Mandating the Purchase of a Product

Where there is a government regulation or subsidy, there is typically a lobbyist or special interest that benefits from them. One area of regulation in which this often happens is in the case of environmental regulations that subsidize or require purchases of “green” products by consumers. Another area is health-insurance mandates. But other regulations, like those dealing with safety, are not immune to this trend.

Tony Fleming of Metropolitan Fire Protection shows off his firms line of fire sprinkler systems Wednesday at the Atlantic Builders Convention in the Atlantic City Convention Center. Photo by Edward LeaTake for example a recent decision by the state of New Jersey to require new homes to be built with fire sprinklers in every room. Naturally, the advocates (read: those who sell sprinkler systems) are touting this as a necessary safety regulation, and they have gained some support in the media. Builders aren’t as thrilled, arguing that it will add to their costs. By extension, the increased cost of this mandate on builders will be passed on to homeowners.

No doubt, a correctly-operating fire sprinkler would aid in the squelching of a house fire, but leaving aside the arguments about safety, the sprinkler system companies are the clear winners under this regulation. They were successful in lobbying the government to force individual homeowners to buy their product. In one report, someone representing a sprinkler company argued the following:

He said the sprinkler mandate will result in a societal benefit of about $5,000 per home each year, most of which results from valuing the lives saved at $8 million each but also includes property saved and cheaper insurance.

There was no mention, of course, of the company’s benefit from this regulation. And that’s the hidden side to this type of mandate. These types of safety regulations take choice away from individuals by mandating they buy a product that the government, successfully lobbied by an industry, has deemed to be in the interest of their safety. The dubious nature of this process is seldom considered.

* I originally posted the preceding on the Young Americans for Liberty blog.

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