China Law Blog

Have been meaning to blog about the organic articles that Eileen talks a little about. In the short term, nothing will work. Even the organic label doesn't work in China because most believe its just a way for stores to earn more money, nobody trusts it.

China isn't going on a diet, people are eating the same things, I think most gave up caring. Nobody knows what, if anything is safe to eat, so why bother worrying everyday?

It will take actual signs that things are moving in the right direction, government actively promoting safer, well grown food and punishing those who are violating the law. It will take a few years without scandal.

I personally shop at Carrefour, where they've started putting up exactly where each item comes from and show pictures of the farmers who grow them. Are they really who grows the food? Are they even farmers? I have no idea, and while I shouldn't bother paying any attention to that stuff, somehow, I find it more comforting...

I don't know, I am sure Eileen is right and I agree there are good reasons to beware of food in China. But what I see is that everyone around me (including myself) continues to eat normally in the little baozi stalls and shops. It's not like we have much of a choice either, most of us are too poor - or too snobbish in my case - to go to the likes of Carrefour. And what would remain of my China experience if you take away the food!

PS. I do note however that my health this year has deteriorated and I am having that checked on my next trip back. I hope it is not related to food.

Food safety is something that can and should be solved in China, and it's baffling to me that the party elders haven't attended to this already. After leaving Andean Latin America and moving within a year to China, the level of food sanitation I encountered was repugnant, and the bar was already set pretty low.

In China I followed the rules about boiling water, drinking only bottled water, washing my veggies, etc. Yet I still got life-altering diarrhea; it was so severe that I thought I was being liquefied from the inside out. I drank the water in Ecuador and Colombia and had slight diarrhea.

That was the final thing that hastened my exit after more than 2 years in China, I was just tired of the cycle of crippling diarrhea, and sick of watching everyone around me suffer from the constant ills of food-borne illnesses and nearly criminal food sanitation.
One becomes a prisoner to one's increasingly ill-mannered bowels.

I would like to add that the CCP leadership themselves generally don't eat ANY of the same things that the regular populace does, they in fact have a seperate food distribution system from which they choose their items.

As for those who are vegetarians or vegans, skip China or be prepared to NEVER eat out and to have a very limited supply of produce.

@ B. cheng:

Shopping at a big-name store is probably a good idea; at least you'll have a better chance of successfully suing them if something goes wrong. That may be the only recourse consumers have.

On a side note, I have always wondered why the PRC has been generally rigorous with enforcing criminal law but less so with environmental and food safety laws. I understand law and order are important for stability (or perceived stability) but isn't widespread anger and distrust over babies sickened by tainted milk more dangerous then a few extra pickpockets in the Guangzhou railway station?

I find this whole thing interesting. I recently moved to China less than 4 months ago. One reason I had came to China is the food. I knew what I was in for before I came. At least for the most part. Having friends here helps. I eat out almost everyday. A little embarrassing, but alas who has the time to cook. In either case I can't say that I have had a crippling case of the trots. Yes I have had them. Yes my body has changed from the food I eat day to day. Mostly I have problems when I eat American food. Odd, probably. But I have to agree that most do not care what they eat. Yes you take the measures that you can but if you put the time and energy into finding out about the food you eat you wouldn't have time left to do anything. Having said that, one has to be wary of what they eat. I don't just sit down anywhere. Though I have and gotten through it. Maybe I have been lucky, maybe not. I suppose you just have to do what you can.

With even the most basic things like driving barely regulated, how can something as big as FDA style regulations going to survive? And on another note, if you made as much as some workers do, I don't think I could argue where I got my food either. Whatever was cheaper is the only option. I will say one thing though, the guy who wears a plastic apron instead of a shirt, sweats all day in the kitchen to make the best beef curry, thanks bro, I appreciate it. Great article and great comments.

It's really not that difficult to eat food safety, you eat food that you buy from someone that you personally know, who buys food from someone they personally know, who buys food from someone they personally know.

You eat either in places that your friends have eaten at, and that you trust, or you eat somewhere that they prepare the food in front of you. (Ever wonder *why* restaurants will prepare the food in front of you.)

It's all pretty easy if you know farmers.

Glen: On a side note, I have always wondered why the PRC has been generally rigorous with enforcing criminal law but less so with environmental and food safety laws.

Because it's harder to do. In the case of criminals, you don't have multiple conflicting interests, whereas in food safety and environment, you do.

Also the important thing in food safety and the environment is to fix things before something bad happens rather than fixing the problem after it happens. Quite difficult to do.

The other thing is that it's a new problem. Food safety wasn't as much of a problem when you either grew your own food or bought your food from people that you knew personally.

I'm guessing those of you who suggest that China's criminal code is competently enforced have little experience working with the PSB on major cases. In reality, aside from minor crime or widespread "crack-downs" ordered from the provincial governments, party leadership, or Beijing, the criminal code is exceedingly flexible. Only top level and bottom level crimes are enforced; the PSB maintains appearances by arresting pickpockets and street swindlers, and keeps a steady stream of anti-crime headlines in the news by going after major players (which also eliminates any organized criminal groups that may threaten state stability). Everything between, which is MOST crime, is pretty much unregulated.

Anyway, as far as the food system, there is no way that the government will be able to monitor the entire food chain in a country of 1.3 billion with lord knows how many small farms. But food quality problems do highlight the need for more transparent and responsive civil legal proceedings. It would be a better world if all the Sanlu Dairy types in China were scared sh*tless of getting sued into bankruptcy in a major class action.

Dan, Thanks for two finds in this post...Steve's earlier WSJ piece that I somehow missed when published...and the interesting eileen eats blog.

As noted by Steve...centralized control, process and procedures amount to nothing more than a rope in the sand when there is no localized infrastructure to execute these rules on a normalized basis. Even if an adequately scaled inspection infrastructure were put in place for China's distributed food production systems, I don't see a clear path to confronting localized interpretations of the rules. It's a big and important problem that must be solved. The solution will come only incrementally over time....until then, 'eileen eats' is correct, don't let your guard down.

SanLu *did* go bankrupt as a result of the milk scandal. Two of the executives got death sentences. Nineteen other executives got various sentences from five years to life. The basic procedure to settle the civil claims was something very similar to what the US government did to setlle the 9/11 lawsuits. The government and the dairy association brokered a settlement in which people could either accept a cash settlement, or else go to court. Most people want to get on with their lives so they took the settlement.

We can talk about US-style class action lawsuits. One of the problems in these mega-lawsuits is that if you win a huge judgment and then the company goes bankrupt, then most defendants may end up with nothing. The other problem is that while the litigation goes on, the company is under a cloud and cannot rebuild.

What happened with the Sanlu case is far far batter than having a massive class action wind its way through the legal system taking years with no one making money except for the lawyers. The nightmare you want to avoid is what happened with asbestos litigation. The first case was filed in 1966, and it's *still* going on. Sort of like "Jarndyce and Jarndyce"

Among the problems, what if the companies goes bankrupt during the court proceeding? What happens if the company *threatens* to go bankrupt in order to impose a settlement. And as far as I know, all US litigation has been civil litigation. None of the executives involved in the asbestos case (or in the tobacco cases) have every been personally tried. One problem here is that if you are an executive whose company goes bankrupt, so what? That's why I think it's important to have personal liability (i.e. people go to jail).

Also while the US uses "class action lawsuits" to deal with consumer liability issues, "class action lawsuits" are not common in most European countries, all of whom have different ways of dealing with the issue.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1296843

As I said above, as far as the actual settlements and consequences, I do think that the Chinese government handled things quite well, and I'd like for people that are critical of the legal aftermath to explain what the Chinese government could have done better. Yes, one could argue that the payouts where low, but as it was, it totally bankrupted the company responsible. If you mandate US-style damage awards, then the whole thing becomes a lottery, in which people that are the first to file or who have particularly good lawyers get the bulk of the money, and everyone else spends years fighting over the scraps that remain. (What happened with asbestos.)

Also if you have a long nasty class action lawsuit, then most of the money ends up with the lawyers (there is an entire industry devoted to asbestos lawsuits). In the mean time, honest dairy farmers and dairy workers who weren't involved in the scandal are hurt because the company gets pounded into dust.

I don't want to offend anyone, but are you people serious???
Yes, there are most certainly food safety concerns in China, but to recommend "never" to eat out or only in places recommended by your friends is to me simply laughable.

The SanLu case is very serious, but how many other really big cases have there been? And when I say "big", I mean using the appropriate scale for a nation of more than 1.3 billion people.

I have lived in China for six years, in Nanjing, Shenyang, Shanghai and now Liuzhou. I cook at home maybe a few times a month, the rest of the time I go out and eat. I eat in all kinds of places, from food stalls on the street to the fanciest of restaurants. I eat cat (once), dog (regularly), snake (sometimes), etc. When I do cook, I often buy my food in outdoor markets. Yes, they will kill and pluck a chicken of your choosing.

In those six years I have had (minor) problems once or twice, which I would expect during the same timeframe in my native Sweden; quite possibly the most "safety fascist" country in the world. (Don't believe me, pay a visit.)

Can I guess that most of the commenters here are Americans...?
In my humble (?) opinion, American food seems to be the world's most dangerous to one's health, judging from the enormous levels of obesity and diabetes in the U.S. Look at the levels of sugar that you ingest daily! All your food is full of sugar and artificial sweeteners.

My advice: stop worrying so much and live a little! Chinese food is fantastic and is a big part of the experience here. I do get a little bit sad when I see Western visitors or expats only eat at MacDonald's or the like.

Twofish: It's all pretty easy if you know farmers.

I assume this is a joke or sarcasm?

Otherwise, I'd like to propose an even simpler food safety system: don't eat anything you haven't personally grown from dirt and seeds.

"Food safety wasn't as much of a problem when you either grew your own food or bought your food from people that you knew personally." I guess this is one way to look at the PRC's current problems, or the problems Upton Sinclair described in the Jungle, although it doesn't do much to reassure consumers (in the PRC or outside) of their food's safety. It's sort of like hearing the contractor who just built your new home announce "I haven't really given much thought to the structural soundness of the dwelling - I previously just worked with Lego."

What exactly did happen with the Sanlu case and why is it "far far better" than class actions? Because the courts refused to accept lawsuits? Because the payments to victims were very low? Because the government officials involved recieved promotions? (http://blogs.wsj.com/chinajournal/2009/04/10/new-jobs-for-officials-punished-in-chinas-milk-scandal/). I also disagree with your claim that the low payouts bankrupted Sanlu; indeed, Steve appears to cite the Sanlu bankruptcy as an example of a government-orchestrated transaction designed to “avoid private access to offending company assets.”

I’d also note that your critique of class actions involves attributing the characteristics of asbestos litigation to all class actions, while ignoring the positive aspects highlighted in Steve’s op-ed: namely, that the threat of class actions increases individual producers’ incentives to police themselves. When producers do a better job of policing themselves, the society as a whole is less dependent upon the government inspecting every single lot of goods from every single factory – an impossible task in any nation, with the possible exception of Lichtenstein.

While we can all relate our personal experiences eating food in China, the larger point made in Steve’s op-ed is important: the problem with China’s food safety system is not the lack of regulation, but the lack of enforcement. Adding melamine to dairy products or clenbuterol to pork was illegal under the old Food Hygiene Law as well. The new Food Safety Law, which adds numerous new layers of yet-to-be-implemented regulations does nothing to actually change this.

JT: Otherwise, I'd like to propose an even simpler food safety system: don't eat anything you haven't personally grown from dirt and seeds.

Which works fine if you have a country that is 90% agricultural. It breaks down once you have urbanization.

JT: What exactly did happen with the Sanlu case and why is it "far far better" than class actions? Because the courts refused to accept lawsuits...

They suspended the lawsuits for a few months until the government brokered a settlement, and which point people could reject the settlement and go forward with the lawsuits. Most didn't. Some did, and those are going forward.

In any case, if you have lawsuits going while you have a settlement pending, you are just wasting everyone's time and benefiting no one but the lawyers. The way that system worked was just like 9/11, you needed to offer enough in the settlement so that people wouldn't go forward after hearing them. If the settlements were really unreasonable, then people would (and are) going to court.

JT: Because the payments to victims were very low?

They were enough to bankrupt the company. The problem with these mega-lawsuits is that if you award everyone huge sums of money, then most people aren't doing to see any of it, because the company does not have enough money to pay.

The total settlement was US$200 million and insures free health care and some compensation for everyone that was damaged. If you start giving massive awards, then it becomes a lottery in which a few people get massive amounts of money, most people get nothing, and then people start dragging in new companies that had nothing to do with original mess.

JT: Because the government officials involved recieved promotions? (http://blogs.wsj.com/chinajournal/2009/04/10/new-jobs-for-officials-punished-in-chinas-milk-scandal/).

I don't know enough about those particular officials to know if they were really guilty or if they are just scapegoats. Neither do you.

JT: I also disagree with your claim that the low payouts bankrupted Sanlu.

This is a matter of fact. The individual payouts were low, but it bankrupted Sanlu because there were huge numbers of people involved. Sanlu got a loan, and then paid US$200 million into a trust fund. It didn't have enough assets to cover that, so it immediately declared bankruptcy.

JT: Indeed, Steve appears to cite the Sanlu bankruptcy as an example of a government-orchestrated transaction designed to “avoid private access to offending company assets.”

And this is a very, very good thing....

Once you've created the trust fund, then you want any assets remaining to be free from claims. Unless, you provide assurances to anyone that buys Sanlu assets that *they* won't be hit by lawsuits, they won't touch anything that had anything to do with Sanlu.

If you are a good guy new investor that wants to take over what is left of Sanlu and turn it into a great milk company, then you aren't going to buy anything, if it means that the lawyers will come after you.

If you buy Sanlu assets, then whatever you pay goes first to the trust fund. You want to maximize the value of the remaining assets both to reduce the cost of the settlement to the taxpayers, and also so that people who were honest dairy producers don't get hurt.

If you provide some legal waiver then what will happen is that companies with nothing to do with the Sanlu mess will innocently buy assets, and then get hit with massive lawsuits decades from now. This happened in the asbestos lawsuits. The initial payouts bankrupted all of the companies that produced asbestos, so there has been this feeding frenzy anytime any innocent company with cash buys something that thirty years ago was involved in asbestos production.

Halliburton got burned by this. Halliburton has never produced asbestos. It bought a company that did thirty years ago, sold that company, and then got hit by massive lawsuits, because all of the companies that *did* produce asbestos have long since folded.

This is very bad, because at that point you are hurting innocent dairy farmers.

One big problem that's been a mess with asbestos claims is that not all of the claims are obvious. Your baby might look fine right now, but what happens if they are ten years old and they get sick from some disease that was caused by bad milk. The current settlement creates a fund for any medical problems that occur because of that.

JT: I’d also note that your critique of class actions involves attributing the characteristics of asbestos litigation to all class actions

The asbestos lawsuit is the biggest lawsuit in the history of the United States, so I'm not picking something random.

Name five class actions involving more than ten thousand people, where you think that the right thing was done. The two big ones that I can think of are asbestos and tobacco. The tobacco settlements are sort of silly because the companies paid millions of dollars, but they are still in business selling cigarettes.

If you think that asbestos is unrepresentative of major class actions, and you can think of something better, go ahead and name them.

JT: While ignoring the positive aspects highlighted in Steve’s op-ed: namely, that the threat of class actions increases individual producers’ incentives to police themselves

But they don't. One thing that I like about the Sanlu action is that you ended up with jail time for the responsible executives.

The problem with multi-million lawsuits is that that for the most part the individual executives are protected from liability. Why should I care if my company goes bankrupt? It's not as if I lose any money.

If you want people to think twice, don't bother with lawsuits that just make lawyers rich. Put people in jail. The problem with the US system is that you have plantiff lawyers that make huge amounts of money with damage awards, but no one with incentives to impose jail time.

The US does a lot of things very well. It has wonderful freedom of speech, wonderful constitutional government, as far as prevention it probably does a better job than China. However as far as legally responding to these sorts of catastrophes, the US legal system is IMHO quite broken, and people in the US recognize this.

That's why after 9/11 the US set up a system of handling claims that was basically the same thing that what China did with Sanlu.

Different countries do different things.

JT: When producers do a better job of policing themselves, the society as a whole is less dependent upon the government inspecting every single lot of goods from every single factory.

I don't think that self-policing will work. It doesn't work in finance. It really doesn't work in the food safety.

You don't have to inspect every factory. Just enough so that the risks of doing something nasty are far, far worse than the benefits.

The US has views about government that most of the rest of the world thinks are bizarre.

JT: Adding melamine to dairy products or clenbuterol to pork was illegal under the old Food Hygiene Law as well.

Yes. People got caught. People went to jail. People will think twice about doing it again.

Got a problem with that?

If the United States was the only country in the world with safe food, then yes we should look at class action lawsuits and massive punitive damages. It's not.

France, Germany, Sweden, UK, Australia, and the Netherlands have safe food, and none of them have adopted the US system of class actions and massive punitive damages, and most lawyers from those areas think that the US tort system is ridiculous.

Here is a question. Someone gets hurt in an operation, why are people suing them for multi-millions which will be paid for from his insurance in an out-of-court settlement that no one will be allowed to discuss. Why doesn't someone sue them so that a judge can revoke his license to practice medicine?

As far as the low compensation. Personally, I think that in some ways you are right. No amount of money can compensate for a lost child, but we have to do things that as fair as we can with the tools we have available.

So I'm just going to ask you, as far as the settlement goes, if you think it is too low then

a) what would you have made the settlement, and
b) who do you think should pay that settlement

If you come up with some numbers then we can talk about this based on facts. Personally, I couldn't come up with anything that was much better than what has been proposed, and you have to remember that in a typical class action suit in the US, one-third of the recovery goes to the lawyers. But if you can come up with something better, I'll keep an open mind.

Also one important part of the settlement is that it covers all medical expenses, which is not a minor thing since the Chinese health care system is more broken than the US one. It also covers people that don't know that they have a problem now.

The basic limit that you have to realize is that Sanlu and the dairy industry have limited assets. If you want to increase the recovery beyond what's available from Sanlu, then at that point we are talking about tax money. The problem at that point is that you have to justify penalizing a tax payer in Guangdong that has nothing to do with the mess. The other issue is that if you start putting tax money into the mix, then you have to ask why victims of Sanlu deserve more than victims of coal mining accidents, victims of police brutality, people who are unemployed through no ones fault, etc. etc.

If you argue that every deserves huge payouts, then you have to see if the numbers work.

One problem that I have with punitive damages is that it may be the case that the company deserves to be punished (and Sanlu was). But it doesn't make sense to me that most of the money goes to the person with the most effective lawyers or to the lawyers themselves. It also doesn't necessarily punish anyone. Most companies pay lawsuits out of insurance.

Also if you think that I'm being unfair at pointing to asbestos suits then feel free to bring up some examples of class action lawsuits that you think would better demonstrate that they work. We can look at

1) where the money came from
2) where the money went
3) who got punished
4) who got rewarded
5) how long everything took

Factory inspections will surely work for food quality in China just like they work for product quality and CSR compliance in the manufacturing sector. After all, who's ever heard of a Chinese factory producing shoddy products or abusing labor rights in spite of passing inspections?

And of course, Sanlu made such good milk that they were exempted from factory inspections--generally a good policy for food producers.

Twofish:

My argument is as follows.

China has serious food safety problems. These are problems not only for Chinese consumers, but consumers worldwide because of China’s export-oriented economy. These problems are difficult to solve. One technique used to heighten food safety in the US is class action litigation.

I am a little confused by your argument, because you first argue that self-policing does not work, particularly with food safety. You then cite the case of Sanlu, where the government was aware of the danger and did not inform consumers, exacerbating the crisis, as an example of how such incidents should be handled. Your call for jail sentences as the major method of food safety enforcement appears to mean that, in your view, food safety enforcement should be solely the province of government agencies, with no role for private litigation/NGOs. It would seem, at a minimum, that there might be “self-policing” issues with the government agencies as well, particularly where they bear liability for the food safety incident.

Points of Agreement

Despite this, it seems that we have some issues on which we agree, but are not communicating well:

Twofish: It's all pretty easy if you know farmers.

JT: . . . I'd like to propose an even simpler food safety system: don't eat anything you haven't personally grown from dirt and seeds.
Twofish: Which works fine if you have a country that is 90% agricultural. It breaks down once you have urbanization.

What I meant was that it actually is not easy to eat safely in China, even if you know farmers. Once you start eating anything that you didn’t personally grow in the ground (did you grow the wheat that was ground into flour for those noodles?) you start getting into manufacturing and supply chain issues, and food safety becomes more complex. It appears from your response that we agree that it is difficult to maintain food safety in modern, urbanized, China.

Disagreement – Settlement

Twofish: If the settlements were really unreasonable, then people would (and are) going to court.

This assumes that people believe that they could get justice from the court system. This is a problem we see in parts of the US as well, where people with valid claims don’t pursue them. I do not agree that people’s willingness to accept settlements is somehow proof that the settlements are fair, particularly given the problems with obtaining other forms of relief.

For instance, lawyers who sought to help the victims were pressured to stop:
http://www.ft.com/cms/s/0/af6696d6-8d6f-11dd-83d5-0000779fd18c.html?nclick_check=1

This is different from a government ordering a freeze on litigation. This is the government telling lawyers they should not try to help people. This is another reason that I see “they took the settlement” as a problematic measure of people’s degree of satisfaction with the settlements.

Sanlu and the local Hebei government knew about the melamine problem for weeks or more, and did nothing to protect consumers.
http://www.danwei.org/quality_control/new_zealand_pm_says_milk_scand.php
http://news.bbc.co.uk/2/hi/asia-pacific/7615315.stm
http://www.danwei.org/front_page_of_the_day/yang_chongyong.php

This is one reason it would be fair to use tax money to compensate the victims of the scandal – the government egregiously failed in its responsibilities, contributing to the scope and severity of the damage.

Additionally, it’s not clear that the government is living up to its promise of free medical care for the injured children:
http://www.theepochtimes.com/n2/content/view/9167/

Disagreement – Bankruptcy

I don’t claim to be an expert on Chinese bankruptcy law, but I do have some questions about your assertion that the bankruptcy is the result of Sanlu’s payments to the trust fund:

“JT: I also disagree with your claim that the low payouts bankrupted Sanlu.

Twofish: This is a matter of fact. The individual payouts were low, but it bankrupted Sanlu because there were huge numbers of people involved. Sanlu got a loan, and then paid US$200 million into a trust fund. It didn't have enough assets to cover that, so it immediately declared bankruptcy.”

To my understanding, 22 dairy companies, including Mengniu, Yili, and Guangming, paid into the compensation fund, whose total value was 160 million USD.
http://www.straitstimes.com/Breaking%2BNews/Asia/Story/STIStory_320405.html
http://www.dailymail.co.uk/news/worldnews/article-1103462/Bosses-accused-Chinas-tainted-milk-scandal-6-children-died-300-000-contaminated-trial.html
http://www.cbc.ca/world/story/2009/01/16/china-melamine.html
http://www.shanghaidaily.com/sp/article/2009/200901/20090121/article_388777.htm
http://www.chinadaily.com.cn/china/2008-12/31/content_7355604.htm

This compensation fund is broken down as 130M for the one-time cash payments, and 36M for all future medical expenses. I haven’t looked for a breakdown of individual contributions, but if 22 companies are contributing a total of 166M USD, I’m going to assume that Sanlu’s share is less than 200M.

Additionally, Caijing says that as of December 29, medical bills for victims were being handled by local governments and hospitals, not Sanlu:
http://english.caijing.com.cn/2008-12-29/110043225.html

The Caijing article also seems to imply that the bankrupting event was not the payment to victims, but Sanlu’s payments to its distributors to cover the costs of a recall. China Daily notes that Sanlu’s total debt is 1.1 billion RMB, or 160 M USD, which is the same amount as the total compensation fund, so I can see how there might be some confusion there.
http://english.sina.com/business/p/2008/1225/207299.html

China Daily (above link) does support your contention that payments to victims will be made before payments to distributors; Caijing appears to disagree with this analysis.

I’ll add that China Daily alleges Sanlu’s 56% shareholder to be the Shijiazhuang city government, and that China Stakes notes that “Unlike with other bankruptcy cases, the Shijiazhuang government is involved in the whole process of Sanlu’s bankruptcy. It not only lent money to the company, but has also offered guarantees to creditors”
http://www.chinastakes.com/2008/12/sanlu-bankrupt-former-chair-may-face-death-sentence.html

At the very least, I don't believe this is simply a case where Sanlu's liabilities exceeded its assets, and it therefore had no choice but to declare bankruptcy. There appears to be significant government decision making in terms of what liabilities to incur, what expenses to pay, when and how to declare bankruptcy.

Disagreement – Class Actions

We disagree about the impact of class actions. You characterize them as having no impact upon manufacturer’s behavior and propose jail time as the only real deterrent.

The idea that corporate decision makers don’t care about class actions does not match up with my personal experience. I have personally worked with corporate executives who are trying to find ways to increase quality control standards specifically out of a fear of class actions. I have also spoken with numerous corporate attorneys who have the same experience – that class actions are a major consideration for US firms.

Conclusion

I have no problem with putting people in jail, assuming they’re guilty of some crime. Nor do I have any problem with punishing people for contaminating pork, milk powder, or any other type of food. I am skeptical that putting people in jail, or adding many new layers of regulation (i.e. the new Food Safety Law) works well as the more decentralized types of enforcement I had advocated and mentioned in Steve’s WSJ piece (“the effective operation of the existing system of private civil litigation and bankruptcy”).