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Source link: http://archive.mises.org/9919/what-keeps-us-safe/

What Keeps Us Safe?

May 8, 2009 by

Look at the back of your computer monitor, the bottom of your table lamp, or the label on your hair dryer. Chances are you will see the symbol “UL” with a circle around it. It stands for Underwriters Laboratories, a firm headquartered in Northbrook, Illinois, and an unsung hero of the market economy. FULL ARTICLE

{ 33 comments }

Barry Loberfeld May 8, 2009 at 9:55 am

“Companies, in turn, pay a tiny fee for every UL designation symbol they put on their products.”

And when there’s no longer trademark protection?

Ron May 8, 2009 at 10:09 am

“And when there’s no longer trademark protection?”

Then the lab, or consumers, would be free to sue the manufacturer for fraud. No different than today.

geniusiknowit May 8, 2009 at 10:16 am

And when there’s no longer trademark protection?

UL could maintain an official listing online, cryptographically signed to ensure authenticity. Retailers, manufacturers, and wholesalers/distributors would be specifically listed as either a trusted affiliate or suspected forger. Any company using the symbol or selling equipment with the symbol who is not listed as a trusted affiliate should not be trusted by the consumer. Convenient? No, but it’s your life at stake when you use these products. Caveat emptor.

I dunno. I’m not much of an entrepreneur. Just my idea of how it would work.

Anyhow, in addition to UL, there is Consumers Union, the people who put out Consumer Reports.

Barry Loberfeld May 8, 2009 at 10:20 am

Ron,

Thank you for your answer, but I’m not sure I understand it. If no one can own a symbol, who’s suing whom?

Professor Coldheart May 8, 2009 at 10:38 am

Excellent article.

It’d be interesting to read a follow-up on other non-governmental bodies that set standards on product reliability, such as:

* The ISO, whose reliability specifications are often stronger than law;

* Consumers Union, and their monthly magazine Consumer Reports. While Consumers Union has been called out for some high-profile mistakes in recent years – the child-seat safety flap in 2007, for instance – it responded to these mistakes quickly and thoroughly. Readers could decide for themselves whether to keep subscribing or to start trusting other sources. Meanwhile, what penalties has the FDA suffered for approving Vioxx?

Mark Thornton May 8, 2009 at 11:10 am

Here is another article on a related topic by Tim Swanson that readers might enjoy.

http://mises.org/daily/2815

Michael A. Clem May 8, 2009 at 11:12 am

Yay, Underwriters Laboratory! Those who think that government can do a better job of regulation have yet to prove their case.

Michael Manocchio May 8, 2009 at 11:45 am

I guess my only comment is that incentives have to be properly aligned in order for private “regulation” to work. We saw in the case of the rating agencies (S&P, Moody’s, and Fitch) that a similar cost structure resulted in these agencies being overly aggressive in rating collateralized securities.

A better, although logistically difficult, solution would be for the consumers to pay the cost of testing (or rating).

A small fee paid by the retailer or the financial advisor or an even smaller fee paid by the consumer / securities purchaser would more conservatively align incentives.

jason4liberty May 8, 2009 at 12:07 pm

In the last paragraph it says “years of public service”. I am much happier that they have been providing “private services” on a voluntary contract basis.

Scott D May 8, 2009 at 12:22 pm

Barry,

It is no different than marketing a product that is labeled as “gluten-free”. No one owns the words “gluten-free”, but to place those words on product packaging when that product does in fact contain gluten is fraud. Claiming that a product is UL listed when it is not is simply lying to the consumer.

Keep in mind, the mark itself would not be “owned” by anyone. If the CEO of a company decided to print a T-shirt with “UL-listed” on it, no one could stop him.

Ron May 8, 2009 at 12:39 pm

Barry,

What Scott D said.

jp May 8, 2009 at 12:39 pm

For those objecting to for-profit standards, in Canada we have the Canadian Standards Association which is an independent non-profit standards setter.

Adam May 8, 2009 at 12:45 pm

I think your article, while well written, and well meaning, has some fallacies.

OSHA (Occupational Safety and Health Administration) is an arm of the Department of Labor. US Law (CFR Title 29 1910.7, 1910.303, 1910.307 and maybe others) requires many products to be tested and certified by an NRTL (Nationally Recognized Test Laboratory). UL is one of these laboratories, TUV is another, MET is another, ETL is another, and that’s just a handful off the top of my head.

The certification is not voluntary though, the only choice private market gets is which lab they use. I don’t think all all of them are non-profit.

Additionally, I think for every evaluation that a private company has to have done (due to government regulation) part of the fees they pay to the NRTL (such as UL) involves fees that go back to OSHA as well.

Grant D May 8, 2009 at 12:58 pm

I’ve never seen anyone bring up the Insurance Institute for Highway Safety when this topic is discussed. Their testing is more stringent the the government’s also.

Barry Loberfeld May 8, 2009 at 1:03 pm

Scott D & Ron,

Thank you, gentlemen. But if Underwriters Lab doesn’t own — i.e., has no legal connection to — the “UL,” how can it stop me from putting “UL Listed” on my product? We all know what gluten is, but who’s to say what “UL” means, absent company ownership of that symbol? And what difference should it make if the product is a power drill or a T-shirt?

Also, if I’m to look up a company’s name on the UL Web site, surely the company has a right to that name, i.e., a right to exclude others from using it. What I’m trying to grasp here are all the implications of the anti-IP position.

EnEm May 8, 2009 at 1:08 pm

And this is what keeps us Unsafe — It’s “gross”!

This is what the insides of a Man-Hating mind look like…

“As wealth is redistributed,” notes Gross trying to put the Treasury’s strategy in perspective, “and the invisible private hand of Adam Smith begins to resemble more and more the public fist of government, then asset values should be negatively affected.

“First comes the haircutting and burden sharing, most recently evidenced by Chrysler and soon to be played out via the stress testing and equity dilution of government ownership of ailing banks. In those footsteps, however, will follow a slower rate of economic growth, not just in the U.S., but worldwide as heretofore libertarian capitalism is bridled, saddled and taught to trot, instead of gallop, over the investment plains.

Gross doesn’t “bemoan this transition”; rather, he simple “recognizes it.”

“Slower growth can be a public good,” the bond king writes, taking a big sip of the Kool-Aid sitting next to his keyboard, “if it avoids the cataclysmic effects of double-digit unemployment, escalating foreclosures and fear of financial insecurity. But the Obama cannon shot will have financial consequences. Do not be deceived by the euphoric sightings of ‘green shoots’ and the claims for new bull markets in a multitude of asset classes.

“Stable and secure income is still the order of the day. Shaking hands with the new government is still the prescribed strategy, although it should be done at a senior level of the balance sheet. If the government indeed becomes your investment partner, you should keep the big Uncle in clear sight and without back turned. Risk will not likely be rewarded until the global economy stabilizes and the Obama rules of order are more clearly defined.”

haragan May 8, 2009 at 1:36 pm

Arthur Andersen and the current bond rating companies show that good reputation is not always enough to prevent abuses; reputation is a hard thing to achieve and easy to abuse. Of course, this does not prove that governments can do better or that politicians are less corruptible.

Matt H. May 8, 2009 at 2:02 pm

Barry, your point is very thoughtful, especially in the context of this article. I support the subtle irony of the picture shown with the article is the big ol’ government-enforced (R) logo right in the middle of it. Now of course, constitutionalists like Ron Paul would have no problem with this.

As for the anti-IP crowd, among whom I would consider myself, I think one could object to patents and copyright without objecting to trademarks. I believe patents should be abolished. Copyright is somewhere in the middle for me while trademarks I really don’t have a problem with.

Having said all that, why couldn’t an independent company, or several of them, serve as repositories of “marks of trade” similar to domain name registrars?

Matt H. May 8, 2009 at 2:09 pm

Barry, one other thought is that trademarks are like names. If such equivalence couldn’t be enforced regarding logos, abbreviations, and brands, then at least a product could be labeled, “This product is listed by Underwriters Laboratory.” Now, by using a name, I think we have exited the realm of IP. I mean, is my name, Matt Haak, really IP? Others share it. But to ascribe some act to me, i.e. that I have endorsed or certified something which I have not, is fraud, regardless of any IP laws.

jp May 8, 2009 at 3:36 pm

Adam brings up a key point. I know that in Canada the government also has mandatory certification too for some products and defines which standard setting bodies (labs) can be turned to, the CSA being one of four.

The question then becomes more historical. Did private standard setting bodies evolve prior to governments setting mandatory certification, or did they emerge only after with the subsidy of the government?

jc butte May 8, 2009 at 3:47 pm

For industrial products (electrical motor controls, breaker panels,process control electronics and enclosures, etc.), UL listing is a state requirement.

Organization like this exist mainly because the regulatory agenices recognize that they are “good” at law enforcement but less so in law creation in technical fields where technology change is rapid.

There is a similar organization for the food processing machinery industries, 3A Sanitary Standards, Inc.: http://www.3-a.org

The 3A standards are written with the participation of manufacturers, government and private scientists and sanitarians and FDA/USDA personnel. The law (FDA) reflects the evolution of these standards. 3A is owned by various industry associations including the IDFA. International Dairy Foods Association and others.

I am one of the accredited auditors (CCE) of manufacturers who apply to become 3A symbolholders…

(8?» May 8, 2009 at 4:16 pm

When discussing the failure of government style consumer protection with statists, I always ask them this question: “Let’s say I have two contradictory reports in my hand concerning the safety of some product. One report is from a federal regulatory agency, and the other is from Consumer Reports. Which one of them are you more likely to trust?”

The answer is so obvious, that I don’t usually get one. Instead the conversation ends.

Too bad Nader hasn’t figured this out yet.

Mark Thornton May 8, 2009 at 4:45 pm

Great tactical devise (8?>>

I have found asking people about UL symbol and then telling them the story also works too.

gene May 8, 2009 at 4:54 pm

As far as I know, Ralph Nader does not work for the US Government!

geoih May 8, 2009 at 9:10 pm

Much of UL’s success is directly due to the requirements of the National Electric Code (NEC), a consensus standard written by the National Fire Protection Association (NFPA). The NEC requires all materials and products be “listed”, and the NEC is adopted as state law in many states. So you might be able to argue that the success of UL is closely tied to government enforcement of the NEC.

Consensus standards are often subject to the same capture by it’s subject members as found in government regulatory agencies. Powerful factions can capture the consensus standard process and direct it for their own advantage. However, I will admit that this is typically far less successful than when it happens with government.

Federal OSHA is a good example of a captured regulatory agency. Most of the OSHA standards, such as the requirements for electrical safety, are so far out of date that they are rarely even considered as being relevant on work sites.

Another example would be the often publicized ergonomic hazards in the work place. While government agencies have been regularly blocked by legislatures from establishing ergonomic standards, most work places do follow practices to reduce ergonomic hazards. Why? Because standards or no standards, workers have ergonomic injuries, and if employers aren’t addressing them, then they’re paying for them, either through lost productivity, increased insurance, or both.

So my point is, I don’t think the UL and NFPA consensus process is in anyway perfect, but it is better than the government way, with one exception. The base rule in the original OSHA law, which put the duty for workplace safety on the employer.

whowouldjesusbomb May 8, 2009 at 11:03 pm

I know of one spectacular incidence of political pressure being successfully brought to bear against UL, causing falsification of scientific data: http://www.911review.com/articles/ryan/lies_about_wtc.html

Ryan May 9, 2009 at 2:15 am

Amen

RTRebel May 9, 2009 at 6:15 pm

Matt H, good point on the trademark analogy as a person’s name.

But then that makes me wonder, how would identity theft hold up in an anti-ip libertarian society? You can put any person’s name as yours on a credit card, and that’s no issue until the person defaults on their loans. Who do they go after? How would they know its not pursuing someone with the person’s name you used on the card or you or some other psuedo information like that person’s address?

Perhaps some forms of free market “trademarks” would emerge as a solution. I’ll leave the more serious libertarian intellectuals to figure out that one :)

Bill May 10, 2009 at 10:27 pm

As a previous poster mentioned, much of UL’s success comes from the fact that the National Electrical Code requires that most electrical devices be ‘listed’, a service that UL and a handful of other companies provide. This applies also to electrical signs, which my company manufactured for several years. The NEC is not law, but is ‘adopted’ in part or whole by most states, and communities. While it is true that in ‘mass-produced’ items, the fee to have UL inspect and ‘list’ an item may be pennies per item, in the custom electrical sign industry that we were in, the cost is substantially more. UL first creates the ‘Standard’ by which any potentially ‘listed’ item must meet. The company wishing to produce custom listed signs must prove to UL that they have the ability to do so by creating samples that meet the Standard. This is after paying substantial fees to UL to ‘open a file’ on their business. After the sample items are approved, and deemed worthy of ‘listing’, UL will make un-announced ‘surprise’ inspections at the manufacturers location to make sure they are not ‘cheating’. These visits are also billed to the manufacturer. This is in addition to a yearly fee to maintain the account and other various fees. The relatively high fixed cost has precluded many smaller sign manufacturers from seeking a UL listing. Many of the businesses are perfectly capable of making safe products (that meet the UL standard), but don’t have the gross revenue to support the fee structure.
So the larger, UL listed sign companies encourage the local communities to adopt and strictly enforce the NEC, which has the effect of putting the smaller, less-capitilized firms out of business.
So if you can’t afford the dues of this club, you are out in the cold.

J May 12, 2009 at 4:07 pm

“Much of UL’s success is directly due to the requirements of the National Electric Code (NEC), a consensus standard written by the National Fire Protection Association (NFPA). The NEC requires all materials and products be “listed”, and the NEC is adopted as state law in many states. So you might be able to argue that the success of UL is closely tied to government enforcement of the NEC.”

This is incorrect, UL has it’s own standards, and they are very different to NEC/NFPA standards. They may share similar views, but rarely do they share any standards. Not only that, UL’s standards are far more confusing than the NFPA.

“Additionally, I think for every evaluation that a private company has to have done (due to government regulation) part of the fees they pay to the NRTL (such as UL) involves fees that go back to OSHA as well.”

No, they don’t all have to be NRTL, there are many that refuse to pay the $17000 fee to join NRTL. Much of NRTL’s formation was from, you’ve guessed it, UL. Take a guess why. It’s up to the city whether to accept a non-NRTL listing/certification company, and usually most do. The ones that don’t end up being dead cities to industry, like Los Angeles, Fort Worth, etc, while their neighboring cities flourish.

I see so many of you have no idea what you’re talking about nor are you in any of these engineering fields, or own/run a manfacturing company?

But anyways, UL isn’t much praised in the industry due to their outrageous prices and their huge government lobbying to prevent competition in many cities forcing companies to either leave to another place or pay the outrageous fees UL charges. Additionally, UL has been a big pusher of OSHA’s NRTL since the beginning (Take a guess why). UL might have been respectable once, but no more. There are other private listing/certification companies to praise (especially cheaper ones that don’t cause small business owners to go bankrupt), UL is definitely not one of them. This article is rather full of fallacies sadly and makes me wonder if the author has links to UL.

Just some advice, if you want to praise a private company involved in safety, please don’t use UL, you’ll be laughed at. Few others you can choose which would be much better examples :)

J May 13, 2009 at 6:08 am

Oh, I’d like to add, NFPA is not government. They maybe enforced locally, but you’re not required to follow it, there are many standards to follow (Make your own if you’d like, that’s how most of these standards came around). If that was the case, UL would be out of business since they have their own standards they follow. Under the NFPA, being listed also doesn’t mean being listed by UL.

Some cities may require the NFPA be used as a minimum, but again not required if you say you used (Someone respectable) NETA’s standards for example with a little mix of UL508, which is perfectly acceptable in many jurisdictions. I’d be surprised if it wasn’t.

Mark Thornton May 13, 2009 at 9:09 am

Thanks for all your comment.

The fact that government intervention might corrupt or distort private regulation and safety institutions does not change the story.

Private institutions create safety standards and help keep us safe. Government then comes in and mucks it up. This does not undermine the basic message that we are and would be safe and safer in the total absence of government safety regulation.

Julien Couvreur June 16, 2010 at 1:22 pm

Regarding the UL logo in absence of trademark protection, this can be addressed in many ways. I’m sure cleverer solutions could be imagined, but cryptography, hard-to-reproduce-but-easy-to-check holograms, or simply listing the name of the CEO and the address of UL on the label.
If a competitor used the UL logo with the UL address, that could be considered fraud.

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