Regulation Plagued by Unintended Consequences

Published May 1, 1998

The Committee on Economic Development’s Modernizing Government Regulation report identifies a host of unintended consequences that result from the regulatory system’s disregard of sound science, cost-benefit comparisons, and, in some cases, common sense.

Problems Caused by Insufficient or Inefficient Analysis

  • At least 40 children nationwide have died as a result of airbag deployments. Regulations mandating passenger-side airbags failed to account for a passenger’s age or height, putting hundreds of thousands of child passengers at risk.
  • A sweeping Congressional mandate that prompted cities and states to spend $20 billion to remove asbestos from public buildings was issued before the costs, benefits, and potential risks were fully explored. Research now clearly shows that removing already-installed asbestos increases levels of airborne fibers. In most cases, removing asbestos is a dangerous and expensive mistake.

Regulation as an Obstacle to Innovation

  • The FDA has ruled that medical computer software must be approved as a “medical device.” As a result, even a minor change in software code requires a time-consuming and expensive federal reapproval.

Obsolete Regulation

  • The Davis-Bacon Act, enacted during the Great Depression with the expressed intent of keeping black workers out of northern job markets, continues to cause discrimination against minorities and requires the payment of above-market wages on many government contracts.

Regulations Working at Cross-Purposes

  • The EPA Office of Drinking Water dropped silver from its list of toxic substances, determining that silver has no adverse effect on humans. Yet silver remains on the toxic list for EPA’s Office of Solid Waste.
  • A dozen federal agencies, ranging from the Department of Labor to the Nuclear Regulatory Commission, have different definitions and inspection standards for hazardous substances. Each refuses to acknowledge the standards of the others.

Hidden Subsidies

  • The Clean Air Act requires expensive scrubbers on all coal stacks, regardless of whether high- or low-sulfur coal is burned. The result is a subsidy, ultimately paid by consumers, that favors high-sulfur coal producers.

What Were They Thinking?

  • Federal regulators required a Kansas City bank to install a Braille keyboard on the driver’s side of a drive-through ATM.
  • The Department of Agriculture requires farmers to throw out millions of pounds of edible fruit simply because it is smaller than arbitrary federal standards.