Mark Schapiro, editorial director for San Francisco’s Center for Investigative Reporting, has written a book about America’s chemical industries from an international relations perspective that vividly illuminates the – possibly inevitable – consequences of a corporate-dominated, anti-regulatory regime in one sector of the economy, just when people are beginning to realize the consequences of this type of regime in the financial sector. This valuable, lucidly written, well-documented and blessedly concise examination of how the US has lost its competitive edge in key industries through its protection of corporate rather than citizens’ interests could serve as a textbook case of how deregulation has backfired on the very corporations which have spent so much time, energy and money lobbying for it. Schapiro’s book is sparingly polemical, so he does not explicitly assert that the very time, energy and money spent wriggling out of regulation could more profitably have been spent on innovation, product research and development: instead, Schapiro satisfies himself with proving that case.
The book starts with a meeting of US engineers in early 2006. They have just learned they have less than six months to redesign all electronic devices for export to Europe to comply with the European Union’s “RoHS,” the directive “on the restriction of the use of certain hazardous substances in electrical and electronic equipment.” Six highly toxic substances commonly used in electronics – mercury, cadmium, lead, chromium and two polybrominated biphenyl flame retardants – had been banned. The engineers would have to completely rethink the ingredients of all the electronic products their companies sold or they’d lose access to the largest and most affluent economy in the world: the European Union, with its population of 450 million, a GDP exceeding that of the US, and a pattern of international commerce that makes it the largest single trading partner for every continent but Australia.
As Truthout has reported (1) over the years, Europe has adopted the precautionary principle (2) with respect to its chemical industries, a far more aggressive standard to protect its citizens’ health than that applied in the US, where conclusive evidence of a chemical’s toxicity is required before it is banned. As Schapiro documents, “conclusive” is an extremely elusive standard, especially when industry controls the scientific data, funds election campaigns and makes intensive use of lobbyists. As the history of the tobacco industry illustrates, it can take years – years during which much irreversible harm is done – to conclusively prove harm.
With my own background in economics, I am frequently surprised at how rarely “free market” proponents promote the perfect information that is a necessary precondition for free markets to function. Schapiro, however, highlights the inequality of knowledge between consumers and producers that Joseph Stiglitz calls “information asymmetry” and invokes as a central flaw of market capitalism. (3) As we have seen with tobacco – industry knowledge about the impact of products is shrouded in “trade secrecy” and “proprietary information,” although consumers cannot possibly be construed as making free choices when they are unaware of the potential impacts of the products they buy and use. Now smart European regulation is revealing new or previously private information about chemical health and environmental impacts and “European ‘life-cycle analysis’ is revealing how much the profits of US-manufactured goods are inflated by hiding the real costs of production and ‘end of life’ disposal.” (4)
“Exposed” details how the differential regulation of various key segments of the chemical industry – cosmetics, plastics (phthalates, specifically), Persistent Organic Pollutants (also known as POPS), GMOs, electronic and vehicular waste disposal – have, in each instance, made Americans less safe than Europeans and made American industry less competitive as it struggles to catch up to European standards or looks for dumping grounds for products that are no longer state-of-the-art.
Those dumping grounds are all too often the US domestic market, where, as Schapiro describes in a subsequent chapter on the US regulatory regime, not even asbestos has been banned: thirty million pounds of it are still used annually “in an array of products.” (5) After explaining how the 1976 US Toxic Substances Control Act controls very few substances – only five are banned by the EPA – Schapiro reports on how the US chemical industry and the American Chamber of Commerce, both directly and through the United States government, attempted to bring the kinds of pressure that shapes US legislation and regulation to bear on the European Union to oppose the European REACH legislation that “places the burden of proof on manufacturers to demonstrate that their products could be used safely. And … proposed to limit the amount of health-related data that companies could claim was ‘proprietary,’ and to release that information on the European Chemical Agency’s Web site …” (6) This intrusion into Europe’s affairs – an intrusion, moreover, that so flagrantly demonstrated the moral and imaginative bankruptcy of US industry as well as the Bush administration’s position as industry’s handmaid and enabler – was widely resented and backfired. Almost as a footnote to that story, Schapiro describes how industry in the US has been promoting the nomination of “industry-friendly” judges, creating a US judiciary ever less concerned to protect either the citizenry or the environment.
Schapiro’s overarching argument is that a more rigorous regulatory regime ultimately costs industry less and is more realpolitik than Utopian as demand for Europe’s safer, greener products and more transparent approach grows. It is difficult not to read his story with disgust for an American system that coddles the status quo and discourages innovation, that rewards investment in lobbying rather than investment in progress, and that, ostrich-like, ignores chemical hazards rather than entrepreneurially confronting them, discovering green replacements and improvements. As we are seeing in the financial system, our “free-marketeers” are mere freebooters who run to the nanny state for protection when their own greed, complacency and laziness come home to roost.