a grain of salt

Today the nytimes is running an article about the processed food industry's latest efforts to avoid being regulated, specifically over salt in their products.

I see a parallel with something I've noticed for many years in the financial industry. Technically it's called the fallacy of composition, and applied to real-estate securitization it's what has brought down our global economy. The fallacy of composition is simple--it just means that you can't take something that's true of a small part (like a single house), and assume that you can add up thousands of such things to reach the same conclusion about the whole

In the case of industry regulation of salt, what I think everyone is missing is that people have to eat. They will buy something. So overall the food industry cannot lose business. They whinged about non-smoking restaurants, but people still eat. They cried bloody murder about the need for trans-fats, but people still buy bread.

Of course if federal regulators were to pass some law that makes your company's food (or even edible-food-like-substances) less attractive to consumers (but not your competitor's), you'll go out of business. If they pass the same law but it applies to both you and your competitors, then it should make no difference to your sales. And yet the otherwise intelligent people working for these companies pay millions to lobby our government to prevent it!

Admittedly, there will be some small cost--companies will have to do the work of reformulating their products, which costs money. Perhaps it's an opportunity for new companies with smarter recipes to knock down large companies that can't adjust as fast. Some very small percentage of people may stop eating processed food and switch to fruits and vegetables. But the costs will be tiny, especially compared to the savings in health-care. The cynic in me says that these companies know exactly what they're doing, and are actually just trying to optimize their profits to avoid these small costs & risks--that their honest argument would be "don't make us reformulate our already successful product because we'll make 0.1% less profit next quarter." Because, for better or worse, that's what our capitalist system encourages.

What I can't excuse is the journalists, who take at face value the idea that cheeze-its becoming more expensive and/or less tasty is any sort of argument against regulation.