The Consumer Product Safety Act of 2008, sponsored by Illinois Congressman Bobby Rush and quickly signed into law by President Bush, soon goes into effect. Sold as a measure to protect children from the perils of Chinese and other foreign-made toys which may contain lead paint, the law was written with good intentions. Unfortunately, good intentions sometimes produce bad consequences. While this law may never save a child, it will certainly have consequences for small businesses which produce toys, as well as other products intended primarily for children under 12.
As always, the devil is in the details, and Publius Endures has given the details careful scrutiny. Among other little details, this law may require toy manufacturers and importers to perform costly outside testing, at a cost of over $4000, on each lot of toys shipped. If the law is so interpreted by the people who draft its enabling regulations, that will simply put small manufacturers out of business, leaving the American toy market to giants such as Mattel or driving more of the business to overseas competitors who produce on a larger scale and can absorb the cost. The result, probably not intended at all by lawmakers, may be monopoly or oligopoly in the American toy market, accomplished through regulation rather than market forces.
For more on this example of unintended consequences of hasty lawmaking in response to a panic, see Upturned Earth, which suggests that congress or regulators might be persuaded to amend or sensibly interpret the law, if only they understood what a potential monster they’ve created.