Will the Lead Toy Industry Get Bailed Out?

Who cares about moral hazard anymore! AEI, Cato, where are you when we need you?

It goes something like this: A group of companies that chose to put lead in children’s toys, or to offshore their operations to countries with poor manufacturing controls in order to save money, are now upset that their schemes are going to cost them money. The government has the audacity to do something about this crisis, and guess what, it costs the industry money! Maybe they should have incorporated the costs of lead when they decided to offshore!

Joseph Pereira of the Journal reports:

Makers of children’s products and charities that run second-hand shops are stuck with more than $1 billion of inventory they can’t sell because of a new federal product-safety law, according to surveys by trade groups and the charities.

They’re stuck with this inventory because of a new federal product safety law? What a way to shift the blame! If the industry as a whole maintained quality controls, we wouldn’t be in a toxic toy crisis, and then the federal safety law would not have been passed. Consumer protection laws do not just pass out of the blue; they are motivated by serious, overwhelmingly problematic situations. Trust me on this, there are 100 lobbyists against any consumer protection matter for each advocate in favor of it. They only pass when agencies and Congress have no option but to side with the single advocate.

The Toy Industry Association estimates that more than $600 million in toys made illegal by the law are sitting in manufacturers’ warehouses or have already been shipped to retailers. A trade group for small apparel makers in New York called the Coalition for Safe and Affordable Childrenswear says its members have a $500 million problem. And the California Fashion Association, which represents many Western clothes makers, puts their troubled inventories at $200 million.

The trade groups were reluctant to disclose the names of the companies affected or provide documentation in support of their estimates.

Yep. Sounds like they’ll be next in line for a bailout.