus, the states should have certain snow conditions, say, ‘Emergency State 5’, which, should it be declared by the governor, would mean a fine of $1,000 for any stranded truck. That would make truckers think twice about being out on the roads in bad conditions.

    1. Bruce Hall

      What are the ><regulations that “we all can agree” are beneficial.
      Food safety? http://www.nytimes.com/2014/07/31/opinion/the-fda-blatant-failure-on-food.html?_r=0
      Drug safety? http://www.ucsusa.org/our-work/center-science-and-democracy/promoting-scientific-integrity/vioxx.html#.VqPd9tIrLGI
      Vehicle safety? http://www.nytimes.com/2015/06/20/business/federal-auditor-finds-broad-failures-at-nhtsa.html
      Drinking water? We covered that.

      The point is that we have a plethora of regulations covering more things in our daily lives than most of us recognize. But regulations are only as good as the way they are written, the competence to enforce them, and the perception of the public that they do more good than harm… a necessary element of cooperation (a big problem for the EPA).

      1. Menzie Chinn Post author

        Steven Kopits: If it’s so hard to implement good regulations, why are the Great Lakes in better shape than they were 40 years ago? Why is acid rain not rusting away cars all over the region? I get the feeling you’re throwing the baby out with the bathwater. Instead of saying no more regulation because we can’t do them well, let’s try to improve the ones we currently have (and improvement doesn’t necessarily mean eliminating).

        Still waiting to hear if you’ve ever taken a BCA course. If you haven’t, let me recommend my colleague’s book, “Policy Analysis: Concepts and Practice,” by David L. Weimer and Aidan R. Vining.

        1. Steven Kopits

          Yes, of course.

          I took it in courses at SIPA, and of course, I have an MBA in Finance and Accounting. Know what IRR’s and NPV’s are?

          1. Menzie Chinn Post author

            Steven Kopits: Yes, I know what an IRR and a NPV is. I was wondering if in your MBA class they covered what assumptions are necessary so that one can aggregate individual welfare functions and then convert to dollar terms (by way of constant marginal utilities of dollars), so aggregate costs and benefits can be compared. That was what I was trying to get at. It’s not all that straightforward.

          2. Steven Kopits

            What do you think I do for a living?

            If we are talking policy, rather than finance, then it’s a matter of including the stakeholders and making some assumptions about values. A lot of it is research and modeling. Historically, I am very good at that. I can quantify almost anything. And bear in mind I led the US operations of a oil services market research firm. We did a lot of research.

            The difference in the private sector is that you can’t assume anything. I usually have some sort of bias, but I don’t have an opinion until I’ve done the work. The conclusion is often not what you expect.

  10. Steven Kopits

    Good regulations are often, but not always, easy to implement. Good, cost-effective, flexible regulations can be very hard to implement, and for a simple reason: Government is mandated to focus only on Type I, not Type II, errors. And Type II errors, as you know, can be devilishly hard to measure. No one at the FDA will lose their job for failing to approve a life-saving drug. On the other hand, heads will role if a dangerous drug is released to the public. The incentives are not balanced.

    For a restaurant, the key is to balance Type I and Type II errors, to the extent the costs are internalized. You want the food to be safe, but not too safe. Too safe food is going to be expensive food, so the consumer will be paying for a marginal benefit which it does not value as a matter of custom. I could give you a fantastic food safety regime which would put every mom-and-pop Chinese restaurant out of business. When I eat at our local Chinese restaurants, I do not have great illusions about food safety or cleanliness. Hell, the waiters don’t even speak English. So I assume I am getting mainland Chinese standards of care. But I eat there because I haven’t gotten sick and it’s cheap. Something for something. Government doesn’t work that way.

    Now, if we stipulate that a fiscal accountability act–an incentive plan for politicians–would remedy the problem, then sure, bring on the regulation. With that, we’d have a way to balance Type I and Type II errors.

    1. Menzie Chinn Post author

      Steven Kopits: And you believe that the Chinese restaurant were subject to mainland China regulations, you’d have the same level of food hygiene as if it were regulated to US standards, because they are both internalizing type I and type II errors correctly? So, let’s do a thought experiment — if we exempted at random 90% Chinese restaurants in the US from US-level food standards, they would be just as hygienic as those 10% not exempted?

      Let me just say, my mother would not take the bet that that would be the case.

      Or maybe you believe the Chinese levels are optimal. Then, let me note, you never responded to my point about the fact that downside losses are truncated at zero, while upside are not, and this gives firms an incentive to socially excessive risk-taking.

  11. Steven Kopits

    No, I don’t. Regulations, as well as corporate PPPs, reflect risk management preferences.

    The amount of money a society is willing to spend on reducing risk is a function of the wealth and income of that society. Wealthy countries will want lower risk and be willing to pay both the supply chain and the restaurant management to handle that risk. It won’t be the same in China as in the US.

    Having said that, and having eaten in both Chinese Chinese restaurants and American Chinese restaurants, I thought the subjective level was pretty similar. And for the record, upscale Chinese restaurants serve some pretty funky mushrooms, which I found hard to take. When I was last in Beijing, I finally begged my hosts to take me to restaurants were regular people ate, and that was much better. I found them very similar to US Chinese restaurants (better actually, than our local Princeton stuff), albeit my sample was limited to Beijing and Shanghai.

    Now, do I believe most Chinese restaurants in the US would pass a level I would consider hygienic. No.

    However, Chinese food is almost always fully cooked. Very little is served raw. As a result, Chinese food is inherently more tolerant of lower standards of hygiene. Not so at Chipotle. Running the show there requires much greater attention to food integrity up and down the line, because so many ingredients are mixed in the open and so much of it is served raw. From the point of local inspectors, both Chinese and Chipotle restaurants are essentially the same. But they are vastly different from a risk management point of view. And that’s Tillis’ point: One size regulation may not fit every eventuality.

    By the way, the most disgusting food I have ever received has been at places marked by monopolies and non-iterated interactions, that is, airports, highway service stops and Mallorca. If you want better hygiene, have more competition. And if you want to regulate, regulate first places characterized by monopoly and non-iterated interactions, or anything within 30 miles of New York City. Those will be the worst.

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