The punishing impact on business of over-reaching government regulation is always painful to watch – the latest example is especially poignant given the time of year. Several recent stories in the mainstream press are highlighting the immense difficulty and expense suffered by toy manufacturers as they struggle to comply with product testing requirements established under the Consumer Product Safety Improvement Act, signed by President Bush earlier this year. (See http://www.latimes.com/business/la-fi-toys23-2008dec23,0,2707481.story) The bill was Congress' response to last year's high-profile recalls of toys found to contain high amounts of lead and other hazardous substances. By Feb. 10, children's products must be accompanied by a manufacturer's certificate that says they do not contain lead or phthalates, which are chemicals used to soften plastic.
The problem is, virtually all of the problem toys were imported from low cost, overseas manufacturers that, consciously or not, failed to adhere to basic safety standards and thresholds for lead and other chemicals. While the problem was real, no children were ultimately harmed and the toy market responded quickly as well-known retailers and toy companies scrambled to ensure their products were safe. But Congress, as usual, reacted viscerally with a ham-fisted law that ensures that a multitude of domestic manufacturers will practically go broke conducting expensive lab tests on toys that never were, and never will be, dangerous to children. Toys prices will go up, profits and dividends will shrink, some companies will go out of business, jobs will be lost, and parents will be told they can rest easier because Congress is once again "protecting their children."
It will be impossible to determine if any children ultimately avoid sickness or injury because of this bill – its supporters simply presume so and will never have to demonstrate such a result. But we can see the effect on the toy sector in an already dismal economy. It's a scene only a Grinch would appreciate.