Do Consumers Need Protection from Consumer Protection?

As readers of this blog should already know, consumer-protection policies sometimes go wrong. Last week, I had the chance to attend a panel discussion about several examples, moderated by Timothy Carney at the American Enterprise Institute. Entitled “Uber competitive: How bogus consumer laws hurt taxis, toys, and braids” (you can watch the panel at the link), naturally the topic of CPSIA regulations came up. As Randall Hertzler of the Handmade Toy Alliance argued in his remarks to the audience, some of our CPSIA regulations have made competing or just staying in business much more difficult for small- and medium-sized firms making perfectly safe products. This ultimately gives consumers fewer choices and higher prices.

Even liberal Slate blogger Matt Yglesias agreed that health and safety agencies tend to under-estimate the costs and over-imagine the benefits of their work, leaving consumers with net losses. Matt was particularly concerned about pure compliance costs, the paperwork costs of figuring out the regulation and documenting compliance that do virtually nothing to make consumers safer but cost big companies money, small companies jobs or existence, and consumers choice and affordability.

The worst part may be that these costs actually lessen companies’ ability to make consumers safer, because every dollar they spend identifying the hoops and deciphering just how to jump through them is a dollar they can’t spend on innovation, including safety innovation. I have been dismayed by the repeated refusals by some at CPSC to consider the full effects of our rules before imposing them, and this habit is starting to get noticed outside the building. I hope these growing voices lead us to make our work better before Congress has to step in and force us to improve.

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