Posted by: janineplusbrianequals | October 23, 2009

who says what’s Kosher?

I don’t actually mind who establishes Kosherness but Scott Coney presents a useful issue today on Triplepundit.com. He asks “Should Eco-Labels Come from Government or Third Party Private Organizations?”

Basically he looks at the wide array of different eco-labels and the pros and cons involved with providing this labelling service through the government or through 3rd party companies. He seems to decide in the end that government should play a key role.

I certainly appreciate his bringing this discussion up as it is an important one. There is a growing population of consumers who want to make purchases that are either good for their bodies or good for the earth (or both). Individual consumers cannot do the necessary leg work to check out every product they buy.

Hence, reliable labels are desirable and valuable to consumers who wish to be discerning. These labels are a key part of real, widespread change in the way we use earth’s resources.

Clearly, reputation is everything for a would-be label company. Companies offering this service have a huge incentive to protect, maintain and develop recognition and esteem for their label. 

This natural incentive is not necessarily built into similar governement labels. These labels instead rely on budget support from politicians who in turn rely on campaign donations, much of which comes from large corporation.

USDA organic

USDA organic

An example is the USDA organic label.

Whether USDA innocently understaffs their certifying department or sells out politically, they make mistakes: (ie Horizon Debacle). Certainly third party labels also make mistakes, but I’d argue that their incentive to catch and clean up their mistakes is much higher.

The only advantage I see to government labels is that they can draw on the instant brand recognition that comes with a monopoly. There is only one US government, no others are allowed. Thus when the federal government has an opinion on what makes a product healthy, for instance, it is the only official government opinion. Everyone has already heard of the US government and in many cases are used to thinking of it as a (reliable?) authority.

This instant name recognition and basic trust is very useful for promoting certain information. My argument is that this monopoly status (offered only to national governments) drastically reduces accountability and the drive for high quality information. 

In contrast, a private company must painstakingly establish its name by consistently offering high quality information. Even after a nationally recognized reputation is built, like Consumer Reports, the consumers still know that they must be engaged with evaluating the quality of the product.

We have numerous examples of for-prophet and non-prophet labels which have become successful and useful.

We have numerous examples of for-profit and non-profit labels which have become successful and useful.

I contend that consumers automatically tend to place too much trust in the information from government and stop evaluating it for themselves because they are impressed too easily by an “official” position. (Despite the fact that this trust has been repeatedly shown to be unwarranted -see Energy Star‘s failure as another example). In this case, civil servants needn’t be corrupt and evil, they just need to be fallible humans and they will produce mistakes. I want consumers skeptical and on the look out for mistakes.

Let’s be patient with this young eco-boom. The market is there.  Numerous companies are sweating to establish the quality and recognition of their labels. Leaders will emerge and if we don’t have too much complacent, government monopoly labels blocking the market we may find that we get much more dynamic and valuable labels. We can do a lot better than USDA certified organic.

Brian

Also, I’m grateful for Coney’s link to Ecolabelling.org which makes it easier for consumers to understand quality labels.

 

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Responses

  1. Hmmm… an interesting debate.

    How does Mr Brian feel about the FDA? Does he feel that most governmental organizations are untrustworthy? My personal impression is that the US gov. has some impressive oganizations e.g. the FDA, EPA, CDC. Of course all organizations are susceptible to corruption, both federal and independent. Who knows which is best?

    Who decides what Kosher? Probably some Jewish guys.

    Regards

    Steve

    p.s. I think you mean “built” not “build”.


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