Or Fabricaphobia – Part II

In March, Menu Foods, Inc. recalled dog and cat food produced in the preceding three months upon learning that a protein additive was contaminated.

See! Business cannot regulate itself and government must step in!

Nonsense.

Recalls are a fact of modern life. Even though millions of Americans will go their entire lives without having had a product they’ve purchased recalled, everyone has certainly heard about them. There are so many different products available to consumers, many of them exhibiting ever increasing levels of complexity, that the chances that all of them will be perfectly and flawlessly designed and produced are simply non-existent. Only a fool demands the impossible, particularly when the alternative is the removal of that wide variety of products from the market, so recalls are here to stay.

Recalls actually demonstrate the responsibility and responsiveness of American business. How can I say that? It’s simple really. Liberals are frequently suffering from the delusion that recalls only happen because government intervenes. Quite the contrary, most recalls occur at the initiation of the manufacturer (as in this case) because it is in the best interests of those manufacturers to assure consumers of the safety of their products.

Automotive recalls, food recalls, pharmaceuticals, batteries for Dell laptops. Time and time again, product recalls are initiated by companies seeking to protect their customers and themselves without the intervention of government regulators. And they are tremendously costly, which is ample incentive to offer a safe product in the first place.

What happened in this case?

Pet food companies uniformly test their products on a regular basis. This is why pet food recalls are rare. As one might expect, their testing procedures concentrate on those risks that are most significant and most likely to occur. Arguably, they could test for toxic levels of darmstatdium, but since it has a radioactive lifetime of less than .001 seconds, it probably won’t show up in kitty’s Meow Mix.

Menu Foods found that certain wheat and rice protein concentrates were contaminated with melamine. Used in plastics manufacture, this substance has no place in a food product and was never subject to testing. We now know that, while melamine has not been demonstrated to be particularly toxic to humans or dogs, it can cause lethal kidney problems in cats.

Upon learning of a potential problem with its products, Menu Foods, and subsequently other pet food manufacturers using the same supplier, voluntarily recalled their products from the marketplace. Why?

In the fall of 1982, seven people in the Chicago are died mysteriously after taking capsules of Extra Strength Tylenol. It was later determined that someone had taken samples of the product from various stores in the Chicago area, inserted solid cyanide into the capsules and returned the products to the shelves. Long before anyone suspected tampering, however – just a week after the first victim died, Johnson & Johnson, parent company of the pain-reliever manufacturer, issued warnings to hospitals and distributors, halted Tylenol production and advertising and recalled an estimated 31 million bottles of the product – at a retail value of more than $100 million (twice that in today’s dollars).

When it was determined that only capsules were affected, the company volunteered to exchange solid tablet medication for any capsules that were still held by the public. Johnson & Johnson was then quickly in the vanguard of pharmaceutical companies offering products in tamper-resistant packaging.

Why in the world would they do this? Was government beating them over the head to make these changes? Was Johnson & Johnson ordered to do a recall? Were they forced to incur such heavy losses by the benevolent regulators?

Of course, not.

In the wake of the deaths, Tylenol’s share of the pain reliever market collapsed from 35% to a mere eight percent. But because of the company’s swift action, within a year its market share rebounded. In November, just thirteen months after the scare, the company re-issued Tylenol capsules (now in tamper-resistant packaging) and quickly recaptured the distinction of being the most popular over-the-counter pain reliever in the US. Johnson & Johnson reaped the benefits of acting in the public’s interest and, by extension, their own.

No examination of recalls, though, can be undertaken without considering the one most frequently referred to by liberals out to expose the “greed” and indifference of the evil businessman: the Ford Pinto.

The story goes that the powers that be at Ford condemned hundreds to their deaths by failing to recall the Ford Pinto because they had determined that it was cheaper to defend the lawsuits than to recall the cars. They found that it would cost $121 million to perform the repairs and only $50 million to settle the lawsuits according to a memo revealed by Mother Jones. The incident used as a basis for the film Class Action in 1991. It is also absurd.

The document which Mother Jones grossly misrepresented was not about the Pinto, was not related to the vulnerability of the gas tank, was not an internal document, and had nothing to do with an assessment of tort liability. In fact, it was part of a response to the National Highway Traffic Safety Administration (NHTSA) regarding the potential cost of a new standard (on vehicle rollovers) to the automotive industry as a whole. The calculation of the value of human life at $200,000 was not some morbid assertion by Ford or an assessment of tort liability but was a figure from an NHTSA study in 1972 to determine the “social cost” of accidents. The document was ruled inadmissible in litigation against Ford because it was irrelevant to the issues at trial.

In reality, the Ford Pinto was no more likely to burst into flame than other cars. It was but one of several cars with behind-the-axle fuel tanks. And over 2 million Pinto’s were produced with the characteristics subject to recall, but only 27 people ever died in Pinto fires (Mother Jones argued, “conservative estimates Pinto crashes have caused 500 burn deaths”), indicating it was no more fire-prone than other vehicles of the time. Moreover, accident fatality rates were actually higher in a number of comparably sized automobiles.

People make decisions that weigh costs and safety concerns every day. It is the dynamic that underlies every decision to choose a stop sign instead of a traffic light. It is precisely the reason that the NHTSA studied the societal costs of automobile accidents. In the real world, perfect safety is unattainable and even safety regulations have costs.

Consider a real world example. After a plane crash resulted in the death of an infant ripped from its mother’s arms, new federal regulations required infants to be belted into airline seats. A subsequent study found that the increased cost of air travel resulted in more people traveling by car. For every child saved by the regulation, nine more were killed because their parents had opted for a cheaper (but less safe) form of travel.

Businesses work to improve their products and benefit the public every day, not out of benevolence but as a direct result of following their own self interests. And as the example illustrates, regulations can do more harm than good.