Edward Lotterman
There are a lot of Norskis in Minnesota; there are lots of literary types too.
So of those who read an 8,000-word article by Sharon Lerner in the May 27 issue of the New Yorker, describing how 3M handled the discovery that a highly profitable class of chemicals was also highly toxic, many may call to mind Norwegian playwright Henrik Ibsen’s 1882 play, “The Enemy of the People.”
Life mimics art, to be sure.
In the play, a doctor discovers toxic contamination in the waters that feed a popular spa that is the economic lifeblood of his town. He feels a moral duty to publicize the dangers to the public, but runs into opposition from those who benefit monetarily. These lead the entire town to oppose the doctor, vandalize his house and make him a pariah.
But the water remains toxic.
Lerner’s New Yorker article, “You Make Me Sick: How 3M Discovered, Then Concealed, the Dangers of Forever Chemicals,” researched and written in cooperation with Pro Publica, describes how a Twin Cities-based 3M scientist, told in 1997 to investigate whether fluorocarbon compound chemicals could be detected in blood from the general population, as well as in that of 3M production employees, finds some surprising answers.
Fluorocarbon chemical compounds, used in the production of myriad high-selling 3M products, including its Scotchgard fabric stain repellent, in cookware and food product packaging and in firefighting foams, are toxic to humans and other organisms. Their chemical composition is such that they last essentially forever. And they are ubiquitous — the scientist found that that not only were the chemicals in blood of 3M production employees or that obtained from laboratory supply companies certified as completely pure, but were in the blood of nearly everyone in the general population, along with possibly every other living thing on Earth, from polar bears in the Arctic to you and me.
But even more surprising, was the discovery of 3M’s reaction to the data.
The article describes years of increasing resistance to the scientist’s findings and her eventual leaving the company. It also described how others at 3M knew of these facts earlier, and still pressed ahead with the production and sale of the products. The issues she raised were taken up by other researchers elsewhere. Understanding of the extent of contamination and the extended effects of the chemicals advanced apace.
Government regulations eventually curtailed the production and use of the so-called “forever chemicals.” 3M has had to pay out many billions of dollars in fines and damages. Litigation has not yet ended, nor have payments of remediation to, for example, municipalities drawing water from contaminated aquifers. Because of the ubiquitousness of the contamination, legal experts foresee this as the biggest single corporate liability case in history.
Form an academic standpoint, the whole affair — going back even to Ibsen’s play — is a case study in the complex economics of “external costs.” These are the harms from the economic activity of producing or consuming a product that hit society as a whole, and are not borne solely by the person or business doing the production or consumption. Basic introductory econ theory demonstrates that even when the product is a useful one, in the absence of government action, too much will be produced, and society will be worse off.
This breaks down the assumptions of free marketers like economist Milton Friedman and author Ayn Rand and others who feel that unregulated free markets always produce optimal outcomes for society. While acknowledging external costs, they dream that such problems can be solved by litigation, thus eliminating the need for regulation — if only the legal rules are well defined. This has proved a false hope in the real world. There are myriad examples of prudent regulation solving “market failures” and making society better off.
Yet challenges are knotty. There are “information problems.” Producers cannot anticipate all problems that may arise. 3M produces thousands of useful products that make our lives better and may even save our lives. The scientists and managers who made decisions decades ago to manufacture products containing these chemicals were not evil people blithely ready to hurt others for a few fast bucks. They saw themselves, to steal an old slogan from DuPont, 3M’s major rival, as producing “better things for better living through chemistry.”
3M had a very well-deserved reputation for good management fostering innovative research and development. 3M had superb scientists and research facilities. It employed best practices and treated employees well. It was a good corporate citizen.
So fluorochemical contamination, at its beginning, basically was what economists call an “information problem.” At the time decisions were made to make stain repellents, firefighting foam and hundreds of other products, scientists and managers literally did not know what harms these might cause. If you don’t know all the costs and all the benefits, including those to third parties as well as producers or consumers, of some product, you get bad outcomes for society as a whole.
Unfortunately, even tragically, governments face the same information problems as producers. Regulators do not have omniscient knowledge of all possible outcomes, including harms.
Laws forcing innovative firms to conduct exhaustive tests over a span of decades to prove usefulness and safety are one possible measure. But these are expensive, taking up resources that might have uses of higher benefit to society. A 10-year test of a new product might in the long run prove lifesaving; but it might also mean that a dozen useful medical products never get off the ground.
In the end, decisions about pre-sale safety testing of new products, whether made by companies or regulatory agencies, essentially must involve subjective weighing of uncertain factors.
And again, an in Ibsen’s play, the core of Lerner’s article is the reaction of 3M executives to the unwelcome news of a majority toxicity problem in dozens of their best-selling products. It describes resistance to the news, increased muzzling of scientists who found problems, delaying actions at increasing levels of management and foot-dragging even after harms were known. Here, economic incentives come into play, not only over the loss of a group of very profitable products, but also foreseeing the huge costs of litigation, the resulting personal financial hit to 3M executives and shareholders. Government regulation had to be escalated and hundreds of lawsuits had to be filed before the company’s truculence was overcome.
3M eventually came around. Search for its fact sheet “PFAS and their uses” on the company’s website. Production of the chemicals themselves should end next year. Products containing them will be phased out as soon as possible.
But here other problems arise. 3M is far from the only producer of PFAS. Other companies continue to churn them out. The EU and several modern industrial nations have actions parallel to ours. Yet other major producers have not. China, for example, while paying lip service to generalities about the need to end production, has “barely begun to scratch the surface” according to a December 2023 report in The Hill news service.
This problem has a parallel in public finance. That includes the concept of “fiscal correspondence,” or the degree to which taxes raised from a given jurisdiction are spent to benefit that area. Similarly, the degree to which the economic costs of giving up production of useful, but also harmful, substances by a given jurisdiction, like the United States or the EU, match the benefits of the prohibition might be called “regulatory correspondence.” To the degree that demand for PFAS-based products remains, some of the benefits of stinting production here eventually benefit those unwilling to do the same over there.
One other approach recognizes that information about toxicities is a “public good,” that won’t be produced by the private sector but with the benefits of which flow to all. Rather than require hundreds of separate companies to research all possible harms of new substances, increased open research funded or fostered by government could reduce information problems.
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St. Paul economist and writer Edward Lotterman can be reached at stpaul@edlotterman.com.
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