Sunday, November 11, 2007

How American!

China cranks out yet another hazardous toy in the form of "Aqua Dots" loaded with a chemical compound that turns into GHB when ingested.
Companies worldwide have increasingly outsourced manufacturing, often choosing Chinese factories for their cost and quality. But heated competition among factories and the rising cost of labor, land and fuel have sometimes put pressure on profits, causing some producers to cut corners.

In the latest case, the Aqua Dots or Bindeez were supposed to have been coated with nontoxic 1,5-pentanediol, a chemical commonly used in computer printer ink. But that chemical generally sells for three or four times the price of the toxic compound found on the tainted toys, 1,4-butanediol.

Private sector purists must be so proud of their Chinese understudy. In the purist's world, government regulation (which adds cost) is not needed to ensure worker, consumer, or environmental safety. If kids get hurt or start dying, market forces will eventually correct the problem -- right? Let the actuaries determine risk tolerance based on financial reward.

It's worked out so well for the lending community, after all.

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