Wednesday, September 19, 2007

Are Product Definitions a Proper Function of Government?

This article regarding the fact that Mars Inc. says that using a certain amount of vegetable oil in place of cocoa butter - even if such a change were allowable under the official definition of chocolate - would be a mistake made me start thinking about the fact that we have a government dictated definition of certain products.

It seems to me that the purpose of having government set definitions of certain products is so that consumers can be confident that, when they buy a chocolate bar, they are actually getting a certain product, namely, chocolate, as opposed to some soft brown stuff on which a company has slapped a label reading "chocolate." I expect that the problem, the argument would go, is that consumers would not be able to tell the difference between chocolate made with only 95% cocoa butter as opposed to 100% and, thus, would be exploited.

It seems to me, however, that having the government define certain products in terms of percentages of ingredients is trying to solve the same problem with two different solutions - after all, there are already penalties for false advertising / inaccurate labeling. If consumers are concerned about the percentage of cocoa butter in something labeled chocolate, companies using higher levels of cocoa butter would certainly want to put that prominently on their packaging. Companies not using high amounts of cocoa butter would probably just put nothing to that effect on the packaging. Thus, consumers would just have to check the packaging. Anything inaccurate in that regard would be discouraged by the aforementioned penalties for false advertising.

This setup, though, would probably be accused of placing a "burden" on consumers. The obvious response to that would be "Oh, come on." One argument in favor of it would be that it would be one less thing that government is involved in. On the other hand, this seems to be an awfully trivial matter in the grand scheme of things and, thus, is it that big of a deal (other than on principle) that government is involved?

Also, it seems to me that, if the government were to change the definition of chocolate to allow a certain percentage of vegetable oil, certain companies are going to be putting their cocoa butter content on their packaging anyway - because it will be a competitive advantage for them. Thus, it seems that, unless government definitions involve 100% purity (of whatever critical ingredient of whatever product we're talking about), then a government definition is redundant anyway. Also, in cases where there are multiple critical ingredients (and, thus, no one can have a 100% value without the exclusion of the others), e.g., certain types of wine, there is almost (if not) always a range of tastes such that defining a certain proportion of percentages would be to chose one group's taste over another's. Thus, again, it would seem that packaging would be informative in this regard in any event.

Thus, whether a certain product involves one or more critical ingredients, a government definition seems redundant because companies are going to have an incentive to include ingredient information on their packaging as a selling point anyway. Again, assuming that it is redundant and the only disadvantage to government definition is that, when the government does set the percentage of the critical ingredient to 100% (since, again, when it is something else, companies are going to put this information on the packaging anyway), consumers don't have to read the packaging, it is a valid use of government?


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