A news bulletin recently flashed across the screen, painfully familiar to everyone in the Balkans: "A large amount of artificial honey is present on the Montenegrin market, authorities are strengthening quality control." The initial reaction of most people is predictable and understandable—"Finally! We need more control! Punish the fraudsters more harshly!".
At first glance, this reaction seems natural. But does another law and more officials really solve the problem? Or perhaps, does it only make the situation worse? So why do people, with a persistence worthy of a better cause, continue to demand something that doesn't work?
Why Government Control is a Poor Solution
Does anyone still believe in the honest and fair government official who will protect us from all deceit? It's an illusion, and reality is far more mundane.
First, bureaucracy is a tax on honesty. Every new license, certification, or inspection imposes additional costs on any entrepreneur. Large corporations easily absorb them into their budgets, but for a small family apiary or a little cheese dairy, these expenses can be a fatal blow. As a result, honest small producers leave the market, competition decreases, and prices for consumers rise.
Second, a government "seal of quality" creates an illusion of safety. It merely lulls our vigilance. People see the coveted sticker and stop thinking critically, reading the ingredients, or taking an interest in the producer. Consumers become easy prey for those who have learned how to "fix issues" with inspectors or find loopholes in the law.
Third, and this is especially relevant for our latitudes, any system of control is fertile ground for corruption. The power to prohibit and permit inevitably creates temptation. As a result, a dishonest producer can simply buy the necessary paperwork, and his fake cheese or diluted oil will smoothly land on the store shelf.
Finally, rigid regulation stifles innovation. Government standards are always inflexible and lag behind life. A craft producer who has created a unique product with a new technology risks finding himself "outside the law" simply because his product does not fit into the Procrustean bed of outdated instructions.
The Alternatives No One Wants to Notice
The most ironic part is that effective mechanisms for combating fraud already exist and have been working for a long time.
We trust the reputation of doctors, car mechanics, and restaurants. Why do we think that for a beekeeper or a winemaker, reputation is an empty word? In a world where a single negative review can cost hundreds of customers, a good name becomes the most valuable asset.
There are independent laboratories, rating agencies, and producer associations. Why do we prefer to believe a bureaucrat who bears no responsibility, rather than those who put their own money and reputation on the line by issuing a private "seal of quality"?
We choose a hotel or a taxi based on a review system. Don't millions of consumer eyes see better than a pair of inspector's eyes? Why don't we trust the same mechanism when choosing olive oil?
And finally, why do we so easily agree to the insane growth of bureaucratic armies instead of demanding that the state fulfill its main and sole duty—protecting citizens' rights through a swift and fair court? After all, selling a counterfeit product is direct fraud and a breach of contract.
Lessons from the Balkan Bazaar
Our markets are full of examples proving the failure of the state control system. "Bitter" honey that turns out to be sugar syrup. "Extra-virgin" olive oil diluted with cheaper oil. "Lenten" cheese that contains milk protein. Life-threatening rakija from an underground workshop that appeared because legal production became too expensive. These are not symptoms of a "wild market." These are symptoms of a sick regulatory system.
Lessons from History: How It Used to Work
Do you think market self-regulation is a new-fangled idea? Not at all. Let's recall history. In the Ottoman Empire, in major trading cities like Sarajevo, esnafs—craft guilds—existed for centuries. Each esnaf had its own charter, its own standards, and its own internal quality inspector—the kalfabaša. These people were responsible for ensuring that the products of the entire guild maintained a high standard. Their collective reputation and income depended on it. And this system worked, so much so that goods from Sarajevo were valued throughout the empire. This is the historical analogue of modern reputation systems and private certification.
Who Don't We Trust: the Market or Ourselves?
So, what does it all mean? Government control is expensive, inefficient, and often harmful. Market-based alternatives already exist, they work, and they have deep historical roots.
So why, when faced with a problem, do people cry out to officials—"Save us, help us!"? Isn't it more logical to trust those who are genuinely interested in their own reputation and whose income depends on the quality of the goods in the market? Maybe it's time to free these people from excessive control and allow them to protect their own good name, instead of creating a cozy spot for another corrupt official?