A Problem with Information Mandates
Even many very pro-free-market economists, noting that there is imperfect information in the marketplace, advocate that government provide information or require private firms to provide information. Even they often tend to regard government as an entity that will somehow provide the right kind of information or mandate that firms provide the right kind of information.
In the real world, though, it is not that simple. Governments may provide irrelevant information or mandate irrelevant information. But it sometimes can be worse. Governments may provide or mandate “information” that is misleading. A recent case in point is a regulation by the Florida government’s Department of Agriculture and Consumer Affairs. It claims that “skim milk isn’t skim milk unless vitamins are added to it.” So it insists that Ocheesee Creamery in the Florida Panhandle label its skim milk as imitation milk. Of course, it’s not imitation. Rather, it’s real skim milk that the government insists be labeled as imitation. And because Creamery owners Paul and Mary Lou Wesselhoeft want to sell their milk to willing customers who want skim milk, they worry that labeling it as imitation milk will cause people to think that it’s–imitation.
So economists and others who glibly propose that government provide or mandate information should think more carefully about their proposals. Government may not do the information function very well either.