Friday, September 11, 2009

Chew, Elasticity and the Black Market For Chicken

Chew #3 by John Layman and Rob Guillory (2009)

Aw snap, Agent Savoy! You best not make those quips about government bureaucracy to the those health reform proponents.

Ironically, the organization that employs Agent Savoy and Agent Tony Chu (pictured above)-- Food and Drug Administration (FDA)--is anything but the paper-pushing, overly bureaucratic entity it's now stigmatized as on real-Earth. In the world of John Layman and Rob Guillory's Chew, the FDA has actually been granted extremely generous power, which includes the formation of its own Major Crimes Unit. During his first week of the job, Chu was held up at gunpoint by culinary terrorists (yes i just said that) and engaged in combat with a group of Yakuza smugglers in a shady sushi shop. Oh, there may be reports to fill out, but suffice it to say the FDA gets things done and kicks some ass doing it.

Why the sudden expansion of power? Well, in response to a recent bird flu epidemic, the United States government had decided to ban the legal sale of chicken and bird-related meats. Not unlike the market for illegal drugs and the market for alcohol during the US's brief experiment with Prohibition, the sudden moratorium of bird products had led to the development of a massive black market for chicken. Speakeasies and drug kingpins now smuggle drums of chicken in through the docks, sell them illegally on the street, and even use front businesses (such as sushi shops) to launder money. As a result, the government had granted the FDA the nearly unchecked ability to investigate all food-related crimes, many of them being violent ones.

However, one wonders whether this scenario would be as extreme as it is in the comic. Surely when a product is made illegal, black markets pop up. Yet in Chew, this black market is so large and organized that it warranted massive government funds to be used towards augmenting the power and scope of the FDA. I doubt that this would be the case.

The reason is that the market for illegal drugs and the market for chicken are considerably different. Consider the demand for drugs. By and large, I would say that drugs are a pretty inelastic good. Basically, this means that consumer demand for drugs is not very sensitive to changes in price. That is, if the market price of a particular drug were to rise, individual consumption would not fall by a significant amount. A major factor of this, of course, is that hard drugs are massively addictive. Hardcore cocaine or heroin addicts tend to find ways of making more money so as to feed their addictions. A change in price is unlikely to deter them. This is why many proponents of legalization argue that the war on drugs using supply-side tactics (which increase price) are ineffective. Gasoline is another example of a highly inelastic good, particularly because there are few substitutes for it.

The price elasticity of demand for chicken, on the other hand, is more elastic for most consumers. The reason is that chicken is not as addictive as drugs are (except for maybe delicious delicious buffalo wings), but also because there are many substitutes for chicken: beef, fish, lamb, pork, and so on and so forth. This means that an increase in the price of chicken is likely to to cause consumers to look to other alternatives instead of expending more for the chicken. At the very least, consumers will be dissuaded to a much lesser extent than they would be for a change in price of illegal drugs or alcohol.

Elasticity is important in the case of Chew because it is a good predictor of the size of the black market. When a product is illegal, it becomes more expensive on the black market than it would be if it were legal and open up to free market competition. Consumers pay exorbitant prices for illegal drugs because suppliers have to figure risk, cost of illegal transportation, etc. into the cost of the product. Further, less competition means that sellers can charge higher prices and consumers will still pay so long as there are relatively few alternatives.

reprinted from

So, if a product is relatively elastic (chicken), then if it is made illegal and prices on the black market skyrocket, those individuals will probably reduce their expenditures and seek substitutes. If a good is relatively inelastic (drugs), quantity demanded would decrease by a much less substantial amount.

All of this is to say that the black market for chicken in Chew is highly exaggerated. Though there would be many consumers who would be willing to throw down some hard-earned cash for a buffalo chicken sandwich or a grilled chicken Caesar salad, I believe this market size would not be so extreme and foment such a spark in violent crime that it would actually require a massive expansion of government authority.

The problem is that this means the FDA wouldn't be as badass. And this would be a horrible shame. I'm willing to suspend my disbelief for the benefit of getting to read about Yakuza fights, food psychics, left-wing food extremists, cop cliches, body parts in hamburgers, and so on.


MikeRussellMcK said...

Second item down on today's News from 1930: "W. Groat, Assistant Atty. Gen., brings suit to dissolve Manhattan & Bronx Smoked Fish Dealers Association due to alleged food racketeering." Nice tie in to today's post here...

Unknown said...

Your analysis is consistent with observation, insofar as there is already a meat which is highly illegal to eat. Almost everyone uses substitutes, and organized cannibalism is not seen.

Anonymous said...

I recall reading in a book on drug policy that increased prices for illicit drugs do affect demand because they put up a higher barrier to entry for new users. This would seem to affect total consumption, although as you said, individual consumption probably wouldn't be very affected and the trade off is increased violence by drug users seeking new ways of financing their more expensive addictions.

ShadowBanker said...

Mike - That's hilarious! Thanks for the link

Jay - True, except it's not like the US government ever supported mass cannibalism.

Anonymous - You're absolutely right that price affects demand--I'm merely saying that in the case of drugs, I demand would be less volatile than in the case of chicken.

Will said...

Jay and ShadowBanker - Horse meat used to be eaten and I believe is now illegal (in many states). Best of my knowledge, there is no underground trade of horse meat (outside of dog food). Maybe chicken tastes better than horse which might explain Chew. I don't know since I have never eaten horse.

Anonymous said...

The chicken black market may not be as small as you think. When you consider how chicken used to be such a generally consumed and widespread food, when it is suddenly prohibited, people will still crave it. Sure, most established restaurants won't sell it, but then are the cases of ambulatory vendors, which we could assume are largely already operating illegally without any permits of any kind. As such, selling illegal food isn't so much of a leap. And people will probably not report them as they may feel they have the right to eat chicken if they want after all, it was prohibited relatively recently. Another thing is that since they are constantly moving, the vendors wouldn't be the easiest to locate and since they are in illegal activities, like in real life, they can easily be talked into, or rather forced, in some sort of partnership by the local mobsters.

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