The Right to a Happy Meal Toy

I can’t believe I never blogged about San Francisco voting to ban toys in Happy Meals that did not meet certain health requirements. I guess it’s because it happened last November which was before the latest incarnation of my blog. At the time I thought it was a hilarious and classic example of the progressive mindset that the state is more authorized to make decisions for children than the parents, and also a hilarious and classic example of fruitless, arbitrary regulation that restaurants would find an easy way around.

Well, the ban is back in the news, because it finally goes into effect today, and the New York Times is reporting that McDonald’s is just going to charge 10 extra cents to slip the toy into the bag. And the regulator response:

“We are going to learn from how the industry responds,” Dr. Bhatia said, “and do what’s necessary to improve regulation.

Ha ha. Dr. Bhatia and the other members of “San Francisco’s Department of Public Health” no doubt have good intentions with wanting to save children from fatty foods. But I think they have an extremely naive view of the way markets function around regulation that is possibly even more naive than the simple capitalist who doesn’t understand public goods or negative externalities and thinks the market can provide everything for everyone without taking advantage of anyone.

I never made it all the way through David Okrent’s tome The Rise and Fall of Prohibition, but my favorite example of the unintended consequences of regulation was when the Raines Law said you couldn’t serve liquor on Sundays unless you were a hotel that served food. So Brooklyn went “from having 12 hotels to about a 1,000 hotels” as bars threw cots upstairs to qualify as “hotels” (and in another form of unintended consequence, often turned into prostitution centers).

What does banning liquor in non-hotels have to do with banning free toys in fatty Happy Meals? Well, nothing in the details, but fundamentally they both have to do with placing arbitrary restrictions on human behavior that are simply impossible to enforce. You may create some costs and friction, but it’s like putting a brick in front of a trickling stream: the water’s just going to find a new path of least resistance around it.

And when it comes to Happy Meals, there are a whole lot of possible paths. I had theorized that McDonald’s might not put the toy in the bag but leave one on the counter with a wink-wink. But maybe that kind of stuff is too close to the spirit of the law or too bothersome to enact. Besides, charging “10 cents” is even better: it marginally increases their profits, and the demand for Happy Meals is probably inelastic enough that parents – who are already supposedly too weak to prevent their children from needing the toys – will doubtlessly cave to the extra dime.

But of course the regulator’s response is to continue to lay down bricks to try to to block the stream (“do what’s necessary to improve regulation”), instead of simply recognizing the futility of doing so due to the source of the problem (bad parenting). Maybe next San Francisco will pass a ban that makes it illegal to include a Happy Meal toy with a Happy Meal for free or less than a dollar. Then maybe McDonald’s will drop the price of the Happy Meals by a dollar and charge $1.10 to include a toy. Then maybe San Francisco will ban the sales of food and toys in the same purchase, and McDonald’s will redefine their toys as “non-food products.” Then San Francisco will ban selling food and non-food in the same purchase with carefully defined exceptions for food wrappers or food decorations like candles on cake or for gas stations and grocery stores that lobby for exceptions. And then McDonald’s will redefine their toys as “food decorations.”

Regardless of what unfolds, the fundamental issue is that if people want to buy unhealthy food and toys, you can’t really prevent them from doing that. And if you keep leveling up on your attempts to do so, then you start placing more costs on more businesses and encouraging them to lobby for exceptions, or you start restricting individual behaviors and personal freedoms in very dangerous ways. You will end up with a complex, contradicting maze of arbitrary regulations that will probably do a lot to foster lobbying and unintended consequences, but it will probably do very little to change people’s fundamental desire to buy unhealthy food and toys. Still, it will be fun to watch San Francisco try…