Why big corporations love government regulations

by The Whited Sepulchre
Apr. 25, 2010

Remember a couple of years ago when the toys from China were found to be contaminated with lead paint?

Our Nanny State passed a bunch of regulations designed to end the lead paint menace. All toys have to go through an expensive, time-consuming testing process prior to sale. Used toy dealers have to do the same.

This has put a lot of the smaller toy manufacturing companies out of business. Many thrift stores simply don't carry used toys any longer. Who can afford to do all that testing just to sell a used toy?

But what about Mattel, the giant toymaker who imported the poison toys in the first place?

They get a free pass. They are, after all, Mattel. They don't have to get independent testing on their products.

Here's the Hot Air blog:

So let’s get this straight. Mattel buys millions of items from China that violate American product-safety laws and standards. Congress reacts by punishing the entire industry, especially those small businesses that can’t afford independent testing, especially on products that don’t really need it. Thrift stores can’t resell merchandise without testing, making their business model impossible and threatening the charities that rely on those sales. Meanwhile, the economy of scale means that this law gives Mattel a competitive advantage from their own malfeasance — and they get the waiver on independent testing?

Yesterday, we discussed crony capitalism. This is exactly what is meant. This is a perfect example of government picking winners and losers in the marketplace through legislation written to be sympathetic to big businesses, and an enforcement mechanism that favors the big players even beyond the legislation Congress passed. Mattel can push its smaller competitors out of business, or force them into buyouts, because they broke the law in the first place.

Exactly. It's For The Children™ .

Just wait until these clowns finish regulating Wall Street.