Blog: How Liberty Helps the Consumer

Statement

Government regulations are so pervasive that many people assume without question both that the regulations are helpful and that they are necessary. However, once we challenge these assumptions, we see that government regulation is frequently not only unnecessary, but futile or even counterproductive. Rather than pretending that government always knows what's good for us and what's not, Libertarians prefer to let individual consumers decide which products they trust. Not every product on the market is safe--but that's true even of products the government has declared to be safe, and we're better off knowing that the responsibility rests with us.

A question I received about expanding the FDA's role in regulating cosmetics illustrates the point. The question came with a link to a video called "The Story of Cosmetics," by filmmaker and activist Annie Leonard. The argument of the film is that there are too many toxins in personal care products like shampoos and deodorants, and that the FDA should be given new authority to ban the use of toxic ingredients in these products. The video is well done, and I really encourage people to consider the "toxins in, toxins out" message when they're buying cosmetics and other household products. But the video claims that additional FDA regulation will be more effective than relying on consumers to make good choices. That argument just doesn't wash.

First, "The Story of Cosmetics" assumes that FDA regulation will make our shampoos safer, even though we're talking about regulations that have yet to be written, sometime in the future. But the same video also argues that the problem with current regulations is that cosmetics makers have captured the government regulatory process and have subverted it so that toxic chemicals are allowed in. So why should we expect regulation to work better the second time? We shouldn't.

It doesn't even matter why the manufacturers escaped regulation the first time around. Maybe industry produced scientific evidence that genuinely convinced Congress or the FDA's experts that there was no need for regulation. Or maybe the case for regulation was pretty strong, but industry prevailed due to sheer political muscle. Either way, there is good reason to expect the same result the second time around.

Second, the video asserts that we cannot address this problem without FDA regulation. But here the video contradicts itself by pointing out that "green chemistry" for consumer products is already a flourishing field. Why is it flourishing? Because there's a market for non-toxic consumer products! Tom's of Maine, Seventh Generation, Kiss My Face--there are lots of brands on the market that attempt to make us clean and shiny without using toxic chemicals. What government agency should we thank for that? None. It was private enterprise.

The video suggests private enterprise won't work here because a single consumer can't affect what Proctor & Gamble puts into its shampoo. But when the video turns to the lawmaking process, suddenly the narrator is one of many people who all want the same thing. Where were all these people when P&G was figuring out what to put in the shampoo? Why wouldn't a group of consumers big enough to get Congress's attention be big enough to get P&G's? Shouldn't it be easier to get P&G's attention, since P&G makes lots of shampoos without requiring any one of them to be favored by more than 50% of all voters?

Of course government doesn't require the assent of 50% of all voters either; it responds to small groups of people who are zealous enough and influential enough to pull the right legislative and regulatory levers--the infamous "special interests." Thus, if government does start regulating your deodorant, it will not be because you and I and all our neighbors joined hands and decided to rein in P&G. If government starts regulating your deodorant, it will be because a relatively small group of people who focus on the toxicity of consumer products think they can choose your deodorant better than you can. Libertarians don't think that's a good enough reason to regulate.

Third, we can never eliminate the risk of mistake, so individuals should have the freedom to balance risks as they see fit. Governments may approve unsafe products, or ban safe products, or conduct decades of tests that fail to produce complete consensus. Those who favor more regulation use the uncertainty as a reason to take the decision away from us, because we have imperfect information. But that ignores the existence of videos like the one I'm critiquing--which in fact does an excellent job of informing us about potential risks. It's true that I can't evaluate toxicity on my own, but it's not true that government is the only source I can turn to for help.

Moreover, this problem of imperfect information is not limited to the decisions we make as consumers. If I'm not smart enough to know which shampoo ingredients are toxic, then I'm also not smart enough to know whether an FDA action permitting these chemicals is a good decision or a bad one. That means I have to rely on others for my information either way; the only difference is that with the free market I end up with the ability to weigh the information, make my own decision, and live with the consequences. I may be left with an uncertain and somewhat dissatisfying tradeoff, with pros and cons for each choice, but that's a lousy excuse for asking the government to take the choice away from me.

Finally, some argue that leaving the market unregulated will mean that rich people can buy more expensive "green" products that not everyone can afford. But wait: If price is the only reason someone is currently not buying a green shaving cream, how is government regulation going to help? Government regulation will not make the green product cheaper; on the contrary, it will make the green product more expensive, both by adding new costs of doing business and by removing marketplace alternatives that the FDA doesn't like. Thus, the real effect of regulation here is to make the average Joe spend more on green shaving cream whether he wants to or not. Folks who want FDA regulations are saying the average Joe is a fool not to spend his money on green shaving cream now, so they're going to remove other shaving creams from the market to protect him from his own folly.

But what if the average Joe is not a fool? What if he just thinks other items in his budget (more food, more organic food, a nicer apartment, cholesterol medication) are more important? What if the right shaving cream for Joe to buy depends on what's important to Joe? Libertarians think we ought to let Joe sort that out.

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