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A few days back the newspaper Folha de Sao Paulo reported about the findings of the Public Ministry of Rio Grande Do Sul. Apparently almost 300,000 liters of adulterated milk belonging to the leading brand Leader of Parmalat are being sold in the cities of São Paulo and Paraná. But Brazilian population should not fear since the government is here. Prosecutors "unleashed" a new wave of persecutions with one person being arrested and some product seized.

There you have it!

Proof!

The Democratic system at work protecting the wellbeing of the population. What else do you want?

Seriously?

A great deal more!

Let's think this through. If the company did indeed adulterate milk with formaldehyde (a known carcinogen) to increase the volume of the product, they did so believing they would be successful. A company would not do so believing they would get caught, that goes without saying.

But why would a company believe that they could do this without reprisals? Because the chances of being caught are very low indeed. And why would this be so? Because governments simply do not have neither the resources nor the technical capability to police the entire food chain. Furthermore, if caught, the penalties would be large (in terms of negative news) but quite low in terms of fines.

Therefore why not? The bottom line is that if they are indeed responsible their punishment would be mild. The risk/reward relationship weighs heavily towards reward.

And why is so? Because reprisals are determined by the government and not by the affected people. People drinking the adulterated milk products won't see a cent of any fine that may be imposed. Furthermore, they are forced to pay from their own pockets (through taxes) all the costs of the government's policing and judiciary costs.

In other words, they were affected by an adulterated product which they pay for. They are paying for the costs of policing and judiciary and they won't see a cent in compensation. Does this seem like common sense to you? Of course not!

The root–cause of all crimes (including this one) is the risk/reward relationship. The risk is low because we are dealing with the Government and this is so because the Government took over the compensation rights from the citizens. Therefore there is no private incentive to go after the company or persons who adulterated the milk. There is no financial gain in so doing and so private forces simply do not do it.

The problem is that by removing incentives the government is preventing free markets to take care of the problem. In an Absolute Austro–Libertarian system the lack of government and the absolute responsibility of one own actions means that compensation level are high and therefore incentive levels for private food chain monitoring are very high too!

To pretend that a government can police the entire food supply of any country is just ridiculous. Private enterprises will always have the upper hand in this game. They have the know–how, the people and the means. The only force capable of opposing them is the free market! Self–interest at work. The free market will deploy sufficient private means to monitor a percentage of the food supply which is compatible with compensation levels.

The more damaging the adulteration, the higher the potential compensation levels and hence the higher the private resources dedicated to monitoring and persecution.

Private efforts are not only efficient and effective, but they are also balanced in the sense that more effort is placed where the potential damage is larger. And all of this is achieved without a single person having to be robbed of a single cent (through taxation) and without the need for any government bureaucracy at all!

Furthermore, since compensation levels are so high, food companies would find cheaper not to adulterate than to do so. They would do this out of self–interest and not because of possible punitive measures a government may impose.

This case is not an example of government in action, but it is an example of government inaction!

For those of you still unconvinced, please note that this is not political or economic science fiction and there is yet another process at work. This happened during the beginning of the Industrial Revolution in UK where food supplies were routinely adulterated. Eventually, companies discovered that in order to gain a larger market share and be able to make larger profits it was better not to adulterate and market the food as such! Eventually, non–adulterated foods displaced adulterated foods from the marketplace and this did happen without government intervention. The government only appeared in the picture after the free market had already solved the problem.

The bottom line is that a free market can and does provide better, lasting, more effective and efficient solutions than any government ever can.

The issue is to get the government out of the way… as usual.

To you good health!

Note: please see the Glossary if you are unfamiliar with certain words.

 

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