Got Milk?

Forbes , January 09, 2000

WHEN PROTESTERS TOOK TO THE STREETS of Seattle to denounce international trade, there were no reports of milk mustaches among their many colorful costumes. But the look would have been appropriate. One of the best examples of the protesters' ideals in action can be found in the dairy case of every California supermarket.

For nearly four decades California has required that all milk sold in the state have extra nonfat milk solids added to it. It's the only state with such a regulation. The rest of the country follows less restrictive federal rules.

The California law started as a way to soak up surplus supplies by requiring dairies to add one-fifth of a gallon of dehydrated milk to every liquid gallon. Nowadays, the milk law functions primarily as a trade restriction—the sort of "nontariff barrier" that drives U.S. negotiators crazy when they deal with the Japanese or Europeans. The law discourages competition from out-of-state dairies, whose home markets don't require fortified milk. (California also favors in-state dairies with various subsidies and price regulations.)

The California milk law represents just the sort of "democracy" the increasingly vocal antitrade movement wants to protect: legislation that overrides consumer choice to protect interests with political clout.

As the antibusiness activists at RTMark, a usually satirical group, wrote of the Seattle protests: "Global free trade already gives multinational corporations vast powers to enforce their will against democratic governments. Expanding these corporate powers—as the WTO intends to do in Seattle and beyond—will further cripple governments and make them even less able to protect their citizens from the ravages of those entities whose only aim is to grow richer and richer and richer."

"Protecting citizens from the ravages" of money-grubbing Arizona dairies is exactly what the California milk law does. Only the citizens it protects aren't the state's 31 million consumers. They're the dairy lobby.

Out-of-state dairies don't employ California voters. And the benefits to consumers of more choice and possibly lower milk prices are too diffuse to generate a significant push for reform. The stakes aren't high enough to rouse consumers to walk the hallways of Sacramento. Only people with a lot riding on the outcome—producers, that is—have enough incentive to work for change, and when one side is made up of "foreigners," its cause is at a decided disadvantage.

State Senator Debra Bowen, a market-oriented Democrat, tried to reform the system last spring. She sponsored a bill that would have allowed nonfortified milk to be sold in the state, provided it included nutritional labels comparing it with California-standard milk. (In some cases, the nutritional content is identical. In others, the enrichment provides a slight boost in protein and calcium.)

Bowen acknowledged that California milk is in some ways "better" than milk that just meets federal requirements. But, she said, consumers should be able to choose.

"We don't prevent yogurt and cookies that aren't low-fat, soda that isn't sugar-free, soup that isn't sodium-free, cereal that isn't high in fiber, or vegetables that aren't organically grown from being sold here, so why should milk be any different?" Bowen wrote in a March article. "Banning a product simply because it isn't 'as nutritious' or 'as good' as something else, whether you're talking about milk, bread, meat, rice, cereal or fruit, simply reduces choices and raises prices."

The state's strong agricultural lobby killed the Bowen bill. Through this campaign and others, charges Bowen, the dairy industry is trying to preserve "a world where it's immune to economics of supply and demand, the rigors of competition, and the realities of a global marketplace."

That's pretty much the world that the Seattle protesters demand as well—only they make it sound much more romantic. Although some environmentalists, including Bowen, see trade as a boon, the idea that trade across regions is suspect runs through a lot of environmentalist writing. "Self-sufficiency" is the slogan for greens who oppose free trade.

In his 1997 book Act Now, Apologize Later, Sierra Club then-President Adam Werbach wrote that environmentalists should work to reduce regional trade, even if they can't eliminate it. As an example, he suggested, "We should demand that the Safeway in Idaho carry only native potatoes." And, presumably, that California supermarkets carry only California milk. That's what democracy is all about. Right?