Health Alert: Potentially Harmful Vegetarian Hot Dogs and Power Bars

Every day in the United States there are many consumers who may unknowingly consume products with potentially hazardous ingredients – namely, isolated soy protein, soy protein isolate, soy protein concentrate etc. This ingredient is found in a wide range of products such as vegetarian hot dogs, vegetarian burgers, vegetarian cheeses, power bars, protein powders, and soy drinks. There are two potential hazards. One is that consumers may unknowingly be consuming soy protein manufactured in China and thus be running the risk of eating foods that are contaminated. The second hazard is that regardless of where the isolated soy protein is from, this is not a healthy ingredient.

Here are the facts:

• There is a little-known loophole in the consumer protection rules. In general, food products from foreign countries have to be labeled with their country of origin. Thus olive oil from Italy is marked as a product of Italy. There are several big exceptions to the labeling requirement. One is for products that undergo a “substantial transformation.” For example, a grape jelly manufacturer in the United States may buy Chilean grapes and not have to label their product as having a Chilean origin. Similarly, if a U.S maker uses imported isolated soy protein in their processed products, since the product undergoes a “substantial transformation,” the U.S. producer need not label their products as having imported ingredients.
• The Chinese are manufacturers and exporters of isolated soy protein. Since there was widespread, deliberate adulteration of vegetable proteins with toxic melamine used in pet food products; one must approach with skepticism any assurances that these products have not been included in human food. Dr. Gary Weaver of the University of Maryland has said, “Uncontrolled distribution of low-quality, imported food ingredients is a great threat to U.S. public health.”
• Regardless of the purity of the product, isolated soy protein, rather than being a health producing substance as many believe, should be treated as a cheap adulterant. It is a highly manufactured substance and bears little resemblance to healthy soy products such as tofu, miso, and tempeh. Tofu, miso and tempeh have been traditional foods in many Asian societies for thousands of years.

So what can the consumer do?

• Carefully read the label of products that you are currently using and see if they contain substances such as isolated soy protein.
• Question whether you need to continue using these products. Be especially careful if you or your children use these products on a daily basis.
• If you decide that you do need to use them, check if the isolated soy protein is organic. If it is, the chances are excellent that the product is of U.S. origin. Be careful: There are many products that are generally organic, but may have non-organic isolated soy protein.
• If the product contains non-organic isolated soy protein or similar ingredients, contact the manufacturer and ask for assurances that they are not using imported ingredients without labeling them. Do not buy products from companies that cannot give you these assurances.
• Eat less processed food, including so-called healthy processed food. Be skeptical of health promoting claims made by manufacturers of processed foods.
• Finally and most importantly, take responsibility for your own health. Do not assume that you can rely on the government to mandate adequate labeling of food products.

The Best of Both Worlds?

Recently my web-based principles of economics class completed its work. The final weekly online conference was on Federal Reserve monetary policy. The class collectively was quite approving of Fed policy and performance. Most believed in the hypothesis that the Fed was responsible for our long-running economic prosperity and that the Fed could keep prosperity going indefinitely. Most believed that Fed had done a good job in controlling inflation. In short they believed, through its wisdom, the Fed had achieved the best of both worlds – low inflation and prosperity.

This collective optimism was in spite of the fact that the class was assigned to read material that argued that Fed policy was partially responsible for the housing bubble and that the consequences of the housing bubble would eventually cause serious problems in the economy. This collective optimism was in spite of a huge federal debt that only mirrored the absence of savings among households.

None of my observations are meant to be critical of my class. My class was just reflecting the current optimism of the larger cohort to which they belong. My class was an MBA class; in general, professionals are doing quite well in today’s economy.

The optimism of this web class has coincided, not so coincidentally, with all-time highs in the stock indices and the longest bull-run in the Dow Jones index in over 80 years. Given that, it shouldn’t be surprising that my MBA class is feeling quite optimistic.

Robert Prechter has observed, “It is nearly impossible to find a treatise on macroeconomics today, that does not assert or assume that the Federal Reserve Board has learned to control both our money and our economy. Many believe that it also possesses immense power to manipulate the stock market.”

Now the truth is of course, human beings never have the power to control what is essentially uncontrollable. Even a cursory study of economic history shows that economic cycles are part of life. These cycles tend to coincide, Robert Prechter argues, with the ebb and flow of collective optimism and pessimism. Peaks in the stock market tend to coincide with the peaks in optimism. When optimism is at its peak, the belief that human beings can control what is inherently uncontrollable is also at its peak. It is only in a bear market, when human beings are collectively pessimistic, that people lose their belief in the power of human beings to control what is essentially uncontrollable. At that point they tend to lash out with recriminations and blame.

Long ago, economist Ludwig Von Mises pointed out that bank credit expansion orchestrated by the Fed leads to what Von Mises called malinvestment. Ultimately malinvestment has to be liquidated. Further credit expansion can only postpone – but not prevent – the liquidation stage of the business cycle. In other words, Fed credit expansion led to the manic run-up in housing prices and has only postponed – but can not eliminate – the liquidation stage of the business cycle.

Von Mises has written that, “There is no means of avoiding the final collapse of a boom brought about by credit expansion.” To human beings who are blinded by the collective arrogance that comes from believing that they can control the uncontrollable, Von Mises’ statement may seem like narrow-minded folly.

When this economic cycle turns, the blame and recriminations will be enormous. Many believe that they are living a life-style has been well-earned and well-deserved. In some cases it has been, but in many cases it has been financed by a mountain of debt and subsidies. This won’t stop the blame. The blame will be absurd for, as has been observed, “blame is the act of accusing the mirror for the content of the reflection.”

In other words, the hubris of politicians and Fed chairmen is only a reflection of our own hubris. As a society we have collectively spent beyond our means and have had the arrogance to believe that there will never be any consequences.  For now we continue to live under the illusion that the “best of both worlds” can continue indefinitely.

 

Whole Foods: A Company That Forgot Its Purpose

How can you be the biggest company in a rapidly growing market segment and still see your profits and stock price plunge? Its easy to do if you forget your organization’s purpose.

Whole Foods, a natural foods supermarket chain, has recently seen both its profits and its stock price plunge. Since their business segment is growing rapidly, many are at a loss to explain what exactly is going on.

I am a long-time Whole Foods shopper and I believe their decline is likely to continue. For many years my family spent around $200 a week at Whole Foods. We now shop at the store only occasionally.

Have we abandoned natural and organic foods? Hardly! Whole Foods has simply lost our business. We still buy as many natural and organic foods, but other retailers such as our local natural food store, Trader Joe’s and Wegman’s have now earned our business.

At the heart as any success of any business is their ability to serve the consumer. The great economist Ludwig Von Mises observed: “The profit system makes those men prosper who have succeeded in filling the wants of the people in the best possible and cheapest way. Wealth can be acquired only by serving the consumers.”

At the core of an organization’s ability to serve the consumer is their understanding of what their purpose is and their ability to adhere to their purpose. To the extent that an organization understands its purpose and adheres to it, the organization builds trust with the consumer. As trust grows profits grow, as trust declines profits must decline. Although many companies forget it, there is no secret to that relationship.

A good example of an organization that remembers its purpose and builds trust is Southwest Airlines. Southwest has a guiding purpose to provide travelers low fares and excellent service. All of their decisions are based around that purpose. Southwest has met their purpose very well and they have been rewarded by consumers.

Whole Foods claims as part of its mission that: “We sell the highest quality natural and organic products available, and that we satisfy and delight our customers”. This was indeed once true of Whole Foods, but in the experience of my family it is no longer.

One example will suffice. For years, we consumed Whole Foods premium Icelandic salmon. Years ago we were stunned to find out that Whole Foods, like any other supermarket chain, was feeding their farm-raised salmon artificial colors.

I contacted Whole Foods several times and asked them to consider labeling their fish as containing artificial colors. They initially refused. It was not until Safeway began to label their salmon that Whole Foods began to label correctly their product.

That was the first betrayal of trust that my family experienced from Whole Foods. Sadly, it was not the last. As the years went on, we caught Whole Foods in more and more questionable practices. These practices further eroded our trust.

Each time we brought these practices to their attention. Each time our concerns were dismissed.

Why is Whole Foods stock price being hammered? The answer is simple. They are no longer fulfilling their guiding purpose. They no longer sell the “highest quality” products, and they no longer “satisfy and delight” their customers.

I take no pleasure in writing these words. Whole Foods had served my family well for many years. I hope they can find their way again.

Sudan Red and Mountain Dew Code Red

The scare over food additives from Asia continues to grow. Melamine has now been found in both chicken feed and fish feed. It has almost certainly entered the human food supply.

Today the Wall Street Journal reports on the practice of Asian countries adding other dangerous food additives. Formaldehyde, boric acid and Sudan Red (a food coloring) are common additives in Asian countries.

With the exception of Sudan Red, which has been found in chili powders, there is no evidence that these dangerous food additives have found their way into our food supplies.

According to Irishhealth.com Sudan Red “is an industrial red dye that is used for coloring solvents, oils waxes, petrol and shoe and floor polishes.” “Human ignorance as well as greed knows no bounds” said Gerald Moy of the World Health Organization.

Now before we get so smug about ignorance in Asian countries, the following is a list of ingredients in Mountain Dew Code Red: “CARBONATED WATER, HIGH FRUCTOSE CORN SYRUP, CONCENTRATED ORANGE JUICE, CITRIC ACID, SODIUM HEXAMETAPHOSPHATE (TO PROTECT FLAVOR), NATURAL FLAVORS, SODIUM BENZOATE (PRESERVES FRESHNESS), CAFFEINE, SODIUM CITRATE, GUM ARABIC, ERYTHORBIC ACID (PRESERVES FRESHNESS), CALCIUM DISODIUM EDTA (TO PROTECT FLAVOR), RED 40, POTASSIUM BENZOATE (PRESERVES FRESHNESS), BROMINATED VEGETABLE OIL, YELLOW 5, BLUE 1.” I could have singled out other soft drinks, but I chose Mountain Dew Code Red because it is popular, and because there is no particular reason that it be colored red.

The Wall Street Journal reports that Sudan Red is added to drinks in Asia are to make them look more attractive. I suppose it is the same ignorance that causes Pepsi to add three different artificial colors to Mountain Dew. These additives have been linked to hyperactivity in children. Mountain Dew Code Red also contains brominated vegetable oil, which has been linked, according to Wikipedia, to teenage obesity and psychosis.

Speaking of obesity, a 20 ounce bottle of Mountain Dew Code Red contains 77 g of sugar. Drinkers of Mountain Dew might drink several bottles a day. This is enormous load of sugar for the body to process and not only contributes to obesity but also contributes to tooth decay and the epidemic of type 2 diabetes.

Incomes in Asia are much lower than in the United States. A teenager or young adult, living in Asia, might only consume an occasional drink, from a street vendor, containing Sudan Red. A consumer in the United States with higher discretionary income may consume far more Mountain Dew Code Red.

Sudan Red is a poison and should be kept out of our food supply. There are legal substances in our food supply, such as Code Red that each of us must take responsibility to decide if they are health enhancing or dangerous. Relying on the government to determine the safety of a food item can be a very dangerous to your health.

You Call This a Team?

I won’t bore you with commentary on whether Roger Clemens is worth $18 million dollars playing, part of the season, for the New York Yankees. I also won’t comment on whether he will be able to lead them to another World Series title. My answer to both questions is no but that is not the point of this post.

Last time I checked baseball was a team sport. And the Yankees have not won much of anything in the post-season in recent years because they are not much of a team. Notice I did not say that they not full of talent, they clearly are; I said that they are not much of a team.

One quick way to destroy a team or organization is to set different rules for different members. No matter what the reason for these special rules, this expediency will corrode team spirit. Despite Clemens being the highest priced player on the team he will not be required to be on the bench for every game. He won’t have to make road trips when he is not scheduled to start and he will be allowed to fly home between starts. Basically he just has to show up for his starts and earn around $10,000 a pitch.

The spectacle at Yankees stadium on Sunday, when Clemens announced to the crowd during the 7th inning that he will return, reminded me of professional wrestling. In Clemens’ empty promises I heard the empty words of wrestlers’ promises to save the day. Most in the Yankee stadium crowd went appropriately delirious.

Of course, unlike wrestling, baseball is not fixed, but the Yankees have become mere entertainment and not a serious team. There is nothing wrong with entertainment, but I would rather watch the great Yankee teams of the late 90s. Players such as Bernie Williams, Scott Brosius and Paul O’Neil are retired but they were clutch, and they were a real team.

A real team usually plays above the mere sum of their parts; a collection of talents usually plays below the sum of their parts. A real team delights us because they frequently delight us with inspired and heroic play. A collection of parts almost always disappoints.

When Does “Saving” Energy Cost Energy?

The June 2007 issue of Consumer Reports has an interesting review of washers and dryers. What is striking is that the review contains evaluations of washers by major brands, such as Kenmore and Whirlpool that earn among the lowest scores ever given to a washer.

When Consumer Reports evaluates a product they give an overall score which ranges from 0 to 100. The score is intended to sum up the performance of the product. Four of the washers evaluated achieved an astoundingly low score of 25 or under. According to Consumers Reports some of the washers “left our stain-soaked swatches nearly as dirty as they were before washing.”

The explanation for this extraordinarily poor performance according to Consumer Reports is that in January of 2007 the U.S. Department of Energy required washers to use 21 percent less energy. Consumers Reports quickly adds that this is a goal that they “wholeheartedly support.”

Economists are fond of pointing out the unintended consequences of seemingly well-meaning public polices. So let’s list a few of them here: The manufacturer incurs higher costs to meet the new energy-saving goal. The consumer buys a washing machine that doesn’t work. The consumer wastes their hard-earned income. The consumer has to prematurely replace the washer that doesn’t work. The consumer washes each load several times in an attempt to clean their clothes.

All of these consequences cost energy and income. And let’s not forget the final consequence: the consumer pays taxes to support the bureaucrats that issue the regulations that cost them energy and income.