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Heritage Foundation Opposes Consumer Information, Well-Working Markets

This piece from Heritage is really rich -- it argues against Senate legislation that would require the Consumer Product Safety Commission (CPSC) to host a public database of consumer complaints.

[Background: Product safety legislation has passed both the House and Senate and is being negotiated in an informal conference. The House provision on the database would require CPSC only to create a plan for the database, then report back to Congress. We and other consumer groups support the Senate bill over the House bill because CPSC should have the authority -- even the requirement -- to create the database as soon as possible, not just develop a plan to create it and then await further instruction. Making this information available to the public would help consumers protect themselves when the CPSC fails to act -- and the agency is notoriously slow to act, whether by informing the public about hazards or issuing new safety rules. With a public database, consumers could do their own research on products to see whether problems exist.]

There are several serious flaws in Heritage's argument, starting with its surprising conclusion. The piece criticizes the Senate's database provision by arguing that the CPSC should not host a database at all, but then it concludes by promoting the House provision, which would require the CPSC to "craft a detailed implementation plan" for a database -- presumably so the agency can implement it. If Heritage really believed its argument, we could expect it to oppose the database all together, not to support the crafting of an implementation plan.

The Heritage piece is also curiously anti-competition. Good consumer information is a basic component of a well-working market. It's odd for a self-styled pro-market outfit to oppose giving consumers the information they need to make good decisions. Here's the main argument: "Worst of all is the risk that a government-run product safety database, no matter how exactly it is implemented and designed, will push potentially superior non-government alternatives out of the market."

What's the problem with this? There are two main ones. First, if the market were providing this information effectively, then Congress wouldn't be talking about fixing the problem. To the contrary, a mountain of evidence exists showing that many businesses successfully hide product defects from the public for years, sometimes even decades, as deaths and injuries mount. The market is yet to provide a solution to this problem without government intervention.

Second, it's precisely this type of government database that can foster those "market" solutions. If critics are correct that the database will be flawed, then it will present a great opportunity for third-parties to pull down the data and present it more effectively. Big business does not want this. In a somewhat similar context, the auto industry has been fighting tooth and nail to keep NHTSA's early warning data base secret. If made public, the database would be extraordinarily helpful to independent groups that provide ratings on auto reliability and safety.

The same might be true of the CPSC consumer complaint database. The availability of this information, and the ability of third parties to examine it and repackage it, increases competition and market value by filling in a crucial information gap and forcing firms to compete more on quality and safety. Heritage's argument is strikingly anti-market and anti-competition: Heritage would keep consumers in the dark instead of providing them with the information they need to make businesses -- and therefore the market -- work better for them.

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