Tuesday, May 18, 2010

CPSIA - Numbers Don't Lie (2nd Update - An Upside Down World)

[Ed. Note: I corrected a mathematical error below. The corrected figure is in RED.]

I have previously reported that my study of reported lead recalls over the past 11 years shows that there has been ONE reported death, the widely-discussed Jarnell Brown who died after swallowing a lead jewelry charm in Minnesota. This single death, plus three injuries, is the entire database of injuries reported by the CPSC from lead and lead-in-paint in the past 11 years. That's it.

The New York Times reported on Sunday that data from the EPA sets the economic "value" of a human life at $6.1 million. Whether that number is high or low, it's a good placeholder for an economic analysis of the CPSIA. [The EPA originally set this figure for an economic analysis of one of its rules.] According to federal rules governing regulations issued by the EPA, the benefits of a regulation must outweigh its costs. Therefore, as the NYT reports, if you save one life (worth $6.1 million) with a new regulation that imposes a compliance cost of $8 million, the regulation is illegal and must be withdrawn.

I wonder if this analysis would give us any insights into the CPSIA. . . .

Another relevant data point from the NYT article is that one IQ point lost to lead poisoning is worth $8,346 over a lifetime. That's a real figure - think of the cost and disruption imposed on the children's product industry to avoid the POSSIBILITY of the loss of an IQ point. Consider that the CPSC has reported three injuries from lead-in-paint in 11 years - that's 3 x $8,346 = $25,038 in "damages" in lost IQ points or a little over $2,200 per year.

Even this miniscule cost is conjectural as I am simply not aware of a single, PROVEN case of lead poisoning from a children's product. The victims assert a link between their (often undocumented) lead poisoning and the offending children's product - but the causal link is rarely if ever challenged or conclusively verified. Even the consequences of the (asserted) lead poisoning is itself conjectural - although I am not defending lead poisoning. It is not certain, however, that lead poisoning always leads to long term problems or diminished capacity. [This issue gives fresh perspective on the recent policy of the CPSC to recall ALL lead-in-paint violations, a strict liability standard. This almost certainly violates the "substantial product hazard" standard that governs the ability of the CPSC to issue recalls as a matter of law. CPSC leadership should be held accountable for this change in policy in violation of the "substantial product hazard" statutory standard.]

On the basis of this very doubtful data, my entire industry has been trashed.

Let's do the math on the CPSIA: In 11 years, one death ($6.1 million) and three IQ points ($25,000) = total cost $6.1 million. On other side of the ledger, the HTA estimates that the ANNUAL cost to test products for compliance with the CPSIA is $5.63 billion. The all-in cost is probably higher by a factor of 2-3x, but the HTA number is fine for illustration purposes. At this rate, ignoring the likely impact of inflation, the 11-year projected cost to comply with the CPSIA would be not less than $61.9 BILLION.

Spend $61.9 billion, save $6.1 million. In other words, thanks to the wondrous CPSIA, Americans spend $10,000 on "safety" to save a buck in injury costs. This is the legislative scheme that your Congressional Dem leaders have been fighting tooth-and-nail to preserve intact for the last two years.

The Dems want you to spend $10,000 to save a dollar. They won't give an inch and have stubbornly refused to listen to reason for two years. The illegality and remarkable fiscal irresponsibility of this regulatory scheme doesn't impress them. They tell us there's no safe level for lead . . . but the real danger appears to be that there is no safe level of Democrats in our government.

November, November. Mr. Waxman, go ahead and fiddle while Rome burns. We'll see you and your colleagues in the voting booth.


Anonymous said...

What about the build-up of lead in a child's system? Lead isn't as simple as are small parts. With the latter, it is clear whether there either is or is not an injury or death associated with the product. With lead, it's not.

Your analysis ignores the cumulative effects of lead.

I agree that it's an issue of ACCESSIBLE lead (a point egregiously ignored by the CPSIA). However, most of the recalls you looked at dealt with lead paint -- that's an especially accessible source of lead because it can flake and be dissolved in stomach acid.

The problem is not that Product X does or does not injure/kill a child in and of itself.

The problem with lead paint is that Product X adds to a child's environmental exposure to lead. There may be 20 (or 200 or 2000) sources of environmental lead exposure, each of which ALONE is insignificant but together are dangerous.

Thus your analysis strikes me as apples and oranges

Rick Woldenberg, Chairman - Learning Resources Inc. said...

Not apples and oranges at all. There are many environmental sources of lead, including your food, water and air. Even if lead has some undefined but negative impact through accumulation in our systems, there is no way to pin the blame on children's products. We are taking in lead every minute of the day as we breathe. How can anyone state that the problem is with children's products and ignore the other sources of lead as though they are irrelevant? If children's products are only PART OF the problem, how can we say that it is worth the money to address the problem this particular way? This question gets absolutely NO attention.

The point here is that the CPSC's legal authority to recall products depends on the existence of "substantial product hazards" as defined in the CPSA. This is not optional, it's the law that governs this agency. Because of the CPSIA, the CPSC now has enormous and unfettered power to punish, so merely muttering "civil penalties" can induce most ir not all companies to recall products that aren't dangerous. The coercive power of the agency is being used to erode the legal standard. Long ago, I noted that a senior CPSC official told me that the recall of 400,000+ Sarge cars by Fisher-Price was over TWO cans of yellow paint. Not all lead-in-paint violations are equal.

To me, a more interesting question is whether as a matter of public policy, it is better to enforce this particular ban on a strict liability basis. Of course, Congress never took this position nor arguably made it possible in the CPSA.

In any event, a strict liability policy (all violations are subjec to recall regardless of severity of risk) would make people stand up and take notice. I come down against this but do consider it a close call. There is just too much money wasted over issues that don't present a real risk to kids. Do you think the yellow dot on the wheel hub of the Sarge car could possibly hurt anyone? Not a chance, but think of the heaps of money burned in recalling them. Is this good for anyone?

In addition, endlessly recurring lead-in-paint recalls destabilize confidence in the market to no end. Why not just focus on real hazards and get out of the "yellow journalism" business.

One man's opinion!