The Traffic Paint Shortage

http://www.futureofcapitalism.com/2010/05/the-traffic-paint-shortage

"Traffic Paint Shortage Threatens Roadwork," is the headline over an article in today's New York Times.

Since free markets are generally pretty good at creating supply to meet demand, whenever I see a news article about a "shortage," I look for a government intervention. The Times article doesn't provide a report of such a government intervention, but it does provide a clue; the key paragraph is here:

The scarcity stems in large part from the shortage of an obscure chemical compound called methyl methacrylate, one of the key ingredients in roadworthy paint, which must be sturdy, long-lasting and reflective. A major producer of the compound, Dow Construction Chemicals, had production problems this year at a plant in Deer Park, Tex. Other companies scaled back production during the economic downturn, said Phil Phillips, the managing director of the Chemark Consulting Group, which analyzes the coatings industry.

Google "methyl methacrylate," and it turns out to be a highly regulated chemical. The Food and Drug Administration went after it in the 1970s: "On the basis of its investigations of the injuries and discussions with medical experts in the field of dermatology, FDA concluded that liquid methyl methacrylate was a poisonous and deleterious substance that should not be used in fingernail preparations. The agency chose to remove products containing 100 percent liquid methyl methacrylate monomer through court proceedings, which resulted in a preliminary injunction against one firm as well as several seizure actions and voluntary recalls." And the Environmental Protection Agency helpfully links it to "chest tightness, dyspnea, coughing, wheezing, and reduced peak flow," as well as "neurological symptoms" and "fetal abnormalities."

With the FDA and the EPA to reckon with, is it any surprise there is a shortage of this "obscure chemical compound"? Anyone thinking of getting into the methyl methacrylate business probably needs an army of Washington lobbyists to fend off the regulators and an army of lawyers to fend off the potential lawsuits. I'm not arguing in favor of adding the stuff to cocktails or force-feeding it to schoolchildren, just saying that whenever you see a news article about a "shortage," there's usually something more complicated going on, and it often involves government.

by Ira Stoll  |  May 24, 2010 at 9:46 am Related Topics:  Press receive the latest by email: subscribe to the free futureofcapitalism.com mailing list