Proof that anything will have absolutely no harmful consequences is—well, impossible. But it’s pretty much the touchstone that government agencies in the European Union and the United States use to regulate chemical compounds—including medicines. It’s as if everything were forbidden unless explicitly permitted. The result? A life-threatening stifling of innovation. And that was true before COVID-19. Things are more dire now.
At issue is what politicians and regulators call the “precautionary principle.” Three fellow economists, Kevin Gomez, Diana Thomas, and Ryan Yonk, have said a lot recently about the idea.
Just published by the Independent Institute (Oakland, California), their study, Precaution Can Kill: Chemical Benefits and Regulatory Risks, explains that “when a precautionary approach is adopted in response to relatively small increased risks, regulators have the potential to cause far greater harm than the documented risks illustrate.”
Read that again. Regulation frequently can cause more harm, in the long run, than the risks from which regulations are supposed to protect us.
Consider, for example, “chemicals-of-concern lists.” Such reports from government bureaucrats, flag chemicals that might—might—be risky, and, as a result, tend to scare firms away from developing or creatively deploying substances that likely benefit millions.
Canadians, however, stand to gain by their government’s taking of a different approach. Although Canada maintains a list of potentially dangerous chemicals, in evaluating those substances, lawmakers in Ottawa have subjected the precautionary principle to some welcome, tough scrutiny, clearing a number of chemicals as not harmful—unlike regulators in Europe and the U.S., which continue to be hostages to the idea.
One such example are phthalates, which have been restricted by Europe and some U.S. state governments. Those materials are used in a wide variety of consumer products, including cosmetics, clothing, non-prescription drugs, flooring, food packaging, natural health products, and electronics. Using a risk evaluation that took into account actual environmental and human harm, in 2018 the Canadian government found that “phthalates do not pose a risk to health or the environment at current levels of exposure.” As a result, Canadian regulators determined that no government action against phthalates was necessary, allowing the chemicals to continue to be used in commerce.
The EU approach is particularly concerning because, unlike Canada, European regulators evaluate chemical risks based only on a fraction of the evidence, often excluding exposure data. If other countries were to follow Europe’s lead, it would mean that more critical substances would unnecessarily be restricted or avoided by the supply chain, which could lead to de facto bans in Canada.
Canada’s system is hardly perfect. But the costs to consumers of the alternative—heavily restricting chemicals that pose no real risk to human health or the environment—could be significant. More regulation would impose new burdens on the development and even the existence of many modern consumer products by Canadian companies. What a cost means here is opportunities lost. If the precautionary principle had been applied half a century ago, who knows how many personal electronic devices, whose production involves many chemical processes, never would have been developed—or would be too expensive for poorer consumers. (Poor lives matter. Of course, so do non-poor lives.)
Another example: a few years ago, the U.S. Environmental Protection Agency (EPA) yielded to the precautionary principle in its report on ethylene oxide, a compound used to sterilize medical devices. The EPA produced a needless economic shock; sterilization plants closed, which, as the authors of the Independent Institute’s report point out, may have led to “more infections and related deaths in hospitals.”
Precaution can kill. Especially, we should add, in times of pandemic.
Under the precautionary principle, we’ve put inventors and innovators in an impossible situation. They have to show that their products will have no harmful consequences—ever. The benefit side of the ledger is ignored. In the meantime, inventors stop inventing. Persons suffer as a result, possibly even dying, from maladies the innovators could have helped them to avoid.
The burden of proof should rest on those claiming actual or real potential harm. Are tradeoffs involved? Of course. But the tradeoffs should be made by consumers to every extent possible—not by bureaucrats or politicians.
Here’s a thought. If we are going to live by the precautionary principle, we should apply it first to the expansive regulatory state. If even the smallest chance exists that a proposed government policy would harm anybody, anywhere, at any time, in our lifetimes or eons hence, the policy should not be implemented. That’s precaution we could live with.
Pierre Lemieux is an economist with the department of management sciences at the Université du Québec en Outaouais and William F. Shughart II is research director at the Independent Institute and a professor at Utah State University.