Monday, January 26, 2009

CPSIA - Smoot-Hawley Redux

From: Rick Woldenberg
Sent: Mon 1/26/2009 1:44 AM
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Subject: CPSIA - Smoot-Hawley Redux

In 1930, two well-intentioned U.S. Senators led a movement to solve overcapacity in the U.S. economy in the severe recession of 1929/30. This bill, the Smoot-Hawley Tariff Act of 1930, imposed sweeping tariffs on a broad range of goods and was signed into law by President Hoover on June 17, 1930. Smoot-Hawley will live in infamy as one of the worst misjudgments by Congress in history, as it is today considered a precipitating event for the Great Depression. Under Smoot-Hawley, international trade went into an abrupt tailspin, with U.S. imports falling by 71% within two years, and U.S. exports falling 67% in the same period. Of course, it is also well-known that unemployment in the Great Depression shot up to almost 25% in 1933 as international trade faded quickly away. Shamefully, Congress held to its position on tariffs despite the petition of 1,028 economists and the despondent pleas of businessmen including Thomas Lamont, CEO of J.P. Morgan, who reportedly “almost went down on [his] knees to beg Herbert Hoover to veto the asinine Smoot-Hawley tariff.”

Congress has ignored dire warnings and turned a deaf ear to rational criticisms of its work in the past – and today repeats these errors in its resolute defense of the indefensible CPSIA. And, as time goes by, it becomes clear that the CPSIA is doing the work of a modern-day equivalent of Smoot-Hawley, rapidly creating a depression on the children’s product industry and laying waste to economic activity and jobs throughout the country with its sudden imposition of incentive-distorting costs.

No doubt, the proponents of the CPSIA have their reasons for defending the structure of the law, but fail to take into account the economic impact of the rules they so strongly support. Every rule represents choices; in this case, any notions of “improved safety” will come at a high cost. Are these costs worth their consequences? Congress opted to legislate the “bubble-wrap” childhood where no risk can be tolerated regardless of cost or the nature of the safety threat. This approach is endorsed by consumer advocates without responding to the substance of objections to the CPSIA: “’This law passed because our product safety net was broken,’ said Rachel Weintraub, senior counsel for the Consumer Federation of America, a nonprofit organization based in Washington. ‘The answer is not to reopen the bill.’” Under this world view, no criticism of the CPSIA can justify its reconsideration – the end justifies the means regardless of what the consequence of those means might be.

As we in the Children’s Products industry suffer severe economic hardship and face the prospect of a law that cannot be complied with, we beg Congress “almost on [our] knees” for revised, rational rules focused on real safety issues. A laundry list of imaginary safety issues, like dangerous cotton t-shirts, edible library books or lead-infused shoe soles, are just too expensive to eliminate in a pinched economy. We are good citizens, the same as the consumer advocates, and are just as committed to safety. However, the economic policy advocated by the consumer groups as embodied in the CPSIA will not work – and if not arrested quickly, will do lasting damage that will not be easily repaired.


Richard Woldenberg
Learning Resources, Inc.


Danielle said...

Once again Rick, excellent job! Thanks for fighting so hard for all of us. Yourletters are always very eloquent and informative. Keep up the great work.

Jo said...

Do you believe there's someone in Washington who'll engage in rational thinking & stop this madness? It feels like we're just on some horrible roller coaster ride that doesn't end.
Give us some hope!

Connie said...

Senator Andrew Brock of North Carolina responding to Rowan County Chamber of Commerce:

"Brock said products that pose a potential problem should have been recalled, but said enforcement of recalls from consignment shops was almost nonexistent.

"You don't have to worry about someone breathing down your necks," Brock said.

This is his idea of a response. Just don't worry about it. Great. Better cross him off your list of rational thinkers.

Wacky Hermit said...

Rick, you ROCK! This is the time one of my profs in grad school called "balls to the wall" time and I appreciate your rallying cries!

However, despite your eloquence, I have severe doubts that anyone in Congress will ever listen. To accept your straightforward argument above, a Congressman would have to possess (1) a knowledge of history and how its mistakes can be turned into lessons; (2) sufficient grasp of mathematics to process the concept of diminishing returns; and (3) a big swinging brass pair. After my experience fighting CPSIA, I now don't believe there are any Congressmen that possess all three of these necessary qualities.

Brent Taylor, Brilliant Sky Toys & Books said...

Senator Carl Levin of Michigan recently wrote me the letter below (excerpts)in response. Let's hope that others are taking this approach as well.
"On January 16, 2008, I wrote a letter to Senator John Rockefeller, Chairman of the Senate Committee on Commerce, Science, and Transportation, and Senator Mark Pryor, Chairman of the Senate Subcommittee on Consumer Affairs, expressing my concerns about the implementation of the CPSIA. In this letter, I included examples of Michigan companies who would be negatively and inadvertently impacted by the implementation of the CPSIA and who have received little or no guidance from the CPSC about whether their products would be exempt from the testing requirements.
My staff has also weighed in with the CPSC regarding specific questions from Michigan companies, including wooden toy companies, thrift stores, consignment shops, sports equipment companies, and home crafters.
At a time when the President and Congress are working to take all possible steps to create
jobs, we are facing a situation where the unintended consequences of well intentioned legislation has resulted in the loss of jobs. I am hopeful that Senators Rockefeller and Pryor will work to provide the CPSC with the resources and direction needed to allow them to issue regulatory guidance in a more clear, rational and timely manner to avoid job losses while continuing to protect children’s health and safety."

The Happy Tomato said...

Thank you little Rick, for another excellent report, and beautifully delivered. I'd let you clap my erasers, but I can't account for the lead-content of the chalk-dust--oh WAIT, I don't HAVE any erasers, chalk OR a blackboard anymore!
Sadly, I have no motivational star-stickers to give you anymore either, and no markers with which to write your parents a note to tell them what fine work you continue to produce, and with such enthusiasm, under the circumstances.
You will just have to hear me when I say "Well done!" and try to recall this positive reinforcement in the future, when all of my instruction and classroom interaction with you will be limited to telepathy, because human soundwaves and adult coffee breath will need to be tested for lead.
You're only in Kindergarten--but you can handle that, right?

(on Connie's point) If Congress can compose a safety law devoid of real risk assessment, of course it can reassure people that compliance really won't be about anything mandatory and enforcement will be of little concern!

I am weary of people telling me not to worry about this, because I am "too small" for them to trifle with. Maybe I should simply resort to my contraband stash of smelly markers and Snoopy stickers and stop being such a complainer, huh?

Connie said...

If we choose to buy that unlabeled cookie at the local bake sale, is that illegal? Or is that within our scope of free choice? How about the bowl of popcorn at the bar? I would not take a handful given that I do not know what is in them nor whose hands have touched them. But I don't deny others the right to do so nor is that illegal. So let's look at children's products the way we look at food products.

First of all, let's set a reasonable age - items for children under 3 is good and is the accepted age cutoff for choking hazard warnings so why not this? Why 12 and under when the sole reason for doing so is just because those children are likely to have younger siblings? Then just mandate that all these items must be labeled with an 'ingredient-like' label listing the lead and phthalate levels or a label with a warning that these levels are unknown. We use food labels to determine what products we choose to eat and to offer to our children - do the same thing here. Empower us with good information on which to base our decisions. The free market will determine the success of items that are labeled with unacceptable or unknown levels.

Rather than a pass/fail type of system, a quantifiable number can be used. By identifitying the amount of the substance, it will allow for future changes in determining an acceptable level. Under the current requirements, when the lead limit falls to 300 ppm, a product deemed 'safe' under the 600 ppm law will then be 'unsafe'. Then when other substances need to be tracked they can simply be added to that 'ingredient' label. Some parents may want to choose to only buy products that are less than 100 ppm now and they should be enabled to make that decision now.

I see parents handing their children donuts and cookies to eat and heading straight for McDonalds for french fries. Do I approve? No. Would I do that with my kids? No. Do I believe in their right to make that decision? Yes. Because many decisions are not that simple and government cannot dictate at that level, even if we all agreed. In Illinois I can legally put my child on a motorcycle without a helmet. A parent can take their child to a monster truck show and risk a part being propelled through the air and killing that child. A parent can get a pet Rottweiler who ultimately turns vicious and kills the child. A parent can give their child a peanut butter and jelly sandwich and that child can die from salmonella poisoning. A parent can give their child a taco and the child can die from bacteria in the tomatoes - oops I mean the lettuce. And therein lies my point. No one can provide 100% safety for themselves or their children. The best we can do is get good information and improve the odds. And it is up to each of us to determine the level of risk that we are willing to take. I admire those that actively seek out safer foods, cleaning products, beauty products, medicines and drugs. I am trying to become more aware and make better choices. It is my right to choose to do that or to not do that. And if I choose to buy that unlabeled cookie at the bake sale or the unlabeled hair bow for my child's hair, I strongly believe that is my choice to make. All I ask is for the information to be available to make an intelligent decision. And if it is not made available, it remains my choice whether or not to purchase the product.

So what is unworkable about this idea? Seems fair to me.