Taxing Antibiotics: Rational Argument v. Socially Defined Marketplace

And just like that! I got interested in something. And how's that for a turgid title????

Okay. Antibiotics.

BRIEF background (because for once in my life, I'm gonna cut to the chase): For decades, activists have lobbied for bans/limits on the use of antibiotics in livestock production. Right now, 2014, they're about as close as ever to achieving that goal. (Many farmers won't be sorry to see the debate end.)

If you want more information, google (or, hey!, read my book).

Here I want to comment on a novel but ultimately flawed proposal to manage the antibiotics issue.

Two economists recently published a (scholarly) paper arguing for a tax on agricultural antibiotics use. They argue that a tax requires less governance (and the costs associated therewith) than bans and is a more rational way to manage the market for antibiotics. Those with an economic incentive to feed antibiotics to livestock will also have an incentive to pay the tax. Fascinating idea.

And a perfect example of an otherwise fine, "rational" economic argument undermined, inadvertently, by the messy reality that is daily life on planet earth.

"Messy reality" in this case is the fact that the debate over food is, to a large extent, a debate over [access to] information and thus (and alas) a debate over labels. For decades, food reformers have waged war on their opponents by lobbying for government-imposed labeling requirements. The opponents respond by arguing (in part) that labeling is an economic burden (which it is).

In the case of antibiotics, food reformers have succeeded in identifying antibiotics-on-the-farm as a "bad thing." That means that the final, retail product (steak, burger, whatever) would likely carry a label indicating that the meat came from antibiotic-fed livestock. Put another way, farmers who opted to continue feeding the drugs face an additional "tax" on the product above and beyond the monetary tax.

In this case, then, the economists' proposal doesn't account for the invisible hand of social reform. The proposal assumes only that livestock producers would weigh the cost of production against the cost of the tax and either pay it or not.

Which raises a fascinating question: Which is the "real" market? The one based on producers' costs only? The one based on producers' costs AND social value (as expressed in the tax)? Or the "social" market, in this case prepped if you will, by the reformers' success in permanently tainting any value, monetary or otherwise, of antibiotics on the farm?

I have no idea. (Because I'm not an economist.) I only emerged from the dark of the deep cave to point out that what appears, on the face of it, as a reasonably alternative to "more government," is in fact, well, perhaps not as "rational" as it appears to be at face value.

Over and out. (And for those keeping track, you notice there are no images. So. Apparently I'm undecided about what role images could/should/might play and, hmmm, if a post can be sufficiently "serious" so that I instinctively omit the images??)