The recently enforced Consumer Products Safety Improvement Act created many unintended consequences for toy manufacturers and oddly enough, even for your local library, but most of which, blinded parents’ sense of caution when it comes to buying toys for their children.
This regulation, which went into effect on February 10, 2009, mandates that all products targeted to children must contain safe levels of lead and phthalates (plastic softener). Who can be against that?
Goodwill for starters. The legislation not only mandates that new products are safe but also that all products sold or given freely meet these standards. The question now becomes, do you invest the money to test all your merchandise or do you destroy it?
Goodwill plans on destroying 170 million dollars worth of goods simply because it’s cheaper.
The economic impact of the Consumer Products Safety Improvement Act has been mapped out by The Heritage Foundation’s Alex Adrianson. You can read his thoughts here.
The US Product and Safety Commission want to make the world safe for our children, but that is the job of the parents. When the federal government creates a supervisory board to inspect toys, it suppresses a parent’s natural inclination to be cautious when purchasing goods, which creates a moral hazard.
Take, for instance, the Securities Exchange and Commission. Their mission is to protect investors. Now, let’s say you were approached by Bernie Madoff and he asked you to invest in his company. You might do your research and see that Mr. Madoff was investigated twice by the SEC and found nothing wrong. When a government agency, with the word security in it, signs off on the Madoff operation, why shouldn’t you? Well, we all know how that worked out.
There is a proper role for the government in protecting its citizens (read: anti-fraud laws, and laws against dangerous toys entering the market.) The SEC and the US and Product Safety Commission do this, respectively. Ideally, harmful products will never reach the market place but if one does, people will respond and not purchase goods from that company or supplier in the future. If the company wants to survive, they will have to reemerge as an industry leader and provide safe goods – remember what happened to the fast food chain Jack-in-the-Box? The proper incentives are in place for companies to follow the rules or else they’ll be out on the street.
So, while a proper role for government does exist, we must not let government agencies lull us away from our natural hesitations or excuse us from our responsibility to provide a safe environment for our children.
Moreover, the overregulation from this policy is doing much more economic harm than regulatory good. Right now, the economic impact is roughly one billion dollars sitting in inventory at manufacturers and second-hand charities.Tthere is nothing fun about that.