CPSIA - Obama - "Too Little Government, Too Little Regulation"

Do you like a good fairy tale, perhaps at bedtime to make you drowsy? Here's some pablum from our President that will bring to mind our good friend, the CPSIA.

On The Late Show with David Letterman on September 21, Mr. Obama explained his view of the fundamental problem with our government - there's not enough of it. Responding to Letterman's questions about angry outbursts at Town Hall Meetings, Mr. Obama set the record straight (beginning at 17:55):

"I also think that some of the anger is misplaced. What people should really be angry about is the fact that, because of the lack of regulation, for example, we ended up having to pony up hundreds of billions of dollars to banks. And that if we had some good regulations in place, we wouldn’t have had to do that. . . . The reason that we had to make some of the decisions that we’ve had over the last several months is because we got in a situation ironically that we had too little government, too little regulation. People were taking wild risks, expecting that maybe taxpayers would come back and bail them out after the fact because we couldn’t afford to let the whole financial system to go under. And so people are justifiably, I think, frustrated and angry right now. They’ve gotten a raw deal. But they need to understand the source of it. It arises because we have not had the kind of serious reforms in Washington that we needed for a long time." [Emphasis added] [For those who are interested in fairy tales about health care, Mr. Obama goes on to issue some real doozies (including one about "misinformation") right after the above quote.]

President Obama is simply stating the current Democratic mantra-like response to all problems - if only we had more government, everything would be much, much better. In this case, his argument is justified by the fallacious notion that evil businessmen exploit sleepy federal regulations to game "the system" for themselves. Thus, he contends that Wall Street engaged in gambling with the surreal notion that if they were wiped out, the Feds would bail them out (you know - heads I win, tails you lose). That is best described as utter nonsense - what happened last Fall has no precedence in modern times, even in 1929, so how anyone might have held that view when investing in securities defies reason. Mr. Obama chose not to explain where this 20-20 hindsight fantasy came from.

In any event, Mr. Obama's statement is unquestionably false based on the facts. Execs at Washington Mutual, Countrywide, Bear Stearns and Lehman Brothers (among others) apparently lost their mythical bets when their companies were allowed to go under. The bailouts of AIG and GM did not preserve shareholder interests so I fail to see how the gamblers were rewarded even though the entities live on. Amazing amounts of wealth at those companies were destroyed, not exactly some kind of fixed game for gamblers. Ironically, because the collapsed Fannie Mae and Freddie Mac were semi-governmental institutions, even the government was "gambling" with the confidence that it would be bailed out . . . by itself?

The Dems think it's all because we didn't have enough government and had far too few regulations. That's a rather pat answer and it will lead to much harm. The CPSIA was just such an unthinking response to "crisis". In 2007-8, a series of unrelated notorious toy recalls riled up Congress. I say "notorious" because yellow journalism media outlets like the Chicago Tribune and headline-seekers like Senator Dick Durbin made a big stink over the recalls. Notwithstanding the publicity, it is notable that no deaths resulted from the 2007-8 lead-in-paint recalls (and only one asserted injury). The 2007-8 lead jewelry recalls resulted from the death of one child in Minnesota (Senator Amy Klobuchar cannot walk by a live microphone without mentioning that incident, even to this day). So, millions and millions of products were recalled yet only one death occurred. [We are a country of 300 million, let's not forget.] Yet, Congress decided the only solution to the "problem" was a lot more government. And that is going to kill my industry. If you have been reading this space, you have some idea why.

I do not know how to stop this runaway train without your help. If we cannot get the attention of Congress and get relief SOON, you can kiss off the many different industries serving the needs of your kids. You won't recognize us in a year or two. You won't have the diversity of choices you need, and vitally important products will also be gone. Markets dependent on us will also suffer greatly (like schools).

At this time of a new Congressional election cycle, you need make your voice heard URGENTLY. If you sit on your hands for much longer, it will be too late. The fault will be everyone's - and notably, yours too. Go SEE your Congressman, go to Town Hall meetings, picket, do whatever you can to raise attention. We are approaching the end of the line.

Thank you.