By Julian Dunraven, J.D., M.P.A.
Honorable Friends:
I know better. I really do. In truth, I was simply trying to be polite. Nonetheless, I opened the email from my honorable friend, clicked on the link, and suffered through a clip of ABC’s World News with Charles Gibson, a man who somehow manages to look grave while pronouncing utter rubbish.
The clip in question, "Lagging Safety Standards for Baby Products," was not news, but rather an inexcusably fear mongering advocacy piece calling for greater government regulation in response to the recent crib recall. My honorable friend sent it along to me in the hope that I could explain why the federal government does not already set strict safety standards for baby products.
Contrary to ABC’s histrionics over what it sees as a complete lack of regulation, the federal government does indeed impose rather exacting safety standards upon manufacturers and retailers of child products. The Consumer Product Safety Improvement Act of 2008 (CPSIA) stands as just one example of such regulation. This is nothing to celebrate, however. The CPSIA serves only to impose crippling costs on business, and actually undermines the safety of the children it purports to protect. All it successfully does is increase the size, scope, and power of government. Only Mr. Gibson could breathe a solemn sigh of relief over that. Sensible people should be alarmed.
The Economic Costs of Regulation
The economic costs of the CPSIA are fairly obvious. The CPSIA requires that any product intended for the use of children under age 12 must be tested by a third party and certified for safety under standards promulgated by the Consumer Product Safety Commission (the Commission). Other than prohibiting excessive levels of dangerous substances such as lead or phthalates, the CPSIA leaves it to the Commission to define and set safety standards. Once certified, a manufacturer must affix a proper label to each of its products. Even without knowing what additional testing standards the Commission will impose, this third party testing, certification, and labeling requirement imposes enormous expense.
For a large toy manufacturer such as Hasbro, these additional expenses, though irksome, are manageable. The company will simply pass the costs along to consumers, and young parents, struggling to pay bills, will marvel at the outrageous prices of baby products while no doubt cursing the "greedy" corporate executives they mistakenly blame for the cost. The consumer suffers, but the large company may survive with less profit. A small business, however, will suffer even more.
A stay at home mother who designs and creates baby bibs for her own children, then has them manufactured for public sale, will suddenly find her business faced with expensive new testing requirements for every fabric she uses, for every fastening device and material she attaches, and for any pacifier or toy she may include with the sale of such a creation. It makes no difference that she thoroughly researched the safest types of products and materials for use in her designs. She must meet the requirements of the regulations, though the cost of doing so is greater than all the revenue of her small start-up company. The time commitment alone is more than she has as a new mother. So she closes her business. Others like her are prevented from entering the market at all. Government has just set a high wealth barrier to market entry.
Regulation’s Cost to Safety
Perhaps even more worrying than the financial costs of the CPSIA, though, is the damage it does to the cause of child safety. This may seem counterintuitive given that CPSIA is intended to do the exact opposite. Make no mistake, though, the existence of the CPSIA ensures that baby products will be less safe than they would be without the CPSIA.
If the CPSIA and its like did not exist, children would not be in any imminent danger. Rather, the safety of products would be determined by the courts. If a child were injured by any given product, and the parents brought suit against the manufacturer, a judge would look to see whether the manufacturer knew, or should have known, that the product could be expected to cause injury. A judge would hold a manufacture responsible for knowing the best practices of his or her industry. Thus, even if a particular manufacturer was ignorant of a product defect or risk which others in the industry had discovered and corrected, he or she would still be held responsible in tort (and sometimes under criminal law) for failing to maintain best practices. The beauty of this system is that the safety standard is always rising as the industry gains new information. Manufacturers have great incentive to keep up with or exceed best practices as punitive damages can put them out of business and the safest products have great marketing appeal.
The CPSIA changes all that. Under the CPSIA, the Commission sets industry standards by law. That then becomes the minimum safety level, and as long as a manufacturer meets the legal standards for its products, it cannot be held liable for the injuries its products may cause. The industry may, in fact, develop best practices far in excess of the safety standard set by law. However, as these standards are more costly and the law does not require them, many manufacturers will not use them in the production of their goods. While the Commission will attempt to issue regulations modified for industry development, it cannot possibly keep pace. It is but one underfunded government agency charged with setting standards for millions of baby products in the industry. Inevitably, its regulations will lag by many years. That is the sole point ABC correctly reported. The government, acting through the Commission, cannot possibly set safety standards as exacting or as efficiently as the industry itself through the proper operation of our court system and the market.
ABC and Mr. Gibson seem to think government must involve itself in everything we do for our own good—especially to protect the children. As I hope you see here, though, further government regulation of child safety standards actually leaves our children more vulnerable while imposing crippling costs on our small businesses. Just ask yourself: do you want the products your child uses to be subject to the highest standards the market and toy industry can offer? Or do you really want to leave your child’s safety at the bottom of a federal bureaucrat’s inbox?
