Peanut Corp's auditors were hired by ... Peanut Corp

[Darth Wong]

http://www.cbc.ca/health/story/2009/03/ ... anuts.html

U.S. salmonella outbreak points to weakness in self-regulation: lawmakers
Last Updated: Friday, March 20, 2009 | 8:55 AM ET

The mortgage meltdown exposed the weakness of self-regulation in financial markets, but now the U.S. salmonella outbreak is doing the same for the food industry.

A government subcommittee Thursday released new documents that showed how private inspectors contracted by Peanut Corp. of America failed to find long-standing sanitary problems at company facilities.

Peanut Corp. is at the centre of a U.S. outbreak that has sickened nearly 700 people and is blamed for at least nine deaths.

Lawmakers said the food industry's private inspection system failed to catch filthy conditions because the company itself hired the inspectors.

"There is an obvious and inherent conflict of interest when an auditor works for the same supplier it is evaluating," said Rep. Bart Stupak, chairman of the House Energy and Commerce investigations subcommittee. He termed it a "cozy relationship."

Last summer, Peanut Corp.'s private inspector, a company called AIB, awarded the peanut processor a certificate for "superior" quality at its Plainview, Texas, plant. This year, salmonella was discovered there.

The outbreak was initially traced to a Peanut Corp. facility in Blakely, Ga. Later, contamination was found at the Texas plant.

Peanut Corp. is under criminal investigation for allegedly shipping products it knew to be tainted.

Owner Stewart Parnell has refused to answer questions from lawmakers, citing constitutional protections against self-incrimination. On Thursday, Parnell told the Associated Press he couldn't comment on the allegations and referred questions to his attorney, who was not immediately available.

Federal law does not require food companies to pay for their own inspections of suppliers. Nor are industry labs and inspectors required to tell the government about any problems they find.

At least one food company that used its own inspectors, Nestle USA, ultimately decided not to do business with Peanut Corp. Nestle USA had no recalls. But a Nestle affiliate in Puerto Rico recalled some ice cream products, and Nestle HealthCare Nutrition — another affiliate — recalled a nutritional bar.

The committee released a 2002 Nestle USA inspection report of Peanut Corp.'s Blakely plant. "They found that the place was filthy," said Rep. Henry Waxman.

A second audit by Nestle USA of Peanut Corp.'s Texas facility in 2006 also found major pest control and other problems. The audit said that would disqualify the plant from supplying chopped peanut pieces to sprinkle atop Drumstick ice-cream cones.
No pathogen monitoring

Auditors found at least 50 mouse carcasses in and around the plant and also a dead pigeon "lying on the ground near the peanut-receiving door."

The audit also said the plant had no pathogen-monitoring plan and noted that one needed to be developed for the plant to be in compliance with audit standards.

Companies that bought ingredients from Peanut Corp. said they had no way of defending themselves against a supplier they accuse of deliberately breaking the rules and covering up.

"I think we did everything we could do," Kellogg Co. chief executive David Mackay told the committee.

"The issue was that [Peanut Corp.] acted in a dishonest and unethical way," he added.

Lawmakers and the Obama administration say the problem goes beyond a rogue company, and major reforms are needed. Legislation has been introduced in Congress to take food safety oversight away from the Food and Drug Administration and give it to a new agency with stronger legal powers and more funding.

Peanut Corp. produced not only peanut butter, but peanut paste, an ingredient found in foods from granola bars and dog biscuits to ice cream and cake. More than 3,490 products have been recalled, including some millions of Kellogg's Austin and Keebler peanut butter sandwich crackers.

In all seriousness, what do free-market deregulation advocates say when confronted with this sort of thing? We know they've tried to gloss over the bank collapse by citing the amount of federal regulation that did exist and pretending it was the source of the problem. How do they answer failures like this, which speak directly to the core of their argument?

[Vendetta]

In all seriousness, what do free-market deregulation advocates say when confronted with this sort of thing? We know they've tried to gloss over the bank collapse by citing the amount of federal regulation that did exist and pretending it was the source of the problem. How do they answer failures like this, which speak directly to the core of their argument?

They pretend that it's an isolated incident that doesn't in any way indicate a substantial flaw with their pet model.

Then they restate the assumptions their model is based on.

[Aaron]

Federal law does not require food companies to pay for their own inspections of suppliers. Nor are industry labs and inspectors required to tell the government about any problems they find.

This part really jumped out at me. Who in their right mind would ever approve such a policy? That is just guaranteed to lead to disaster.

[Darth Wong]

Federal law does not require food companies to pay for their own inspections of suppliers. Nor are industry labs and inspectors required to tell the government about any problems they find.

This part really jumped out at me. Who in their right mind would ever approve such a policy? That is just guaranteed to lead to disaster.

Any devotee of Ayn Rand would applaud this policy.

[born in shadow]

How do they answer failures like this, which speak directly to the core of their argument?

I imagine it'd run something like this:

"Sure, they screwed up. In doing so, they'll get less business and better businesses will thrive! See? The market polices itself! HUZZAH!"

So if anything, I imagine they'd try to spin it as evidence for their theory rather than against it.

-Aaron

[Darth Wong]

How do they answer failures like this, which speak directly to the core of their argument?

I imagine it'd run something like this:

"Sure, they screwed up. In doing so, they'll get less business and better businesses will thrive! See? The market polices itself! HUZZAH!"

So if anything, I imagine they'd try to spin it as evidence for their theory rather than against it.

-Aaron

By that argument, couldn't any and all government failures also be explained the same way (ie- they screwed up but they'll get voted out so the system polices itself), thus still making government more fair because it is accountable to all people equally, not rich people in extra proportion like market forces are?

[Terralthra]

How do they answer failures like this, which speak directly to the core of their argument?

I imagine it'd run something like this:

"Sure, they screwed up. In doing so, they'll get less business and better businesses will thrive! See? The market polices itself! HUZZAH!"

So if anything, I imagine they'd try to spin it as evidence for their theory rather than against it.

-Aaron

That doesn't really do much for the nine dead people.

[PainRack]

This isn't something new or shocking. What's shocking is that even if we ignore lolbertarians, there is still no political will to do ANY form of reform or antitrust actions.

For one, legislation to force companies to list source of ingredients have been soundly rebuffed, as companies wish to retain the ease of moving between sources without having to relabel and repackage products. To make things even more wonky, companies are STILL allowed to simply list some ingridients as permited flavourings and colouring, sidestepping the essential issue of exactly WHAT flavourings and colourings is in the product you're buying. What this means is that if another flavouring turns out to be a risk for lung cancer,(butter flavour for popcorn) you would have no way of checking if your product is part of those made with dangerous ingredients or not....... and would have to rely utterly on the manufacter and retail stores being capable of doing complete product recall. Granted, the big chains with their just in time product inventories might be able to do that, shelving entire lines made from certain factories and the like, but your small time groceries stores, which are seperated from the supply chain would have no way to do so.

Another real problem of course is that consumers may cry and moan about such potential liabilities, but if companies do increase their prices by a dollar to accomodate safety concerns, nobody would buy their products. This is one of the reason why Chinese food products had such a low safety. Companies which chose to build more safety parameters would be priced out of the market, and in the drive for more production, safety was ignored.

[born in shadow]

By that argument, couldn't any and all government failures also be explained the same way (ie- they screwed up but they'll get voted out so the system polices itself), thus still making government more fair because it is accountable to all people equally, not rich people in extra proportion like market forces are?

I'm not saying it's a good argument, I'm just saying that's the argument I'd expect to hear. It's those depressing double standards that make arguments like this work in the face of their own flaws. Although I think part of it might have to do with the belief that people are well informed customers, but not well informed voters. So although they'll drop bad companies, they have no idea which politicians are good or bad. Though I could be mistaken, that's the impression I get from some free-marketeers.

That doesn't really do much for the nine dead people.

No chance of a class-action lawsuit by the people made ill/the families of the deceased? Won't be bringing anyone back, but at least people could make a big stink about it. I'd like to think that with enough attention draw to this sort of thing, people might push for a change. Then again, I've heard people bleat about "No new taxes for anything! Get rid of as many taxes as you can!" over just about everything, so any chance of government mandated safety levels (and corresponding cost increases) is probably slim to nil.

-Aaron

[Connor MacLeod]

It wouldn't surprise me if this came about because someone in the corporation wanted to maximize production and keep down costs in order to maximize profit. I've seen at least two factories where I live employ similar practices (shitty quality and shitty quality control) simply because they wanted to make out high numbers of output. Part of this was to make money and part of it was to look impressive. In one case they (and the workers) kept over-producing even in light of the fact they weren't selling much and within a year or two the entire company went under and got bought out.

The other one ran into the probelm that they were running lines with as few people as they could manage (to cut costs) but also trying to produce as much as possible (ot keep up high numbers.) This resulted both in a drastic reduction in quality (these were refridgerators and freezers - the loss in quality was of the kind where you had products in cartons that didn't even have doors on them - and they ran intot his problem a second time even after it was known about!) as well as a collossal increase in accidents (I think they were averaging about one accident a week at the worst). The corporate HQ had to get involved and make massive changes in the facility itself (and the office staff) Before anything got changed.

Generally I find that wha happens is that most people generally don't give a shit and are too lazy to actively "check" on these things unless there's a definite chance they may get in trouble if they don't. If its a small chance alot of businesses will simply gamble that it won't happen rather than expend money to take away that risk. And some simply won't change until something DOES happen or someone higher up decides to take an interest (then you'll see them productive as all fuck.) It happens at all levels, really, too.

I'd bet any one of those (or probably) several applied in the case of Peanut corp, simply because they wanted to maximize profit and they gambled that it wouldn't come back and bite them in the ass.

of course I would bet (from their thinking) 700 cases and 9 deaths are statsitsically a minor thing (considering hwo many sales they must have). I wonder what would happen if nothign was changed before the uproar died down - probably nothing would be my guess.

[Darth Wong]

That doesn't really do much for the nine dead people.

No chance of a class-action lawsuit by the people made ill/the families of the deceased?

Interestingly enough, the kind of people who oppose government regulation of this sort of thing also tend to oppose negligence lawsuits.

[bobalot]

How do they answer failures like this, which speak directly to the core of their argument?

I imagine it'd run something like this:

"Sure, they screwed up. In doing so, they'll get less business and better businesses will thrive! See? The market polices itself! HUZZAH!"

So if anything, I imagine they'd try to spin it as evidence for their theory rather than against it.

-Aaron

That's pretty much always the answer i get from libertarians. The mere fact this could kill lots of people is waved away by these retards. These people are mere causalities on the path to the utopia of libertarianism.

[PainRack]

It wouldn't surprise me if this came about because someone in the corporation wanted to maximize production and keep down costs in order to maximize profit. I've seen at least two factories where I live employ similar practices (shitty quality and shitty quality control) simply because they wanted to make out high numbers of output. Part of this was to make money and part of it was to look impressive. In one case they (and the workers) kept over-producing even in light of the fact they weren't selling much and within a year or two the entire company went under and got bought out.

This is one of the reasons why government intervention in the markets is essential. Without laws and other measures to "shape" the market, current market forces and company pyschologies will promote production over safety and quality.
Distortion my ass. The markets DO need to be distorted.

I'd bet any one of those (or probably) several applied in the case of Peanut corp, simply because they wanted to maximize profit and they gambled that it wouldn't come back and bite them in the ass.

For food companies, there's also the issue of ignorance. Whereas safety measures such as "always wear your hardhat" is easy to understand, measures to prevent bacterial contamination isn't. So, getting people to wear a hairnet may be easy, but asking them to monitor for cockroaches, sign of dampness, proper storage conditions and to prevent cross contamination of food batches are harder. Afterall, we routinely "contaminate" food at home, so why shouldn't we carry over such practices at work? More exotic industrial products at least carry an aura of mystique, such as electronics and semi-conducters.

[ray245]

This is one of the reasons why government intervention in the markets is essential. Without laws and other measures to "shape" the market, current market forces and company pyschologies will promote production over safety and quality.
Distortion my ass. The markets DO need to be distorted.

A better way to put it will be the market will get distorted and destroys itself in the long run without any government body regulating it.

A company that don't really care about safety will lose consumer confidence in the long run, but by the time the company realise its mistakes, lives has been lost.

[K. A. Pital]

Interestingly enough, the kind of people who oppose government regulation of this sort of thing also tend to oppose negligence lawsuits.

Because in their world, everything that happens with a human is solely his own responsibility. Got intoxicated? You're dumb for eating in fast food/not making enough money. Got fired? Bad worker. Got killed? You clearly weren't careful enough. Died due to lack of healthcare? You should've worked better. It's really simple once you get inside this mindset. There's also no way out of it, unless you start admitting that external consequences of your actions for others do exist and we're not living in magical "success bubbles" of perfect individualism.

[SirNitram]

Standard free-market worship: A company supposedly will always keep themselves clean through deals like this, because the best product at the lowest cost always wins!

Reality, as usual, takes a big, fat crap on that idealogy.

[ray245]

It's really simple once you get inside this mindset. There's also no way out of it, unless you start admitting that external consequences of your actions for others do exist and we're not living in magical "success bubbles" of perfect individualism.

It was easy for me to get out of that mindset though, when I view anyone who is not a successful businessman as losers so to speak. Once you realise that the reason why certain people becomes so successful is due to luck, and sometimes even if you work hard and etc, you won't be able to succeed all the time.

Those people seems to view a person career like academic results, that if you study hard enough you will definitely get a good pass without considering the social background of a person.

[Surlethe]

Speaking of self-regulation, there was a WaPo article last fall about what caused the financial crisis. The Fed, FDIC, and Treasury blocked the SEC from regulating credit-default swaps, but permitted the SEC to set up self-regulations. Guess what never happened?

[Rye]

It really frustrates me that free marketeers can spot the concept of a conflict of interest in regards to government, but in this, in which there really can't be a clearer example (with people suffering or dead), they pull the old "isolated incident" response. I remember talking to a guy ages ago about just this sort of thing. He said that if people heard about the company, then people wouldn't buy for it and thus the invisible hand would make hygienic operating procedure more profitable, therefore companies would behave and people won't get ill from negligence sans independent regulation.

Hell, that will probably happen in the long run, with this factory/company being shut down or whatever, but what amount of risks and suffering have to be endured first? Yet if the problem is a government conflict of interest, well then, we must create militias and fight tooth and nail against anything that isn't packed out with "checks and balances" (often used as newspeak for Minarchism and stagnant governance).