In a recent Grist magazine interview, Newt Gingrich was asked:
You have supported nuclear, solar, wind, smart grid, and other emerging technologies. Do you see incentives as the only way to push these markets to evolve?
He replied:
Absolutely. There’s no evidence in American history that regulations and punishments work to create a better future.
Obviously you can write bad/stupid regulations that do damage to the economy and kill jobs. But not having smart regulations can just as easily kill jobs and damage our economic future.
Take lead in kids’ toys. Lead is very dangerous to kids, especially young kids. In high doses it can kill. In lower doses it can cause brain damage. And unlike many other toxins, the effect is cumulative — repeated exposure to small amounts of lead add up. Even very low levels of exposure can hurt kids; according to the CDC, “it must be emphasized that there may be no threshold for developmental effects on children.”
Suppose we didn’t have regulations banning lead in kids’ toys. What would parents who didn’t want their kids to be poisoned do? They could try to avoid buying lead-laced toys. But of course companies are going to lie or try to mislead parents. It’s hard to imagine Bratz’s makers running ads saying, “sure, Sasha and Jade have brain damaging lead in them, but if you let your little girls have these dolls, do you really care if your girls are that smart when they grow up?”
With this level of uncertainty, every time we had a scare about lead in a particular toy from a particular factory, odds are parents would panic and stop buying toys that could even possibly contain lead paint. It already happens once in a while now, like the big China scare back in 2007. Imagine what it would be like without any regulations or oversight.
At that point, “market discipline” would kick in — this panic would punish bad manufacturers. But it would also punish good manufacturers, because parents don’t know who to trust and therefore are understandably going to overreact. Small toy manufacturers, with tiny cash cushions and advertising budgets to counter and/or ride out the panics, would often get wiped out by these panics. So would small toy shops, which run on absurdly thin profits. In short: more damaged or dead kids, fewer small businesses, fewer jobs, and more scared parents.
Of course, not all kids would be affected equally. Because of market demand, services would spring up that would regularly test toys for lead. I’ll give you two guesses as to whether parents who are programmers and lawyers or parents who are janitors could afford either the services or the more expensive toys whose manufacturers could afford to pay for certification — or could afford to pay for frequent, expensive testing to see if their kids had been exposed to hard to detect but dangerous levels of lead.
This is a “better future” than one with regulations?
