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The Free Market
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March 1997
Volume 15, Number 3

Labeling and Consumer Choice
Michael Levin

Remember how, when you were a kid, the drawstrings on your jacket were constantly catching on the seesaw or the swing? How sometimes a passing car would snag the drawstrings of a friends hood, garroting him before your eyes? Neither do I. But someone at the Consumer Product Safety Commission must, because drawstrings are on their way out.

I recently became aware of this development when my son received his new winter jacket from Lands End, a well-known mail-order house. When he tried it on, he found no way to tighten the hood, the whole point of winterwear. We were puzzled, until out of the box fluttered a leaflet entitled "Why We Ditched Our Drawcords."

Conceding that "many of you liked the looks and snug fit they provided (we did too)," Lands End explains that they have learned from "concerned parents" but above all from the Commission that the perilous appendages "can catch on playground equipment, escalators, vehicles, and other items." "Needless to say," they continue gravely, "this cannot do."

They even offer instructions for removing cords from previously purchased garments. One needn't read between the lines to know where this initiative came from: its origin is right in the lines themselves. While the Commission "hasn't implemented a mandatory requirement as of yet, we at Lands End have been working in an ongoing process since Fall 1995...to protect our kids."

Curious as to what extent the elimination of drawcords was a voluntary response to consumer demand, I called Lands End. The woman I spoke to was not at all hesitant (evidently the legal department hadn't gotten to her yet), but a wee bit evasive. "We've had lots of calls about cords," she assured me. Requests that they be removed? "Whenever we do anything with drawcords, concerned mothers get right on the phone."

No doubt, but before you made this change, say five years ago, did anyone complain to you? "Oh, yes, a few years ago a boys hood was caught in the door of a bus, and he was dragged. There was a lot of publicity about that." Was it a Lands End product? "No." I then asked her if she thought the Commission was going to ban cords, and she was pretty sure it was.

I don't wish to put words in this woman's mouth; no doubt some customers have expressed concern about accidents involving drawcords (just as most customers are eminently satisfied with them). But it seems obvious that the sudden and complete disappearance of this convenient feature was a preemptive response to an expected federal mandate.

Likewise, we have all learned to take with a grain of salt the bragging of car manufacturers about their wonderful airbags; airbags are there by force of law. Sadly, as the public is also beginning to learn, these temperamental devices, which expand with explosive force, also have a habit of killing people, particularly children. As some wag has remarked, airbags are the only safety device with a death rate.

The standard defense of government regulation of these and other aspects of consumer safety is that, while the Commission, the FDA, the National Highway Safety Administration, and similar agencies do have their excesses, the good they do outweighs the bad. It has been estimated (very unscientifically) that 34 lives are saved by airbags for every 1 taken. How, it is commonly asked, would the market handle consumer safety absent government regulation?

This question betrays two misconceptions. First, the human race did get along famously for many ages before consumer products were regulated. So far as I know there was no Athenian Trireme Commission, yet most Greek trading ships managed to get around the Mediterranean without heading for the bottom. (Had the Commission been around when Isadora Duncan caught her scarf in the wheels of a car, no scarf today would exceed two feet in length.) Second, the cost and consequences of mandatory product safety--or some zealots idea thereof--is regularly underestimated.

Lets take as an illustration of these costs the can of Campbell's Tomato Soup before me. 20% of its label is dedicated to a list of ingredients and, more prominently, what are called Nutrition Facts. It tells me, for instance, that the soup therein contains 2 grams of fiber, which is 8% of the fiber I should have daily (assuming, I am further informed in a space-consuming footnote, a 2000 calorie diet).

To begin with, this label involves coercion of the manufacturer, who had to put it on. Why? To "protect" me, but from whom? Nobody will force me to buy soup whose fibrousness I do not know. Campbell Soup Co. has no private army dragooning consumers. If consumers really wanted this information, any company that provided it would be at an immediate competitive advantage.

And let's not forget that the more space on the package given over to bureaucratic edicts, the less room there is for art and copy to make the product more appealing. The less attractive the item, the more sluggish its sales, again raising unit costs, reducing overall productivity and quality.

Prices play a role here too. The can of Campbell's in my hand sells for 79 cents. A hypothetical can of unregulated Pretty Good Soup might go for 59 cents. By what right can anyone else, even a democratically elected government, prevent this purchase? The Pretty Good Soup offers, in exchange for 59 cents, a quantity of digestible liquid. Labeling laws in effect forbid this range of bargains. Ironically, in so doing they harm the worst off, namely those who cannot afford expensive soup but could buy cheap, supposedly risky soup if only the government let them.

Labeling socialists like to conjure a market world in which unsuspecting consumers die like flies as they ingest poison soup, drive unsafe cars, wear pajamas that burst into flame, and so on, but the market can accomplish everything safety regulation can, with more efficiency and better results. Indeed, it does, as Mark Thornton has demonstrated, the famed Underwriters Laboratory is entirely private. It grants a seal of safety coveted by manufacturers of all types of electronic products; most wont go to market without it.

Absent government regulation, people concerned about what is in food could also subscribe to testing services, which would provide a breakdown of the ingredients of various comestibles. If such services proved popular, no manufacturer would dare offer unhealthy products, and most would provide their own labels.

The Consumers Union, and its publication, Consumer Reports, is an example of such a service today. Failure of such testing services to prove popular enough to be profitable would show that a great many people found the cost of knowing ingredients to be too high. They prefer to have 20 cents in hand to any reduction in uncertainty the 20 cents could buy. I may think you are crazy to buy Pretty Good Soup; you may think I'm crazy to spend extra to find out how much thiamine my breakfast cereal contains. The free market lets each of us follow his star.

Here, then, is the central dilemma of laws meant to protect the consumers "true" interest: either they give him what he already wants, in which case they are redundant, or they deny him what he wants, in which case they violate his liberty.

One priceless argument for intervention is that it protects the innocent: some helmetless motorcyclist might hit a tree and end up in a public hospital, where the taxpayer would have to pay for the repairs to his fool head. That's why motorcyclists should be made to wear helmets. Wrong: that's why there shouldn't be public hospitals. Each person's well-being is his own responsibility. In fact, the greater care everyone (including motorcyclists) would exercise absent "public health" institutions highlights one more hidden cost, the moral hazard. Believing that government action has made some disaster impossible, people behave more recklessly, thereby bringing about the very evil the decree was said to prevent. How many more auto accidents have there been because drivers assume airbags make them invulnerable?

Maybe someday firms can offer coats with and without drawstrings, so consumers can decide. Meanwhile, in the chilly New York wind, my son can't figure out how to tighten his hood.

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Michael Levin teaches Philosophy at the City College of New York

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