As economist David Henderson points out, even many free market advocates believe that government-mandated warnings are a largely harmless way to protect the public against various risks. Maybe we shouldn’t ban potentially dangerous activity X or product Y, but surely the government should warn the public against them, or require firms to do so. That way, they can make a better-informed decision about whether the benefits of X and Y are worth the risk. Unlike outright bans, this form of “soft paternalism” doesn’t restrict the freedom of consumers. It doesn’t even significantly increase the costs of exercising it, as “sin taxes” do.
But, as Henderson emphasizes, this optimistic appraisal of government-mandated warnings implicitly assumes that the government is an “entity that will somehow provide the right kind of information or mandate that firms provide the right kind of information.” In reality, government officials often have strong incentives to mandate warnings that are misleading or flat-out wrong. Henderson points to a recent case where the state of Florida required producers of skim milk that does not contain added vitamins to label it as “imitation milk” even though it is actually real milk, and not an imitation. In this instance, the state requires inaccurate labeling of all-natural milk that is likely to mislead consumers.
This case is just the tip of a much larger iceberg of misleading government warnings and information campaigns. Advocates of warning labels point to success stories such as the famous Surgeon General’s warning against the dangers of smoking. But, as Harvard economist Edward Glaeser describes in this article, there is also a long history of misleading government-sponsored information campaigns against such activities as homosexual sex, masturbation, and many others. More recently, the European Union has imposed mandatory labeling of GMO foods, even though such foods are no more dangerous than no-GMO competitors.
Why would governments mandate misleading and inaccurate warnings? There are a variety of reasons. Often, governments use warnings to stigmatize an unpopular activity or group. Elected officials must get on the good side of majority public opinion to stay in power, and denouncing the unpopular is a time-honored strategy for courting popularity. This dynamic accounts for public information campaigns against homosexuality in an era where majority public opinion was deeply hostile to gays and lesbians. In other cases, inaccurate warnings may be the result of interest-group lobbying. For example, producers of non-GMO food products have obvious incentives to promote labeling that might scare consumers away from their competitors. In still other cases, the culprits may be a “baptist-bootlegger” coalition between well-meaning, but poorly informed members of the general public, and self-interested lobbies.
We might not need to worry about misleading government warnings if voters carefully monitored government information campaigns and punished politicians at the polls for promoting inaccurate ones. But public ignorance about government policy is widespread, often much more severe than ignorance about private sector products. If the public really was well-informed about the issues addressed by government warnings, there would be little justification for the warnings in the first place. Ironically, the very public ignorance that government warnings are supposed to combat reduces the quality of the warnings themselves, and increases the risk that they will exacerbate ignorance rather than curb it.
None of this proves that government-mandated warnings are never justified. But we should at least view this tactic with greater skepticism than it usually gets. Perhaps government-mandated warnings should come with their own attached warning labels, like this:
WARNING: Following government-mandated warnings like this one will sometimes be hazardous to your health, your happiness, or your pocketbook. The government is not liable for any injury or financial losses you may incur by adhering to this warning. Exercise caution and proceed at your own risk.
UPDATE: It’s worth noting two additional dangers of unnecessary or misleading government warnings. First, they can contribute to information overload, wasting our time and diverting our attention away from more useful information. Most people have encountered packages that have so many hard-to-understand warnings that it becomes difficult to separate the potentially useful information there from all the clutter. Second, mandatory warnings requiring expenditures for enforcement, compliance, and monitoring. These may impose significant costs on taxpayers, businesses and consumers. They also tend to privilege large, established firms (which can more easily afford compliance costs), over smaller and newer ones.