Recently, Johnson & Johnson ran an elaborate Internet ad on Politico begging for more government regulation over their business and products. Adorned with pictures of babies and children (babies and children use cosmetics?), they proclaimed that the Food and Drug Administration’s (FDA) cosmetic regulations need to be modernized and updated. This will bring peace of mind to the consumer when said consumer opens a bottle of shampoo or hair straightener or hair curler.
One can envision the board of directors of Johnson & Johnson sitting around the board room when a board member makes a motion, “I move we make the world a better place by having the government impose more regulations on our business.” Not likely.
More likely that this is a plan to increase Johnson & Johnson market share by using government regulation to run smaller competitors who cannot afford to comply with government meddling out of the business.
Decades ago the large timber companies in Idaho came up with a similar rent-seeking scheme. It was called the Forest Practices Act. It was claimed that the bill would make the world a better place by having the state government enact regulations that would protect the bunnies and bugs and the flora and fauna from irresponsible timber harvesting.
One of the provisions was that timber companies when logging could not build logging roads that were wider than “necessary.” I asked a lobbyist for one of the largest timber companies in Idaho why they would support a bill filled with this kind of vague language. He proceeded to explain it to me. He said, “Look if we have a state inspector come along and say this road is too wide we can have three civil engineers there within a couple of hours to explain the bureaucrat why the road is just right. On the other hand if a contract logger whose main asset is his logging truck is faced with the same inspector he is out of business, which means more business for us.” Nice.
This is exactly the kind of cynical greed head thinking behind the Johnson & Johnson ploy.
It is as if when Edison invented the light bulb he went to the Congress and said we need to outlaw candles and oil lamps and claim we are doing it in the name of fire prevention.
Having a superior product Edison did not feel the need to do that and was confident enough to let the market decide.
The company he founded, General Electric, had no such inhibitions about using the government to feather its nest. Having decided that is was difficult to make money manufacturing light bulbs in the U.S. and selling them for twenty five cents each they decided to make a different kind of light bulb in Communist China and sell it for several dollars each. The only way this would work of course would be to outlaw the twenty five cent bulb, which their lobbyists proceeded to get Congress to do. As in the case of Johnson & Johnson they claimed they were doing this for humanitarian purposes. They proclaimed they were just trying to save energy and save humanity from the ravages of global warming. Yeah right.
Using the government to harm your competitors is not free enterprise, it is not capitalism. It is fascism and it should be called out.
This is a guest post by Don Todd is Director of Research at Americans for Limited Government.