Why Everyone is Wrong About the New LA Fast-Food Ordinance

Lots of chatter over the last few days in the blogosphere about Los Angeles’ new ordinance banning new fast-food restaurants in south LA. (Not “South Central”: we don’t call it that anymore). And everyone is wrong.

My friend and colleague Steve Bainbridge, whose picture is in many dictionaries next to the word “curmudgeon“, sees it as not-so-creeping nanny state-ism. So does Will Saletan.

Matt Yglesias and Ezra Klein have gaskets of their own to blow: arguing, where have you guys been all these years? That’s what land use regulations do. That is true but I think somewhat overstated: there is a difference between a land use regulation purportedly designed to block externalities, and a land use regulations purportedly designed to help those who won’t help themselves. That’s more paternalistic, and many might find it wrong.

But here’s why they are all wrong.

There is a more moderate way to protect public health: full disclosure of the health harms of certain kinds of food. One might argue that people still won’t protect themselves, but before getting there, and engaging in the philosophical question of whether it is then okay to intervene, it makes much more sense to try truth-in-labeling first.

Why isn’t Los Angeles doing that? There’s a pretty straightforward explanation: they might very well get sued and lose if they do, because food labeling might be pre-empted by state and federal law. So they use their land use authority, which isn’t pre-empted, even though it is a more blunt and problematic instrument. This happens a lot: cities can’t tell certain kinds of stores to unionize, so they just make sure that they don’t get permits until they do. Then businesses complain about the difficulty of getting permits.

Progressives are gradually waking up to the real potential of local governments in advancing the progressive agenda. But in the fast-food case, it’s one that many conservatives might endorse as well, because it is less paternalistic. Restaurants, of course, will sue to stop the new regulations, but that’s why cities are jumping on the bandwagon of the LA ordinance. They are telling the fast-food places: okay, fight us in court on this, but don’t be surprised if in the future you can’t get a permit at all. (And the existing stores will be amortized out of existence in a few years). That’s the way the game gets played. And in any event, that’s no reason for the rest of us to try to get better legislation at the state and federal levels to allow localities to regulate their own communities (assuming that they can’t now, which is still an open question.).

Steve says that fuller disclosure is silly, too, since “if markets demanded that sort of behavior, we would observe it. We don’t.” I think he was in a bad mood: even libertarians (which Steve is not) might concede that you can’t really have a market demand if the information isn’t there. Moreover, if you are someone in south LA, and you want more market information, it is very difficult to take your business to more transparent restaurants if there aren’t any–not to mention the transaction costs of getting lots of other folks to do the same.

All of that said, however, there is one other overwhelming reason why the charge of nanny-state-ism doesn’t work very well here: children. Fast-food places market to children. They make themselves attractive to children, including playgrounds, marketing with popular movies etc. Particularly as children get just a little older but still under 18, they have some disposable income. But it’s perfectly legitimate to be paternalistic toward children. As for the younger kids, as the father of a four-year-old, I can tell you that lots of us wouldn’t necessarily regard it as paternalistic for the government to help us out and take away some of the many opportunities for fast-food restaurants to give our children an excuse for a crying fit.

One last thing: there is one possible externality here. To the extent that low-income people eat more fast food, that also means that they will be placing a greater burden on the public health system and making big insurance pools riskier. So on that basis, I suppose you could say that this isn’t nany-state-ism at all, it’s protecting the public fisc (and what we hope will be the public fisc.). I’m not sure that this works because it might prove too much. John Edwards’ health plan wanted to require people to have health exams as part of it, I imagine mostly for fiscal reasons. But many people saw it as too intrusive. You can’t just slap the label of “externality” on something. This is a broader issue, probably for other posts (and other writings).

End of Land Use 101.