Can Regulation Cure Mattel’s Problems?

The New York Times editorial board thinks that the answer to Mattel’s problems is more regulation by the Chinese government:

What China needs is an effective and transparent regulatory system to enforce product safety standards. The United States and other countries can help with technical advice and warnings about what would happen if Beijing refuses to take it. But the dangers are too immediate to wait.

I would like to make a few fundamental points:

1. It is Mattel’s responsibility to ensure that the quality of toys they produce are adequate. It should not be the responsibility of the Chinese government.

2. This recall creates incentives for both consumers and producers. Consumers may switch to other toymakers. Similarly, the recall provides Mattel with the incentive to prevent future recalls and thus providing closer inspection of their products.

3. Regulation failed. The Times solution: more regulation. American regulators have not done their job (which the NYT freely admits), yet the Chinese are expected to emulate U.S. regulation?

4. The Times claims, “the Bush administration must send a clear message to Beijing that it has to clean up its act or its export-led boom will falter.” Idle threats from the U.S. government aren’t likely to have any impact on the Chinese. Further, through the free market process, the quality of the products made in China will ultimately determine whether their export boom will continue.