Moral Hazards are Not Something to Toy With
Nicolas Loris /
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.