(photo credit: )
In March, I asked an interesting question: If junk food is so junky, why don't the producers of healthy food beat them at their own game of mass advertising?
I also gave the answer: "There is just no way for the fruit growers to get together and gang up on the cookie kingpins. A single superpower rival like Kellogg's could take on Kraft, but there are tens of thousands of fruit growers in the world, and they have no practical way to pursue their common interest in preaching the gospel of healthy eating. There is no 'world fruit growers organization' which could coordinate such a campaign, and even if there were, no grower would have an incentive to participate, since he would benefit from the campaign even if he doesn't participate. This is a classic case of what economists call 'market failure.'"
I also suggested a solution: "It's possible to think of various effective solutions, for example modifying anti-trust laws to better enable industry groups to pursue joint aims and enforce joint decisions in the public interest."
Now, it's not completely true that trade associations are helpless against monopolists. There are examples of effective campaigns.
For example, there is the "Got milk?" campaign in the US (recently we have been treated to the Israeli version, "I love chalav"). And we Israelis are occasionally treated to glowing paeans to the health virtues of avocadoes. But it is true that farmers seem to be at a distinct disadvantage.
(Disclaimer: I'm not a nutritionist and I have no concrete evidence that milk, fruits, vegetables and the like are healthier than cookies and processed-food snacks. The column is based on my general impression that many healthy foods are produced by lots of small producers and lots of unhealthy foods are produced by firms with intellectual property rights in their products.)
After considered reflection, I have come to strongly favor my March suggestion -regulations to strengthen the ability of trade associations to act effectively and overcome the "free rider problem" we mentioned: If your fellow grower advertises grapes, or your fellow record label fights piracy, your business will benefit. Furthermore, I think that protection from anti-trust is not enough and that special powers should be enforceable.
The free rider problem is one of the most common types of market failure, and one addressed by many well-known laws and regulations. If it were not for the law recognizing the authority of resident councils, buildings in Israel would find it far more difficult to have attractive gardens, clean entryways and working elevators. If unions didn't have the right to represent all workers in a workplace, collective bargaining would be destroyed by a management decision to give non-union workers the same benefits as union workers, thus gutting the unions. We couldn't have official government media broadcasts without obligating everyone with a TV set to pay the annual fee. (Good reason to eliminate this fee.) And without class action suits, it would be virtually impossible to pool cases in order to sue a company which caused small damage to many individuals.
Of course, we don't want to give trade associations too much power as they would have a powerful incentive to use it to fix prices.
(In practice they seldom actually fix prices; usually they just limit competition. For example, the greengrocers might adopt a code forbidding anyone selling vegetables without undergoing a three-year course in horticulture or demonstrating five years of experience. Sound farfetched? What if lawyers enforced a code forbidding anyone practicing law without obtaining a special degree, passing a rigorous examination, and undergoing an arduous apprenticeship benefiting an existing cartel member?)
But I think there is a compelling reason to enable trade associations to enforce at least limited participation in advertising campaigns which promote the industry's products.
I welcome reader reactions either supporting or opposing this idea, or informing me that such laws already exist.
In the wake of such legislation, I anticipate a wave of salutary advertising, such as promoting eating vegetables (from local growers), quitting smoking (from life insurers), and so on. It's just too bad it won't promote the Daf Yomi (worldwide daily Talmud classes), since the classes don't bring in any money.
The writer is research director at the Business Ethics Center of Jerusalem (www.besr.org), an independent institute in The Jerusalem College of Technology. He is also a rabbi.
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