Treading on Economic Eggshells

In the 2006 Parliamentary Debate World Championship finals, American debater David Denton snapped that the other side “has a heart, but they simply don’t have a head.” Fittingly enough, Denton was arguing the invalidity of animal cruelty laws at the time, and especially in the case of Proposition 2, his accusation rings ominously true. Besides having a heart but no head, however, Proposition 2’s proponents appear to also be politically and economically tone deaf, for if ever there was a time to introduce a bill which could jeopardize any portion of California’s economy, it is most emphatically not now. The nation’s economic regulators are walking on eggshells as it is, and any bill this brazen has the potential to shatter the uncertain economic footing into a thousand shards of depression.

Proposition 2’s proponents argue that those who oppose the bill are only shills for the interests of Big Egg, with no concept of the immorality of what they are doing. Even if this hysterical accusation were true, taking such a cavalier attitude about the interests of one of California’s leading industries in a time of economic strife is unwise in the extreme. Big Egg does not need California’s workers to survive, and if Proposition 2 were passed, there is no reason why Big Egg could not pack up and move to another State, or to Mexico, rather than suffer under the onus of the increased costs imposed by Proposition 2.

To get some idea of how deadly this would be to California’s industry, it may be useful to look at some actual data. A study done by the nonpartisan University of California Agricultural Issues Center at UC Davis reports that the value of Egg production in California was about $213 million in 2006 and $124 million more in 2007. The industry produces about 5 billion eggs per year, which accounts for approximately 6% of national egg production. Moreover, California’s citizens consume 12% of all national egg production, meaning that this industry is vital not only as a resource for revenue, but also as a consumer good.

To introduce Proposition 2 into this equation would be equivalent to introducing a fox into a henhouse. Naturally, Proposition 2’s proponents have tried to argue that the data does not show a substantial rise in the costs associated with the bill. The data is against them with respect to this contention. While it is true that the costs of enforcing the bill will be comparatively minor for the State, this is not the most relevant cost consideration associated with the bill. That dubious honor belongs to the costs which this bill would impose on the egg industry, which the UC Davis study estimates would be 20% higher than the current costs of producing eggs. Perhaps because of this dramatic increase in costs, only 5% of all eggs nationwide are produced without the use of battery cages.

Moreover, those eggs that are produced without the use of such cages cost on average 25% more than those produced in battery cages. Given the dually important status of eggs as a consumer good and as an export, these increased costs coupled with the increase in prices would be devastating. Let’s assume that the egg industry, despite evidence that it would act otherwise, decides to stay in California. At that point, the price of all eggs produced in California would go up by 25%, making 6% of the nation’s egg production marginally more difficult to afford. This would make eggs produced by California businesses totally noncompetitive both at the national scale and within California herself, since the citizens of all States, California included, would almost certainly buy from producers in States without these sorts of absurd laws.

At this point, due to decreased demand, California’s egg industries would probably decrease production. This would have several negative effects. Firstly, the State would take in less revenue because there would be less profit to tax in a less productive industry. This would either increase deficits or lead to budget cuts which might also damage California’s people. But this is nothing compared with the second effect – that companies which cut production would also cut costs, possibly leading to mass layoffs, which would lead to a spike in unemployment and even further decreased consumption because fewer people would have money.

In short, Proposition 2 may have a heart, but if it is passed, the economy may fly the coop, and California’s workers will be reduced to scurrying about like chickens with their heads cut off.