Eurosceptics have been having a field day over olive oil, but there’s a serious question about business regulation that needs to be looked at.
If you got your news from certain sorts of media you’d think that the biggest story in Europe this week wasn’t the financial crisis, terrorism or same-sex marriage, but rather olive oil.
A media firestorm broke out over a proposal last week by the European Commission to ban restaurants from serving olive oil in open containers. Olive oil would have had to be provided in sealed containers, so that diners could be sure what they were getting. The measure was supported by the olive oil producing countries of southern Europe – not surprisingly, since with separate containers for each table there would be a lot of waste, so more olive oil would have to be bought – but opposed by Germany and other northern countries on the basis that it would add to costs for consumers.
The reaction, also not surprisingly, was especially intense among the Europhobic tabloid media in Britain. Prime minister David Cameron spoke out against the move, although Britain had apparently abstained on the initial vote in the Commission.
On Thursday the EU backed down. Agriculture commissioner Dacian Cioloş said that he had “seen and heard strong views expressed by consumers.” As a result he had “decided to withdraw this proposal and not submit it for adoption.”
In other words, the system worked. Despite its very real overbureaucratisation and democratic deficit, the EU is actually capable of responding to public opinion. But as is usual with such things, the initial outlandish proposal will stick much more firmly in the public mind (helped by the media) than the more sensible outcome.
The outcry also risks obscuring the fact that there is a real problem that the Commission, ineptly, was trying to address. Olive oil varies widely in quality and therefore price; it’s a relatively simple matter for a restaurant to promise the good stuff (and keep a couple of bottles of it around to show people) but actually fill the serving jugs with something much inferior. The fact that the proposed regulation was a really stupid way to deal with this doesn’t mean that the problem doesn’t exist.
Many libertarians seem to have convinced themselves that fraud isn’t something government should concern itself with, and that it’s something the market can just sort out on its own – in this case, customers will simply avoid restaurants that are deceiving them about the quality of the olive oil.
It’s unlikely that they would say this if the problem was restaurateurs bailing up customers at gunpoint and stealing their wallets, although in both cases it’s true after a fashion.
In my view the problem is that, as with a great deal of consumer law, countries have turned over to the regulatory apparatus problems that would be better dealt with by the ordinary criminal law. Instead of occasionally fining merchants for breaking intricate regulations, why don’t we put some serious police resources into detecting actual wrongdoing and send the perpetrators to jail. It’s called deterrence. (I’ve suggested this a number of times before.)
That wouldn’t give so much of a boost to the olive oil producers, but it might result in a better deal for consumers.