Tuesday, July 9, 2013

GM Oh No! Part 3 of 3: Economic and political considerations

GM Oh No! Part 3 of 3: Economic and political considerations

A blog of Bridge Environment, updated most Tuesdays

This is the final entry in a three-part series about genetically modified organisms (GMOs)

Over the preceding three weeks, I have discussed human, pig, and environmental health concerns surrounding genetically modified (GM) foods, also known as GMOs. I argued that, by focusing on short-term human health considerations, GMO opponents have distracted us from more realistic and challenging long-term human and environmental health concerns.

All of these concerns are exacerbated and potentially eclipsed, though, by economic and political dynamics. Often, people who bring up economic and political concerns sound like conspiracy theorists. I promise to keep this discussion rational and grounded in well-studied human behaviors. To make sense of this situation, we need to examine monopoly power, intellectual property rights, and the political influence of money.

In general, western economies rely on competition to maximize collective benefit. According to theory and much practice, competition among companies lowers prices so that more consumers can enjoy them and spurs innovation towards better products and more efficient production. Even though companies lose profits from competition, collectively society does better because of the benefits to consumers. In contrast, companies that secure monopolies can drive prices up and slack off on in innovation to the detriment of consumers and society in general. For these reasons, many economic rules and regulations exist to deter monopolies and encourage competition.

There is one major exception to this rule: intellectual property, or ownership over ideas. The idea could be a musical composition, a new drug, or a GM technology. When it comes to intellectual property, we explicitly allow monopolies for periods of time, typically 20 years. Even though monopoly conditions allow the owner of the idea or technology to charge much higher prices than a free market would sustain, we allow them this reward for investment in innovation. If drug companies couldn’t recoup costs of research into new drugs (both successful and failed attempts) by charging a premium for their products, they would invest less in new cures. Agricultural companies like Monsanto make large investments in crop improvements using GM and other technology in part because intellectual property laws allow them to monopolize the market for their new seeds. The US Supreme Court recently ruled that companies cannot patent naturally-occurring genes but did affirm the legality of patenting altered genomes of the GM variety.

Thus, our effort to spur innovation comes with the cost of monopoly power. Companies that develop GMOs can use this monopoly power in several ways. They typically only allow farmers to purchase GM seeds if the farmers sign agreements that prohibit them from replanting next year’s crops using seeds they produced this year. Instead, they have to buy new seeds from the company every year. Companies also charge more than they would under competition. Without competition, companies can charge a price equal to the net benefit that their product provides to farmers. Thus, under monopolies all of the benefit of a new technology goes to the company. With competition, the prices would be driven down to the cost of manufacturing the seeds without regard to what it cost to develop them. Thus, under competition farmers and consumers would gain all of the benefit. Our system of intellectual property rights favors the companies.

A system with companies as the primary beneficiaries of financial gains has potential political implications. Though the US political system is driven by votes, it is incontrovertible that money plays an outsized role. It buys advertisements that allow a candidate to introduce themself to the public in the most flattering of lights and to raise concerns, real or imagined, about their opponent. It also buys complex get-out-the-vote operations, which identify geographically favorable neighborhoods for the candidate and seek to register residents and get them to the polls. As a result, the candidate with the most money typically wins the election, making politicians potentially susceptible to pressure from contributors. As a result of recent US Supreme Court action overturning campaign spending legislation, companies can donate unlimited funds to politicians. In doing so, they may be able to shape laws and regulations. For example, campaign contributions most likely played a key role in the recent defeat of US legislation to label GM foods and an unrelated defeat of widely supported regulations to tighten registration requirements for gun sales. Monopoly power and money could also affect the science to understand potential human and environmental health effects. In order to avoid this undue influence, we need regulatory agencies that are independent of political influence and sufficiently funded to do their work. My own observations on political influence on the detailed regulatory process would suggest that it is relatively mild. However, ongoing government budget cuts do threaten the work capacity of government agencies.

In the previous three blog entries, I argued that environmental effects of GMOs raise important concerns worthy of immediate additional study, and that long-term human health effects may also be of concern. These conclusions are based on the idea that the regulatory system is fair and thorough, traits that monopoly power and political influence may challenge. In order to restore and maintain the public’s trust in government regulators it is crucial that they are shielded from political influence and funded sufficiently.

To conclude, GMOs are an inevitable part of modern food supply and a logical step forward in the production of better food organisms. Because this technology has the potential for rapid and drastic change, we need to study carefully the acute human health, long-term human health, and ecological risks. At present, evidence suggests that acute human health risks are minimal but the jury is out on the other two forms of risk. Unless we can maintain independent and effective regulatory agencies, we run the risk of missing important concerns until they become major problems.

Even with effective regulators, the ultimate judgment regarding GMOs will come down to their contribution to sustaining a human population that has grown dramatically and continues to increase resource consumption per person. Next week, I will discuss the “population problem.”


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