Extending An Olive Branch To Regulators

I get around half my calories from olive oil -- much like this lady -- so when I started reading that a lot of olive oil is not actually olive oil I was naturally quite concerned.

More than two of every three bottles labeled imported extra virgin olive oil are either a cheaper grade of olive oil or adulterated with another type of oil, a University of California at Davis study found.

Top-selling brands including Bertolli, Filippo Berio, Carapelli, Pompeiian, Colavita, Mazola and Carapelli all had bottles that flunked the test -- containing instead a cheaper virgin olive oil, the study by the university's Olive Center found. Even a brand carrying the name of TV host Rachael Ray -- who frequently touts her supposedly extra virgin olive oil -- flunked the testing on two of three samples.

WalMart's "Great Value" store brand olive oil is -- not surprisingly -- pretty inexpensive compared to alternatives, and since I consume so much olive oil I make a point of buying theirs (I usually keep 3-4 gallons around at any given time, which also gives me a nice healthy calorie-dense hedge against disaster).  But surely at such a great price they must be one of those aforementioned scammers, right?

The chemical analysis did find that 90% of the California-packaged olive oils were indeed what they claimed to be. Two that were exactly what they claimed to be were Walmart's Great Value brand and Costco's Kirkland Organic.

oliveoil.bmp

Well, that's a relief.  While I'm not in California, I expect that holds true across all of WalMart's distribution chain.  It's ironic, though, that the big bad box stores are in fact the most honest.

Of course, not all the players are self-regulating here, and this is one of those cases where libertarians welcome proper regulation of the marketplace.  Oftentimes such regulation amounts to ridiculous rentseeking (such as the 80-year-old barber forced to get a license), but effective regulation is valuable to a free market -- all that intangible capital we Americans enjoy is largely in the form of trust, such as trusting that labels really tell us what's in a product.

posted by Dave on 02.26.11 at 03:41 PM










Comments

This is a situation where regulation failed. I would be much happier if there were no regulation and no false presumption that the product met the regulation.

I would then be unlikely to assume the product was as advertised and more willing to pay for private testing to ensure quality. After all private testing like Consumer Reports would sprout to test these products and many would pay a few dollars for this service.

Regulation here is the problem and makes the problem intractable since people are likely to assume quality due to regulation. End it.

Maddog   ·  February 26, 2011 4:42 PM

Agreed, Maddog. We need more like Underwriters Laboratories and a whole lot LESS government regulation.

Kathy K   ·  February 26, 2011 6:08 PM

I dislike the conflation in this case with the libertarian position with regulation. The usual libertarian position in these sort of cases is not called "regulation" but prosecution for fraud. Unless you consider prosecution for criminal fraud to be a form of regulation, you cannot make this a case where most libertarians would welcome regulation. In this case though prosecution for fraud is made more difficult due to the existence of the regulatory scheme, in addition to Maddog's point.

max   ·  February 26, 2011 6:09 PM

Cheaper than regulation and probably almost as effective in this case is information + publicity. And for that a UL type organization would suffice.

M. Simon   ·  February 26, 2011 6:17 PM

Maddog -- this is a situation in which regulators failed. Yes, government sucks at everything. But truth-in-labelling should be regulated.

Kathy K -- I agree we should have less government regulation generally, but that doesn't mean every regulation is wrongheaded.

Max -- In order to receive a civil judgement for fraud you must prove damages. That would be very difficult in a lot of cases like this where the harm is minimal.

Simon -- I agree in principle, but this solution has the same problem as Max's argument. UL has a good business model precisely because the sorts of things they review can often cause very obvious and litigable harm.

TallDave   ·  February 26, 2011 10:18 PM

TallDave, who said anything about a civil suit? I'm sure civil suits could be brought if someone wanted to, but fraud is a crime as well as a tort. Prosecute the crime when it occurs rather than create a regulatory scheme only complicates the business of those who would never dream of mislabeling their product and will be ignored by criminals anyway.

max   ·  February 27, 2011 1:16 AM

Max -- unfortunately criminal fraud cases have an even higher bar.

For instance, in theory almost every cinnamon distributor is technically committing fraud because virtually all cinnamon sold in the U.S. is actually cassia, a close relative of cinnamon that is much easier to mass produce.

The defense would be "this is common industry practice" and you would have to prove not just damage but malicious intent, and not just by a preponderance of evidence but beyond a reasonable doubt. That's why these olive oil cases typically end with a slap on the wrist.

TallDave   ·  February 27, 2011 10:17 AM

Dave, I would like to hear more about your use of olive oil. I use it myself, but not nearly to the extent you do.

May I ask if you find that obtaining half of your calories has a beneficial effect? Your comments suggest it does and I think it would be interesting to learn more about it.

TJ

TJ   ·  February 27, 2011 10:47 AM

I thought Dave's post was completely reasonable.

Maddog: You might "be unlikely to assume the product was as advertised," a sensible position in an unregulated market, but most people probably DO assume the advertisement is true. Deregulation of financial markets didn't seem to diminish people's confidence in (what turned out to be) false claims for financial instruments.

Kathy K: UL is an interesting example. Am I the only one old enough to remember UL-rated aluminum wiring? A successful lawsuit is cold comfort when your family's dead.

Max: if there's no government regulation there's no standard against which to measure the alleged fraud. How much not-olive-oil has to be in the bottle before I can claim successfully in court that the bottle isn't olive oil? It's unrealistic to expect consumers to bring such lawsuits on their own. The plaintiffs have to make a major financial commitment up front, the defendants can delay judgement for years and then use bankruptcy to skate away.

Don   ·  February 27, 2011 11:33 AM

if there's no government regulation there's no standard against which to measure the alleged fraud. How much not-olive-oil has to be in the bottle before I can claim successfully in court that the bottle isn't olive oil?

Well, if you are marketing your product as "100% olive oil", or even just "Olive oil" and your product contains something not on the ingredients list it is fraud.

Michael   ·  February 27, 2011 8:39 PM

Makes perfect sense to me; I think the legal default ought to be no additives, period. But you and I would go into court arguing common sense, and the fraudster who sold me non-olive-oil in my olive oil would argue that everybody knows it's not 100% olive oil, or that the additives make the product better, or that the label is truthful if it's just MOSTLY olive oil in the bottle, or that the label is truthful if whatever's in the bottle tastes more or less like olive oil. Without a standard definition of olive oil, we have to fight over what the definition is, before we can fight over what's in the bottle.

That's a lot of work to adjudicate one case of olive oil fraud. Too much work, if the whole point of the exercise is simply to make a market work efficiently.

Don   ·  February 27, 2011 9:19 PM

Am I the only one old enough to remember UL-rated aluminum wiring? A successful lawsuit is cold comfort when your family's dead.

One can easily say the same thing about the regulators that you want to handle this particular truth-in-labeling case. Look at for example the FDA. People have written books with nothing but its failures. Also the UL's failures are few and far between and it does indeed work: http://mises.org/daily/3440?sms_ss=facebook&at_xt=4d6b01e5d8f5db49,0

anything that it does not cover is a problem with how the courts and the law function, obviously you cannot put our suggestions of what should be done out of context, those things would be changed as is appropriate. You can't just single out some specific thing and put it into the current environment, many things won't work in that case.


Fareed   ·  February 27, 2011 9:24 PM

Am I the only one old enough to remember UL-rated aluminum wiring? A successful lawsuit is cold comfort when your family's dead.

you should look up SARS, as well as talk to all of the families that have lost people because of the FDA's failures, based on that logic.

Michael   ·  February 27, 2011 9:27 PM

Makes perfect sense to me; I think the legal default ought to be no additives, period. But you and I would go into court arguing common sense, and the fraudster who sold me non-olive-oil in my olive oil would argue that everybody knows it's not 100% olive oil, or that the additives make the product better, or that the label is truthful if it's just MOSTLY olive oil in the bottle, or that the label is truthful if whatever's in the bottle tastes more or less like olive oil. Without a standard definition of olive oil, we have to fight over what the definition is, before we can fight over what's in the bottle.

That's a lot of work to adjudicate one case of olive oil fraud. Too much work, if the whole point of the exercise is simply to make a market work efficiently.


what about the salmonella-tainted peanut butter scandal, the mercury-tainted high fructose corn syrup scandal or the bisphenol A-in-our-bodies scandal or the phthalates-in-our-bodies scandal...oh wait, all of these took place within the same time period.

Anonymous   ·  February 27, 2011 9:50 PM

Makes perfect sense to me; I think the legal default ought to be no additives, period. But you and I would go into court arguing common sense, and the fraudster who sold me non-olive-oil in my olive oil would argue that everybody knows it's not 100% olive oil, or that the additives make the product better, or that the label is truthful if it's just MOSTLY olive oil in the bottle, or that the label is truthful if whatever's in the bottle tastes more or less like olive oil. Without a standard definition of olive oil, we have to fight over what the definition is, before we can fight over what's in the bottle.

That's a lot of work to adjudicate one case of olive oil fraud. Too much work, if the whole point of the exercise is simply to make a market work efficiently.


what about the salmonella-tainted peanut butter scandal, the mercury-tainted high fructose corn syrup scandal or the bisphenol A-in-our-bodies scandal or the phthalates-in-our-bodies scandal...oh wait, all of these took place within the same time period.

Michael   ·  February 27, 2011 9:55 PM

Not only that but lots of imported oils are actually rancid.
http://www.physorg.com/news/2011-02-consumers-olive-oil-rancid.html

That study didn't say "imported oils are rancid", it was testing something else. But it was something they found out by accident. Another survey of imported oil really needs to be made to see how much is rancid.

I have switched to California olive oil. Your post only makes me even more glad I did.

plutosdad   ·  February 28, 2011 12:28 PM

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