Wednesday, June 29, 2011

CPSIA - Do Accidents Happen?

Accidents happen. It's an old saying.

Once upon a time acts of fate were no one’s fault and we each bore the risk individually. Today, things seem different – when bad things happen, the search begins for someone to blame. The media and politicians feed this trend in hysterical tones (they profit by doing so). Individual responsibility is passé. In the case of children’s products today, blame is often laid at the feet of the product or its manufacturer by the CPSC. In some cases, the fault is clear (the hazard is “substantial”); in other cases, it’s not nearly as clear. In this article, I am only interested in those more ambiguous cases where there is an element of fate or other factors outside the control of the manufacturer. Should we be satisfied with how the CPSC draws the line?

CPSC as Allocator

The CPSC’s assignment of responsibility for injuries (in the form of recalls) is an inherently “legal” process. Our laws allocate risk and responsibility in society in the form of rights. About 75 years ago, legal theorists developed a field of inquiry known as “law and economics” which held that legal systems incorporate economic principles which ensure efficient allocation of resources and promote economic activity. “Rights” are essentially factors of production in economic terms. Ronald Coase of the University of Chicago Law School won the Nobel Prize in Economics in 1991 for his seminal work on law and economics over the preceding 50+ years. Notably, Obama regulations “czar” Cass Sunstein is an ex-University of Chicago Law School law professor, as is President Obama himself.  Sunstein is closely associated with the study of law and economics.

The issues confronting the CPSC over injuries to children are not emotional in nature at all. They are actually purely economic issues because the CPSC is a market regulator. It is an objective fact that injuries to children or other consumers are a cost we bear in exchange for the benefits of economic activity (availability of innovative manufactured products, the provision of jobs, etc.). Naturally, as a community we want to bear as few such costs as is efficient, again to promote growth, hence a societal interest in reducing injuries. The interest in reducing injuries is economic, however; we are not indifferent to cost and judge them in light of corresponding benefits. For instance, this explains why you do not wear a crash helmet on the way to work despite your awareness that fatal auto accidents happen every day. The costs outweigh the benefits.

As a regulator, the agency brokers costs among a large group of parties. Consumer costs related to injury (including emotional loss and lost income, among other things) are weighed against manufacturer and market costs (recall costs, damage to brands, decreased growth, lost jobs, etc.). Whether the CPSC does the math properly or not, their decisions allocate resources by directing that one party incur costs to protect other parties from incurring costs. These decisions are purely economic even if stated in emotional terms. It is therefore clear that CPSC regulators have the capacity to promote economic growth or stifle it.

Is the Goal “No Injuries” Ever?

The CPSC has a legal responsibility to differentiate between a product hazard that causes accidents and accidents caused by the hand of fate. Congress limited the authority of the agency to regulate only those product hazards deemed “substantial” (a term of art under the CPSA and FHSA). As stated here many times previously, I believe the CPSC under current leadership regularly exceeds its legislative authority in this regard. The CPSC acts as though its role is to move society toward a Utopian ideal in which children are never injured or die prematurely. While I certainly don’t endorse injuries to children, the Utopian ideal of injury-free childhoods is illusory. In fact, an injury-free childhood could only be achieved at a very high cost. If the CPSC attaches an almost infinite value to preventing injuries, their allocation decisions will always constitute a transfer (a tax) and cause economic inefficiency (depress economic activity).

This over-appraisal of the cost and consequence of childhood injury is illustrated by recent remarks of Chairman Inez Tenenbaum about a recall of one million pool drain covers. Ms. Tenenbaum appears to justify the recall on the possibility of injury despite media reports confirming that no deaths had occurred since 2009:

"I want to make it clear that this recall announcement does not mean that one million drain covers will need to be replaced or repaired. The recalled covers were marked with the wrong flow rating . . . . Now for those public pools and spas that need their covers replaced or fixed, I have an obligation to advise that those facilities be closed at this time. They should reopen as soon as the work is completed that addresses the recall and brings the facility into compliance with the law. I know this is a very difficult message for many communities to hear so close to Memorial Day weekend, but we cannot risk a child becoming entrapped in a recalled drain cover." [Emphasis added]

This unstated policy attaching infinite value to childhood injury is much more than a strict liability standard because the CPSC only acts after an assessment of fault (rather than simply assigning responsibility). Isn’t the agency saying that the actions or inactions of manufacturers cause accidents?

Recent Recalls Allocate Uncontrollable Costs to Manufacturers

Consider some recent recalls for perspective:

a. Big Lots recalls bunk beds recalled after a three-year-old child died when caught under a futon.
b. Maclaren recalls one million strollers sold over 11 years because of more than a dozen fingertip amputations caused by a hinge.
c. Mattel recalls more than 7,000,000 children’s trikes sold over 14 years because of genital injuries to ten young girls jumping on the trike.

While it may be hard to look past these sometimes grisly childhood injuries, each of these cases calls into question whether the injuries were really the fault of the manufacturer. It’s not worth defending the product designs – let’s concede that in retrospect the products could have been better designed. Parental supervision appears to be an issue in each case. Manufacturers are typically unwilling to resist CPSC recalls by blaming consumers for injuries incurred using its products. That route is very risky and may in fact be more costly than going along with the CPSC’s dictates. As a result, the record in these cases is usually very one-sided – the CPSC has the first and last word on the subject, often on TV. Why would anyone stand up for these companies in public? There’s no incentive to do so; after all, the costs are paid by only one party, and that party isn’t talking.

There is a fundamental error in routinely blaming manufacturers for accidents or fate. It is widely accepted that laws operate efficiently when they allocate responsibility for risk to the party in the best position to address the risk. Manufacturers can efficiently bear many such costs – but not all. For instance, product safety is best assigned to manufacturers rather than consumers. This is fairly obvious – manufacturers know their own products better than consumers do and are best able to take steps to keep products safe at the lowest possible cost (most efficient). This is the reason why the common law tort system assigns product liability costs to manufacturers.

So who is in the best position to control costs associated with accidents or fate? Risks associated with acts of fate are difficult to control.  In fact, many foreseeable risks leading to childhood injuries are completely outside the control of manufacturers:

1. Fate
2. Failures of adult supervision
3. Product abuse or misuse
4. Mental deficiencies or mental illness (e.g., pica)
5. Risks well-known to the user (e.g., knives are sharp).

I would advance that good adult supervision is the lowest cost way to prevent accidents with children’s products. There are significant limitations to what a manufacturer can achieve on behalf of consumers who don’t adequately supervise their children. Of course, drawing the line is a big issue here. But can’t an argument be made that adult supervision of the toddlers using the Mattel trike could have prevented foreseeable injuries from jumping on the trike? That a parent must carefully supervise the location of a child’s hands before closing a stroller? This is a simple point – manufacturers cannot control these factors from their offices or warehouses. The cost for a manufacturer to do so would be excessive.

Some people might argue that assigning blame for matters of fate to manufacturers of consumer products is a neat way to efficiently spread cost among the community. Why not make the manufacturer pay the uncontrollable cost of fate relating to their products, and let them pass the costs along to consumers in the form of higher prices? Manufacturers can be converted into involuntary insurers by public policy, risk intermediaries for events of misfortune. The appeal is irresistible; after all, it doesn’t cost tax dollars to pay for these losses if we force responsibility on manufacturers. Of course, if you are a careful consumer, you might resent paying more to subsidize free-riding consumers who don't take appropriate precautions.  But money aside, doesn’t it reflect a hardening of our society if if we ignore heart tugs when kids are injured? Is this heartless . . . or sensible? Is the CPSC doing the American public a favor by increasingly pushing responsibility for uncontrollable risks to manufacturers?

The Important Role of Economic Efficiency in Laws Governing Children’s Products

I believe bad things do sometimes happen to good people. What is the economic effect of assigning these costs to manufacturers by default? Unfortunately, this invariable result is not economically efficient and will have the effect of a tax on the children’s market. In other words, the economic incentive to participate in markets will shrivel as manufacturer returns on investment decline because of legal risks (costs) they cannot control. This is basic stuff, folks – the reduced economic incentive causes market participants to withdraw, just as high taxes cause people to stop taking risks (trading).

Ronald Coase addressed this subject in two articles that led to his Nobel Prize. In a 1937 paper on the nature of the firm, Coase articulated what became known as the Coase Theorem which holds that if trade in an externality is possible (in this case, childhood injuries) and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights. Translated into English and applied to the facts here, Coase theorized that it would not matter which party was responsible to pay the costs of an injury (victim or tortfeasor) if there was no cost to bargaining between the parties. This of course is not the case in the real world. Coase returned to the subject in a 1960 article entitled “The Problem of Social Cost” and explored the role of regulations in achieving economic efficiency when economic activity creates social costs. This eminently readable article is a foundation stone of modern legal theory.

Considering the social costs of human activity (such as pollution or injuries from the use of children’s products), Coase concluded that efficient allocation of resources would be achieved regardless of allocation of rights relating to social costs (responsibility to pay those costs) provided that trading can be conducted without transaction costs. In other words, in an efficient market, economic factors (resources) will always be put to their highest and best use through allocation of resources and bargaining. Through bargaining in an efficient market, the party with the most productive use of economic factors will ultimately possess the resources, thus ensuring compensation for social costs regardless of who has been assigned legal rights.

Coase cites numerous examples (including torts) in making this point. Coase notes the symmetry of these disputes in his analysis. When cattle overrun crops causing economic losses, there would be no damage without the cattle, and likewise no damage without the crops! Causation is not black-and-white to an economist interested in efficient outcomes. As he notes, a smoothly operating pricing system ensures that “the fall in the value of production due to the harmful effects would be a cost for both parties.”

Nevertheless, Coase recognized that there ARE transaction costs in the real world (e.g., legal expenses, bargaining holdouts, etc.). These costs of altering and recombining rights allocated by the legal system can interfere with the ability to bargain and thus prevent the efficient allocation of resources in the market. He argued therefore that regulations are justified to the extent they allocate rights to the most efficient risk-bearer. Regulations can supersede market transactions by imposing the most efficient outcome. This is presumably the underpinning of President Obama’s call for more federal regulation. According to him, this will be good for us.  Coase might demur, noting that it all depends on the facts as we shall see below.

Coase was realistic in his assessment of the inherent dangers of regulation: “But the governmental machine is not itself costless. It can, in fact, on occasion be extremely costly. Furthermore, there is no reason to suppose that the restrictive and zoning regulations, made by a fallible administration subject to political pressures and operating without any competitive check, will necessarily always be those which increase the efficiency with which the economic system operates. Furthermore, such general regulations which must apply to a wide variety of cases will be enforced in some cases in which they are clearly inappropriate. . . . It is my belief that economists, and policy-makers generally, have tended to over-estimate the advantages that come from government regulation.” Coase’s solution: perform a cost-benefit analysis to make sure that regulations increase economic output (the all-in costs must be less than the all-in benefits when reduced to dollars).

We encounter situations regularly in which the party causing a legal nuisance does not bear the consequential costs. For instance, a home remodeler does not have to pay compensation to neighbors for noise and debris that may adversely affect them. He may feel a social obligation to give them freshly-baked cookies but is under no legal obligation to do so. This is one of many legalized nuisances. Why is this the legal rule? The allocation of rights takes into account that as a society, we want to encourage investment and capital improvements. The small cost of dealing with these inconveniences is considered a cost we all should bear in exchange for the benefits received from the economic activity. This rule does not apply to exceptional cases of nuisance where the costs outweigh the benefits. Not every instance of damage is remediable under our legal system for good reason.

Coase cites a fascinating real world example of this rule carried to a surprising extreme: under traditional English law, railroads are protected from liability for fires caused by sparks from their engines. Coase devotes considerable ink to prove that this legal rule creates an efficient allocation of resources (a positive effect for society) notwithstanding that there are “winners” and “losers”. This result would be very difficult to achieve through bargaining. Clearly a railroad would have a very difficult time working out a deal with every landowner along its lines as a precondition to laying down track.

Importantly, Coase points out that the opposite rule (where the railroad must pay for the fires its engines cause) does much more than just transfer liability. It also shifts incentives to everyone’s detriment. A farmer along the track now can gamble with the railroad’s money – he can get a market price from market buyers if he can harvest his crops or from the railroad if there is a fire. The farmer’s return is thus guaranteed, the incentive to take care is removed, and he will be rewarded for planting crops likely to be burned. This alternative rule’s transfer of costs to the railroad will simultaneously reduce the potential reward for constructing tracks and likely result in fewer train lines, reducing the broadly-distributed economic benefits that come with the expansion of the rail system. In other words, shifting liability in this case makes everyone along the train line poorer.

Coase notes that “nuisances” are not always against our interest: “[Pigou] is wrong when he describes these actions as ‘anti-social’. They may or may not be. It is necessary to weigh the harm against the good that will result. NOTHING COULD BE MORE ‘ANTI-SOCIAL’ THAN TO OPPOSE ANY ACTION WHICH CAUSES ANY HARM TO ANYONE.” [Emphasis added] CPSC, are you listening?

Placing the cost for nuisances on the producers’ shoulders may be well-intentioned but it is not necessarily the right result because it does not provide any incentive to consumers to take steps to prevent injury. “A tax system which was confined to a tax on the producer for damage caused would tend to lead to unduly high costs being incurred for the prevention of damage.”  The CPSC’s tendency to blame products via recalls and bans is the equivalent of a tax in this case. The “unduly high costs” leads to a reduction or suspension of economic activity. We can observe this in the children’s market over the past three years – the agency and Congress have both received considerable testimony on this topic (and seemingly ignored it). Coase won the Nobel Prize for pointing out that regulators often neglect to look at the full economic picture and thus fail to achieve optimal social results.

It goes without saying that the regulators may nevertheless achieve optimal newspaper headlines.


Why is it inefficient to invariably push costs to manufacturers for injuries associated with children’s products? As Prof. Coase notes, in a raucous marketplace, transaction costs can distort the allocation of resources. In this case, the prospect of liability and uncontrollable losses are a high transaction cost that affects the efficient allocation of resources by trade. Coase posits that a cost-benefit analysis must be performed to make sure that efficiency is achieved. The rule for such analyses is quite clear – the all-in cost of the regulation must be less than the all-in economic benefits achieved.

The best way to understand the formula in this case is to look at all marginal children’s recalls as a class. Let’s agree that there actually are some “substantial” product hazards out there and exclude them from our analysis.  [Manufacturers are in the best position to evaluate and prevent "substantial" hazards on behalf of consumers.]  We must also assess all the money spent as a result of CPSC action as a group. It does not matter who spends the money – we want to tote up all the costs and lay them off against all the benefits. The benefits are easy to calculate – there is an economic value to a life and also to injuries. This type of analysis is not only common, it is a requirement of federal law (as a result of Coase’s work outlined above). The government has tables of these values. Likewise, the costs are pretty easy to tote up: out of pocket costs for the recall, replacement of inventory, damage to reputation and brand, legal and regulatory costs, lost jobs, reduced investment, etc.

In the case of accidents or other uncontrollable factors leading to injury, the CPSC’s calculus is defective. It is quite telling that the regulators are not interested in my point that no victims have been identified. Lead-in-substrate victims – NONE. Phthalates victims – NONE. The ledger on the benefits side is undocumented, vague and untested, but the regulators' indifference suggests that they place an almost infinite value on injury or even the possibility of injury. On the cost side, the regulator also seems to largely ignore the impact on markets. As noted by Coase, the regulators are not subject to competitive pressures so they can easily overlook these costs. The math does not add up, and as a result, their decisions inevitably will choke the market. The CPSC acts as though not subject to the laws of economics.

The legislative fix for this misguided regulatory effort is clear – mandate economic analyses as a justification for any CPSC regulation. It is also necessary to restore (actually, to mandate the use of) risk assessment by the CPSC. Risk is all about cost allocation and cost management. By removing the ability to assess risk, Congress essentially removed the wiring necessary for the CPSC to make an intelligent assessment of the economics of their decisions. While the CPSIA was clearly written and passed into law in anger, enough time has passed to expect cooler heads to prevail. Congress, it’s time to act!

Tuesday, June 28, 2011

CPSIA - Shams and the People Who Perpetrate Them

As far back as December 2009, CPSIA zealots have been promoting the notion that a "functional purpose" exemption is the centerpiece of any fix to the CPSIA.  See Henry Waxman's first attempt at a middle-of-the-night amendment to the CPSIA.  Chairman Inez Tenenbaum chimed in in January 2010 to support the need for a functional purpose exemption:  "I have learned through our implementation of the law, however, that there are circumstances where the exclusion of lead in certain materials or component parts is extremely problematic. Accordingly, it would be helpful for Congress to create a new exclusion to the section 101(a) lead content limits that would allow some flexibility in cases where lead is required for a functional purpose and the elimination of the lead is impracticable or impossible."  At their insistene, this term has always been part of each draft of CPSIA amendment being discussed by the House Committee on Energy and Commerce.

This same approach lives on in ECADA today.  Does it really make sense to offer an "out" for items or materials which "[require] the inclusion of lead because it is not practicable or not technologically feasible to manufacture" without violative lead levels?  How might that judgment be made? 

No matter - the exemption sounds like a nice gesture by the powers-that-be, doesn't it?  Leaves the door cracked just a bit so that companies in the children's market can preserve hope, right?  The provision also addresses the unfortunate but predictable fact that the CPSC has been "unable" to grant even one exemption to the CPSIA in the last three years.  Zero, zip, zilch, nada, nothin'.  Advocates insist that this exemption process solves the problem of an overly-inflexible law without unnecessarily "endangering" children from dreaded lead.

I wonder if you would feel differently if you knew that there are no conceivable materials or products that meet this standard.  The CPSC Staff confirmed it in writing.  The CPSC report on 100 ppm released last week confirms once and for all that the functional purpose exemption is an outright SHAM.  This darling of Rep. Henry Waxman and his minions (including Adler and Tenenbaum) will never be used to grant even one exemption, thus perpetuating the hoax that the CPSIA has exemptions.  It doesn't, it never has and if the Dems get their way with this provision, it never will.  This is no accident.

The CPSC Staff report concludes that the 100 ppm lead level is "technologically feasible" for all products and all materials.  Thus, they recommend the implementation of the new standard on time on August 14 to apply to everything.  This is critical - they conclude that every material and every product can be produced at the 100 ppm level. 

This is actually a narrow judgment under very specific conditions set out in the CPSIA.  "Technologically feasible" is a term of art under the law - it does not have the ordinary English language meaning you might otherwise expect.  Of particular note, the definition does not refer to cost or economics in any fashion.  In other words, if it can be done (at any expense, regardless of how ridiculous), it must be done.  As the staff discovered, almost anything is "technologically feasible" under this definition in a low tech business like children's products.  Of course, you might have to spend a lot of money or take a lot of economic risk.  The law is indifferent to these pedestrian concerns. 

To reach this conclusion, staff also dispensed with the notion that anyone "used" lead at these trace levels. They note that intentional uses of lead were always at concentrations well above 300 ppm:   "Staff has found no intentional uses of lead in materials at concentrations at or near any of the three statutory lead limits (i.e., 100 ppm, 300 ppm, or 600 ppm).  Therefore, staff does not believe that children’s product manufacturers intentionally design or make products or components with the maximum allowable lead content because lead concentration near the maximum limit would have no benefit or purpose to the product or the manufacturer."  In other words, lead is never "included" in children's products at these levels. 

[Note to the Dem Commissioners - you can now officially apologize for your insulting remark that we manufacturers intend to "dose" children with lead if standards are even slightly loosened.]

Staff also confirmed the obvious on health issues relating to these trace levels:  The contribution of products with lead levels of between 100 ppm and 300 ppm is "minimal".

In so concluding, the staff apparently rejected the testimony of the AAP's estimable Dana Best that IQ points were being lost left and right from trace levels of lead. 

So why are the Dems still insisting on a "functional purpose" exemption process?   Well, substantively, there is no rational justification for it anymore - it cannot be granted given staff's conclusions.  That said, who is going to figure that one out?  It sounds good, makes good press for an easily-duped media, and allows Dems to adopt the stump-worthy posture of "listening" to corporate victims while still protecting children against evil companies out to poison them. 

As I said, who is going to connect the dots and figure this one out?  Expect every draft of the pending CPSIA amendment to include this obsolete notion no matter the facts.  It's good for you, remember!

This is called leadership in Washington today.

Monday, June 27, 2011

CPSIA - What's the Difference?

The current debate over the need for mandatory CPSIA testing of children's products derives from consumer advocate assertions that American consumers "want" this testing to be "assured" that products are not laden with lead.  This assertion has never been backed up with real data (other than "push poll" data) but strikes a nice chord with certain politicians seeking to have something nice to say on the stump.

Has this very notion, that mandatory testing "assures" anxious consumers, ever been tested?  More to the point, how does mandating testing achieve anything - given that the core issue preceding the CPSIA was compliance with the rules.  In other words, prior to the CPSIA, a small number of companies making children's products (some of them large multinationals like Mattel) did a poor job of following the rules. Some quite notoriously ignored the rules, too.  Despite the fact that the agency had the legal power to enforce against these companies and despite the fact that these companies were not following the rules, Congress decided what we really needed were more rules.  Apparently, when companies don't follow one set of rules, there is a big need for more rules.

More rules certainly solved the problem. . . .

And out of that effort grew the myth that mandated testing was absolutely necessary to keep America safe.  Of course, mandated testing for real hazards isn't controversial.  For instance, you will not find one peep from me about testing for lead-in-paint since 2008.  That's a real hazard, actually linked to real, actual victims.  However, the CPSIA invented a couple new standards concerning "hazards" not previously documented to have caused any actual injuries, and instituted mandated testing.  This was Congress' solution to a perceived lack of compliance by the market.

How does that work logically?  There were standards or rules previously, and they were notoriously ignored by a small number companies. That made everyone "mad" and gave people like Dick Durbin something to spout off about.  But the fact is, the rules were well-known and were nevertheless ignored.  We can certainly conclude from this experience that the existence of a rule is not assurance that the rule will actually be followed.  Compliance is independent from posted restrictions.  [Have you ever been cited for speeding?  'Nuf said.]

The new rules mandated third party testing for every product.  Why?  Purportedly to make SURE that every product complied with the standards that Congress felt were being ignored.  Since we "cannot trust" companies to obey these standards, they must test.  Apaparently, we trust these companies to test even though they previously ignored the mandated standards.  And this apparently helps the CFA sleep better at night.

But if a small number of companies were ignoring the old rules, what makes Congress think a small number of companies won't ignore the NEW rules and simply lie about their testing or cut a few corners . . . until they get caught?  Good question?  I have no answer to it. 

The Dems don't like to talk about this.  In their perfect world, while the old standards were rules that might be ignored, the replacement rules (mandated testing) will CERTAINLY be universally followed.  No reason for this conclusion has ever been provided.  The lack of rationale has not deterred the Dems from clinging to this idea like grim death . . . .

Not all of the new CPSIA rules work to protect consumers, but disclosure of the facts is not forthcoming if it might reflect badly on the agency or Congress.  For instance, you may recall that companies can petition to certify firewalled in-house labs to conduct testing on a "trust me" basis - this rule effectively only benefits big companies like Mattel.  Yet when Mattel recalled 11 million units of its toys last September, nothing was disclosed about the involvement of its firewalled labs in the recalls.   Were any of these items tested in0house and passed?  Let's not forget that Mattel is largely responsible for the CPSIA because of its bad acts.  Was the firewalled lab rule a bummer for American consumers?  This is not a question welcomed by Dems.

And if a small number of companies will skirt the NEW rules on madndated testing, what happens to the rest of us?  Well, our costs will certainly go through the roof and put us at a disadvantage to the scofflaws.  In other words, the more compliant you are, the worse you fare competitively.  Many of us would rather eat sand than knowingly break the law.  So our costs skyrocket, and the basic problem that Congress wanted to solve (presumably, making consumers safer, not making consumer advocates sleep easier in their naivete) is not advanced at all.

Is this economically-efficient? Stupid question - to this politicos, it only matters what the CPSIA sounds like on the stump.  Is anyone safer?  Well, first tell me whether a markedly lower percentage of cheaters are present in the market.

Let's get one thing straight:  there is no way to know if you are complying with lead content standards without testing.  Whether testing is mandated or not, testing will need to take place to assess compliance with mandated levels of lead in children's products.  Mandating compliance with the standard and mandating testing is the SAME THING - but the big difference is that in the former case, we can run our businesses and succeed or fail based on our ability to run those businesses well and competitively.  In the latter case, the government becomes our partner and nothing we do is beyond their scrutiny and "advice" (needed or not). After all, they have nothing better to do.  Catch criminals?  Please - watching over our shoulders is all they have time for.

We can only hope that some Dems will wake up and do the right thing for our economy and job creation.  This three-year disaster is a metaphor for everything that's wrong with our current government and political leadership.  I wish it were otherwise, but there is no sign that the Dems care what we have to say.  Until this storm breaks, we are doomed to slowly asphyxiate through mandated testing under the supervision of the government.

Wednesday, June 22, 2011

CPSIA - CPSC Announces that 100 PPM is Technologically Feasible

The CPSC put out its report today concluding that the 100 ppm lead-in-substrate standard may come into force on August 14, 2011 because it is technologically feasible.  To quote:

"Based upon this analysis, the staff could not recommend that the Commission make a determination that it is not technologically feasible for a product or product category to meet the 100 ppm lead content limit for children’s products under section 101(d) of the CPSIA."

This applies to EVERY product and EVERY product category.

You are now OFFICIALLY SCREWED and may begin throwing out inventory.  Don't expect Congress to help you out.

CPSIA - ECADA Mark-up Delayed . . . What Did You Expect?

Continuing Congress' recent tradition of partisan gridlock, the House Energy and Commerce Committee yesterday "postponed" the mark-up on the CPSIA Amendment (ECADA).  This is no doubt due to the politically-advantageous intransigence of the Dems on basically ANY amendment of the CPSIA.  Although they (through the mouthpiece of Henry Waxman) concede that the law must be changed, they really don't mean it.  Your concerns . . . your complaints . . . your data-driven critiques of the awful CPSIA . . . your lost revenue . . . your lost business opportunities . . . your escalating costs . . . your job cuts . . . have ALL fallen on deaf Dem ears, all for the greater good of putting more Dems in a position to say THEY hold the high moral ground and love children more than evil Republicans.  Soon they will finish the job by preventing any fixes to the CPSIA.

The next chance for a mark-up is the weeks of July 7 or 14. 

And, if you aren't aware somehow, on August 14, the lead standard drops to 100 ppm by legal action under the original CPSIA.  Among the many reasons why the Republicans have been working on this amendment since the FIRST DAY OF THE NEW CONGRESS (see my blogposts of January 7th and thereafter) is to head off that terrible change in law.  Aside from the absurdity that Congress ENDORSED the sale of merchandise with 300 ppm lead for two years only to legislate a reverse course on August 14, 2011 when the merchandise magically becomes dangerous overnight, the provision has been interpreted to be RETROACTIVE in effect.  In other words, your inventory becomes unsaleable after August 13 even if in compliance with prior law if even a single component violates the trace 100 ppm lead-in-substrate standard.  For perspective, consider that the dirt in the White House vegetable garden has been tested out at 93 ppm lead.

As previously discussed in this space, retroactive bans are extremely rare in American law and never before have they been so carelessly used or endorsed as in the awful CPSIA.  So there is a ticking time bomb in the CPSIA - and the Dems are perfectly content to let it explode in your warehouse or your store.  Expect many order cancellations soon.

Thanks Dems.  Good job governing. 

Friday, June 17, 2011

CPSIA - Battles Lines Drawn

As ECADA moves toward a mark-up, possibly next week, the action over the CPSIA is happening elsewhere on the Hill.  In yesterday's The Hill newspaper, it was announced that the pending Appropriations Bill knocks out all funding for the noxious CPSIA database. 

It is symptomatic of the partisan gridlock in Washington that a policy debate has to be dealt with by withholding funds.  The parties are simply unable to agree on anything.  To agree is to give up political advantage.  In gridlock, it is always possible to blame the other party and to paint them with whatever black brush is handy.  This is particularly attractive to a minority party like the Dems in the House - they want their majority back.  Thus, while the "defenses" for the absurdly over-reaching rules governing the database are almost laughable, the Dems posture as though any change threatens the American way of life.

That said, it's a good thing that the Appropriations Bill is doing the work that the House Energy and Commerce Committee hasn't done or perhaps cannot do.  Brokering agreement with someone as unyielding and unreasonable as Henry Waxman is no small feat.  Rationality and reason, not to mention good policy, have no apparent effect on this ideologue.  He won't concede that Rep. Mike Pompeo, and the other database haters, have legitimate concerns.  NO ONE is asking that the database die, just that it be a fair game for everyone.  It's only because the Dems won't give a millimeter that you get the Appropriations Bill.  If Energy and Commerce can't change the database, or the CPSIA, I commend the Appropriations Committee for taking action to protect American businesses from government-sanctioned slander.  Somebody had to do it.

There's no telling where all this goes.  The Republican majority in the House may be able to shine a light on the issues of the CPSIA, but since the Dems control the Senate and White House, it seems as though the Dems are capable of blocking progress.  Three years of work have no persuaded one Dem of anything, by all appearances.  [Hence my disillusionment, frustration and outrage.] 

There is little sign that the Dems will give an inch - and you know what that likely means.  You and I are (remain) screwed.  Stasis means the 100 ppm standard gets implemented in two months, possibly retroactively.  It means that you must continue to test internal components for phthalates and test and retest everything else endlessly without relief of any kind.  It means that the 12-year-old age limit for everything stays in place, rhinestones and brass remain illegal (but osmium, iridium and ruthenium are still a-okay!), books and bikes and ATVs remain under the thumb of the CPSC, and many, many businesses will further weaken. 

NO child will be safer, and NO injury will be avoided.  The advocates can't provide evidence that ANYONE was EVER injured so there is no rational reason to believe this massive disruption will save a life or even a paper cut.

The battle lines are drawn.   Perhaps now you know why I was so disappointed when only one wiener resigned from Energy and Commerce today. I can think of a few more that ought to go . . . .


Wednesday, June 15, 2011

CPSIA - I Think I Found Someone Who Lost a Few IQ Points . . . .

Morons on parade . . . .

Never failing to disappoint, the Tribune (via its South Florida Sun-Sentinel) today published the latest left wing tripe about the CPSIA Amendment (ECADA).  In an article entitled "Pandering politicians threaten to make hay of product safety", Nicole Brochu unquestioningly falls in line with Henry Waxman and Rachel Weintraub on ECADA and trashes safety legislation she clearly does not understand.

I am pretty sure Ms. Brochu is not a regular reader of this blog.  She has successfully remained ignorant of many indisputable facts about safety in children's products, not to mention the detailed nature of the problems caused by CPSIA.  That certainly makes it easier to react emotionally to the "threat" posed by ANY effort to change the ill-conceived CPSIA.  And that she does . . . .

Ms. Brochu starts by confirming her bias against business and ruling out any consideration of opposing viewpoints (possibly involving FACTS):   "I don't know about you, but when it comes to keeping the nation's supply of kids' toys and other consumer products safe, I'm going with the advice of doctors, scientists and watchdogs. I'm not sure we can rely on toymakers and motorcycle distributors to have the public's collective back on this one. . . . [The] only thing [ECADA] proposes to enhance is special interests' bottom lines -- not the CPSC's authority, or its protections of the consumers in its care."

Ah, special interests again!  She must have been talking to the estimable Jan Schakowsky.  As everyone knows, I am a "very cynical . . . special interest".  You should see my lapel pin!

Ms. Brochu regurgitates the platitudes and slogans of the shrill groups opposing any change to the law:
  1. ECADA and CPSIA are toy bills.
  2. CPSIA was passed by an overwhelming majority of both Houses of Congress and was signed by "pro-business Republican President George W. Bush".
  3. As a result of the CPSIA, there has been a "noticeable improvement in the public's wounded confidence" (presumably in children's products and the federal government).
  4. "[A] bunch of pandering politicians [are trying] to muck it all up for us.  Since Republicans took over majority control of the U.S. House last year (and even before), they have set their sights on diminishing the safety act's laudatory provisions in the name of lifting the burden off small-business owners."  [Ed. Note:  This is a variant of the argument that only Democrats and consumer groups care about kids, certainly not businesses or Republicans.]
  5. ECADA is "a hyperventilating overreach that would put the country's health and safety at risk.  And that's just what an impressive contingent of folks -- including the American Academy of Pediatrics, American Medical Association, Consumers Union, Consumer Federation of America, Kids In Danger, Public Citizen, Union of Concerned Scientists, the U.S. Public Interest Research Group and the CPSC's chairman and two of its commissioners -- say this measure would do." 
  6. ECADA "[waters] down the safety act's firm hold on lead content in children's products . . . ."
  7. The book industry and motorcycle  industry are "special interests" seeking a pass for their products. No matter the merits of their claims, the law's protections cannot be weakened in any way.  [Ed. Note:  This is the "zero sum" argument again - if manufacturers are made better off by ECADA, it follows "logically" that children MUST BE worse off.]
In each case, I have already replied to these misstatements and mischaracterizations in this space.  Since I seem to repeat myself endlessly, I am going to spare you one more trip around the same block today.  You can find the answers in my recent postings on ECADA.

The author finishes up with one of the biggest misconceptions promoted by the opponents of ECADA:

"The bill would do away with the requirement that manufacturers test their products before bringing them to market, putting the onus instead on the tax-funded CPSC to conduct extensive, costly analyses to determine if testing is necessary. Taxpaying consumers shouldn't shoulder the burden, or the cost, of making sure the products they buy are safe. In any reasonable scenario, that responsibility should fall on the businesses -- big or small -- making money selling their wares to the American public."

This remark reflects a gross misunderstanding of how businesses operate and how the proposed change in law affects businesses regulated under the CPSIA.  ECADA does not eliminate the need to test children's products for compliance with the strictures of the CPSIA.  The lead standards are still on the books, the rabid regulators are still breathing down our necks and THERE IS NO WAY TO KNOW IF YOU COMPLY WITHOUT PERFORMING PRODUCT TESTS.  What ECADA accomplishes, Ms. Brochu, is to stop the government from telling us how to run our businesses.  We know better how to comply with these rules than they do, and can save vast sums of money wasted on government-mandated testing overkill.  We will STILL HAVE TO TEST. There is no way around it.  And if we screw up, we pay.  This is not really a change, btw.  We have always been subject to American tort law and have always been on the hook for our failures.

I wonder if the knuckleheads who believe that ECADA eviscerates the CPSIA understand that the government has no way to force businesses to test.  Mandated testing does not mean that every children's product will be tested, any more than posted speed limits mean that you will never get a speeding ticket.  To survey compliance, the CPSC will always have to test products - and cops will always need radar guns.  Scurrilous businesses that don't want to spend the money to comply will lie - and good businesses will spend themselves into bankruptcy paying for endlessly repetitive tests.  The mandated testing regime has little to do with these behaviors because this is the realm of compliance.  Rules do not eliminate bad behavior as common experience instructs.   The drafters of ECADA get this point, and have incorporated the modest concession that the standards are more important to safety than attempting to manage thousands of businesses.  Ms. Brochu would know this if she read my blog.

I want to draw your attention AGAIN to the important point that Ms. Brochu's safety neurotics have yet to answer my query - WHERE ARE THE VICTIMS OF LEAD-IN-SUBSTRATE?  If we are saving children from a dreaded threat NOW, presumably children were suffering grave consequences in the past.  Yet when asked to name these victims and provide case histories and other identifying and validating data, the advocates cannot name even ONE victim - from any country, at any time, using any children's product by any manufacturer under any living conditions.  Zero known victims - but we must bear billions in costs to comply with a neurotics' legislative and regulatory wet dream. 

Notably, in May 2010 I published my own analysis of 11 years of CPSC recalls from 1999-2010 and found only three alleged injuries (all from lead-in-paint) and one death (from swallowing a lead bangle from a bracelet).  That's it - and there are no known victims of lead-in-substrate in the CPSC's publicly-available recall records in that time period to the best of my knowledge.  Or at any other time in the history of the world.  The absence of lead-in-substrate injuries is stark in comparison to prosaic risks we bear EVERY DAY.  Stair falls have killed almost as many people in Japan as fires despite the fact that many structures in Japan are made of wood (1976).  In Canada, injuries and fatalities on stairs are at least ten times greater than those from natural disasters (1985).  In the UK, it has been estimated that more than 100,000 stair injuries occur annually (1999).  Yet the federal government wants us to spend literally BILLIONS OF DOLLARS annually to protect against a health threat not associated with a SINGLE documented injury.  We are being governed by idiots.

Maybe someday we can expect the media to think before it speaks.  Maybe someday the standards for journalism will include knowing what you're talking about, investigating and challenging preconceived notions and a healthy skepticism for pat answers.  Until then, we have the Tribune and Ms. Brochu.


Tuesday, June 14, 2011

CPSIA - NSSEA Calls for Letters on ECADA

The NSSEA (National School Supply & Equipment Association) is calling for letters in support of the pending CPSIA Amendment legislation (ECADA).  Please send the below letters BY FAX to your House Representative and to members of the House Committee on Energy and Commerce.  You can get the fax numbers off each Representative's website.  The mark-up may happen as soon as Monday June 20th (but is not scheduled yet to my knowledge).

Now's the time to stand up and be counted!!!  There are two forms of letter below (Manufacturer and Dealer/Retailer).  Please modify as appropriate.

Letter from Manufacturers:


I am writing as a constituent and concerned member of the National School Supply & Equipment Association (NSSEA) to express my support for HR 1939, the Enhancing CPSC Authority and Discretion Act of 2011 (ECADA). We urge you to support this important bill that fixes problems created by the Consumer Product Safety Improvement Act (CPSIA) while maintaining the core provisions of this law that ensures the safety of consumers.


The safety of our products and the safety of our customers are our top priorities. Unfortunately, we have encountered many problems in trying to comply with the well intentioned but overly burdensome CPSIA. We have been forced to spend thousands of dollars for unnecessary lead and phthalate testing and continue to deal with compliance programs that change multiple times to meet constantly changing rules. ECADA provides common sense reform to sections of CPSIA which have burdened our industry during these challenging economic times. Given your strong record as a friend of small business and manufacturers, I hope that I can count on your support for this bill.

A costly new rule mandating a burdensome, unreasonable testing regime, the lifting of the stay on third party testing for lead substrates, and the retroactive application of a tighter lead standard despite overwhelming evidence showing that this new limit is not technologically feasible are just several challenges that my company will face this year if the reforms in ECADA are not approved by Congress soon. ECADA reduces the most excessive regulatory burdens created by CPSIA while maintaining protection for consumers. The bill enhances the Consumer Production Safety Commission’s (CPSC) ability to investigate complaints and prioritize testing based on cost-benefit analysis, and improves the CPSC’s public database by ensuring more accurate information.

As manufacturers and small business struggle to recover from the worst recession in decades, it is vital that government does not impose costly and unnecessary regulations that have no positive impact and hinder the fragile recovery. I urge you to vote for ECADA to ensure that companies like mine can continue to provide quality products and services that are so important to our children's education.



Letter from Dealers/Retailers:
I am writing as a constituent and concerned member of the National School Supply & Equipment Association (NSSEA) to express my support for HR 1939, the Enhancing CPSC Authority and Discretion Act of 2011 (ECADA). We urge you to support this important bill that fixes problems created by the Consumer Product Safety Improvement Act (CPSIA) while maintaining the core provisions of this law that ensures the safety of consumers.


The safety of our products and the safety of our customers are our top priorities. Unfortunately, we have encountered many problems in trying to comply with the well intentioned but overly burdensome CPSIA. As a distributor, we fear that the range of products offered by our suppliers will continue to narrow due to the costs manufacturers incur for unnecessary lead and phthalate testing. In turn, the needs of American students will be unmet, including those children with disabilities and special learning needs, because fewer specialized products will be available to our customers.

CPSIA has caused considerable confusion in the marketplace due to the constantly changing rules and regulations associated with the law. ECADA reduces the most excessive regulatory burdens created by CPSIA while maintaining protection for consumers. The bill provides common sense reform to sections of CPSIA which have burdened our industry during these challenging economic times. The bill enhances the Consumer Production Safety Commission’s (CPSC) ability to investigate complaints and prioritize testing based on cost-benefit analysis, and improves the CPSC’s public database by ensuring more accurate information.

Given your strong record as a friend of small business and manufacturing, I hope that I can count on your support for this bill. As small business struggles to recover from the worst recession in decades, it is vital that government does not impose costly and unnecessary regulations that have no positive impact and hinder the fragile recovery. I urge you to vote for ECADA to ensure that companies like mine can continue to provide quality products and services that are so important to our children's education.



Monday, June 13, 2011

CPSIA - Lies and the Lying Liars Who Tell Them

We live in interesting times.  There has been no action by Congress to deal with the CPSIA since its controversial passage in August 2008 despite consistent and loud hue and cry.  Right now, Dems are blocking progress.  Apparently, they think the biggest threat to America is ANY change to the CPSIA. Our markets, our jobs, our livelihoods will be a necessary sacrifice to . . . what? 


During this crisis of thousands of businesses catering to children, a Democrat on the House Committee on Energy and Commerce, the committee charged with managing the CPSIA mess, has been emailing photos of his you-know-what to women and girls all over America.  One of Anthony Weiner's email correspondents was reportedly voted "Most likely to be involved in a tabloid scandal" by her high school class (she's only 21, it wasn't long ago).  I think you get the (sordid) picture.  Mr. Weiner has been of no use on the CPSIA, riding the high horse "protecting children" with his Dem brethren, at the VERY SAME TIME he was using the Internet for interactions that are, at a minimum, pretty creepy. 

So Weiner is against letting even a notch out on the CPSIA belt around our necks, too unsafe . . . but he thinks it's okay to creep around on the Internet, shooting pics of himself in the Congressional locker room and sending them out to his female Internet pals (one of whom was a porn star).  Hypocrisy?  How can that be, the Dems are cloaked in white, right???

Mr. Weiner remains perplexingly in office.  As Chairman of the Republican National Committee Reince Priebus noted on Meet the Press:

"What we called for is for Nancy Pelosi and the Democratic leaders in this country to do what every American knew had to be done immediately and call for his resignation. Now, it seemed to me that for the first 10 days in this circus that the only job [in America] that Nancy Pelosi was interested in saving was Anthony Weiner's. We've got crushing unemployment in this country, we've got a president that's, that's whistling past the graveyard, we've got families that are struggling, and instead we've got leadership in a Democratic Party that are defending a guy that deserves no defense."  [Emphasis added]

And back at the ranch, the CPSIA Amendment (ECADA) is stalled.  Why?  Consider the May 25th words of Rep. Henry Waxman, Ranking Member on the Energy and Commerce Committee and principal roadblock to relief:

"But instead of refining a good law, the Republican bill goes after the law with a wrecking ball. The result is an assault on children’s safety.  The Republicans call their bill the 'Enhancing CPSC Authority and Discretion Act.' A better name is the 'Unsafe Toy Act.'"  [Emphasis added]

That's right - the Dem leader is calling the work of the Republican majority the "Unsafe Toy Act".  Hmmm.  Please NOTE that the General Counsel of this committee (Gib Mullen) is the former General Counsel of the CPSC and its former Director of Compliance.  Is the implication that this former Kirkland & Ellis partner is a "hack", lacking principle and integrity and is simply doing as he is told by Republican overlords who don't care about children's safety?  Please, if you believe that, I have a bridge to sell you.

The label "Unsafe Toy Act" is an insult and a lie in so many ways.  First of all, it isn't true.  As I have discussed extensively in this space, ECADA is a surgical revision to the CPSIA, designed to fine tune the law without restructuring it.  Reporters have called me to ask what the big deal is.  Good question but the answer is obvious.  No rational person subject to the laws of the United States or residing here would want to make toys, or any children's product, "unsafe".  If you insist that they would, Mr. Waxman, PROVE IT.  Oh yeah, you don't do that, do you?

Second, Mr. Waxman impugns the dignity and integrity of anyone who would dare support ECADA.  That includes me since for more than 20 years my career has been devoted to making educational products (with perhaps the best safety record in the entire children's product industry).  Mr. Waxman's label plainly announces to the general public that I favor poisoning kids to make more money.  That is rather offensive, to say the least.  Members of the House of Representatives are permitted to speak their minds, through and including libelous remarks, while on the House floor.  They literally can say ANYTHING with impunity - I can't sue them for this slander.  As such, there is no recourse for this slander.

This unfortunate label is at the heart of what the Dems are after - political advantage.  Those of you who periodically pepper me with defenses of good Democrats fail to recognize the consistent pattern of obstruction and failure to act reasonably among the small group (cabal) of Dems and associated consumer groups behind this roadblock.  The pattern of lies is all for political effect.  Can you imagine the reelection commercials?  Good for the Dems, bad for anyone who disagrees with them.   The threat even applies to Dems who might have a conscience and be willing to stand up to the demagogues - the consumer groups are ready to attack them, too.  Everyone knows it, no one wants to say it.

Mr. Waxman trots out the usual lies and misstatements, relying on the trick of portraying this law as a "toy law":

"The Unsafe Toy Act triples the amount of lead allowed in most children’s toys. For some children’s products, the bill would allow lead levels to increase 100 times or more.  The bill eviscerates the requirement that toys imported from China be independently tested for safety. . . . Just listen to what the experts are saying about this bill. The Consumer Federation of America says that the bill creates 'huge loopholes.' Consumers Union says it will 'lower standards and roll back safeguards for children and infants.'  The American Academy of Pediatrics and 100 other experts in children’s health wrote to express their 'deep concern' over the bill because it 'would have the effect of permitting more lead in toys.'  Chairman Inez Tenenbaum of the Consumer Product Safety Commission and a majority of the Commission wrote that the bill 'would effectively revoke key protections … and fails to adequately protect the health and safety of American children.'"

I have rebutted the consumer group "arguments" numerous times in this space already. I am not going to repeat myself here.  Mr. Waxman's reference to "triple" lead levels refers to a new limitation on the excessive and useless 100 ppm lead standard that, btw, has never been deemed technologically feasible by the CPSC.  The "change" to lead levels of 100 times or more than existing standards refers to the rule exempting metal alloys (like brass) complying with the stay authorized by the CPSC Commission.  OMG, you mean we can still use brass in children's products like pens and trumpets?  The HORROR!

Neither the consumer groups nor Mr. Waxman and his Dem brethren have answered my question - Where are the victims?  This question was asked several times in the April 7th hearing by members of the committee.  To date, no one has supplied even one case history.

No one calls Mr. Waxman to account for his lies and innuendos, so he persists in trashing those who can't defend themselves.  This is not unlike his unjustified attacks on Toyota that were later proven FALSE.  Mr. Waxman did something similar at the April 7th hearing first discussing the CPSIA Amendment.  In his opening statement, Mr. Waxman laid it on thick: 

"But your discussion draft, which is the subject of today’s hearing, takes a wrecking ball to the law and would endanger young children. . . . Your discussion draft is a very different document. Democrats, consumer groups, and health experts were not consulted. The result is a one-sided proposal that provides relief to industry, but sacrifices children’s health and safety. . . . I have learned over the last few months that there seems to be no limit to the ability of the new Republican majority to pass bad legislation in this Committee and on the House floor. I have no doubt that if you want to do so, you could do so again with your draft bill.  But there is no chance that a bill this extreme could ever become law. It would not survive in the Senate and if it did, it would be vetoed by the President." [Emphasis added]

It's always nice to end with a threat.

The title of this post refers to a lampoon written by now Senator Al Franken (D-MN).  In this book, he contends that Republicans are liars.  Well, well, well, how times change, huh?  Mr. Franken???  Any comment?

I didn't think so.

Thursday, June 9, 2011

CPSIA - Kids Don't Lick ATV's, Apparently. Who Knew?!

In today's Desert Sun newspaper, John Paliwoda, Executive Director of the California Motorcycle Dealers Association, published an Op-Ed entitled "Note to Congress:  Kids don't lick their ATVs".  You're kidding!

A few salient take-aways:

a.  Although ATVs and dirt bikes are now "banned hazardous materials" under the law because of trace levels of lead in metal parts like engine components, scientists agree that the risk of injury is "remote at best".  Even the CPSC staff acknowledge this (in writing).  Mr. Paliwoda notes that "there have been no cases of lead poisoning documented from children riding youth model ATVs".  No one seems to care, however.

b.  The CPSC acknowledges that children face a "far graver and more immediate risk" by being exposed to adult-sized ATVs than exposure to lead in metal components in youth-model ATVs.  The very EXISTENCE of youth-model ATVs is the handiwork of the CPSC - so their ban reverses the safety gains earned by the Commission (work that actually saved lives).  This ban of youth-model ATVs under the CPSIA is part of a larger political objective to ban ATV use by kids altogether, as publicly admitted by Cindy Pelligrini of the American Academy of Pediatrics.  Subterfuge as public policy?  Apparently.  Still, Mr. Paliwoda observes:  "The one thing that the government, ATV manufacturers, dealers and consumer groups all agree on is that the key to reducing injuries and fatalities to children riding ATVs is to keep riders younger than 16 off adult-size ATVs."  Hmmm.  Job well done, Congress!

c.  The manufacturing and sale of youth-model ATVs has been severely curtailed by the law despite the temporary stay protecting manufacturers and retailers.  Why?  The stay of enforcement "failed because many manufacturers and dealers are not comfortable selling youth model powersports vehicles while the ban is on the books."  And the impact on the industry?  Mr. Paliwoda:  "[For] motorcycle dealers in California, [the CPSIA] has been devastating."

Sadly, Mr. Paliwoda's reasoning and documentation will not likely sway any Dems.  Why?  Aren't they listening?  No.  Don't they care about data?  Nope.  Don't they care about the creation of jobs in their districts?  Doesn't seem like it.  What motivates them, then?  It's certainly not children's safety, by all appearances.  My best guess is that they want to be reelected as their top priority and feel that taking a reasoned stand to repair an idiotic law ostensibly "protecting" children is too politically dangerous to risk.  The public can't be expected to actually think about the details, after all, and the rabid and equally uncomprehending media will certainly take the other side of any effort to bring relief to this suffocating law.  Data be damned.

Or, you, your company, your market and your customers be damned.


CPSIA - Fools in Charge

So happy to be so safe . . . and so unemployed!

Today's initial jobless claims report is yet ANOTHER report card on the dense and unthinking approach to economics implemented by Mr. Obama, Mr. Waxman and their Dem minions since the 2008 election.  A full three years after the economic cataclysm, and with a diminishing ability to blame this misfortune on someone else, the Dems stubbornly stick to their over-regulation agenda dooming Americans to safe, safe unemployment.  Can't be too careful, you know.

The CPSIA is the poster child for the Nanny State.  Mr. Obama told David Letterman on September 21, 2009 that the national problem he had to fix was that we had "too little government, too little regulation". Our industry has become a classic example of the cure being worse than the disease.  The story has been told again and again.  For instance, the CPSC heard (and promptly ignored) at its February 16th hearing from a representative of the bicycle industry, all the small bicycle manufacturers have left the children's market and the big makes of bikes have sharply cut their product lines.  They also informed the CPSC that if the 100 ppm lead standard comes into force, the rest of the bikes will disappear from the market.  Quite a stimulus plan - you can imagine all the jobs this useful plan has created.  Other consequences is a general reduction in choice and availability in child-size bikes, which not only punishes families but also retailers.

Do any of the numskulls running our safety apparatus have evidence that any child has EVER been poisoned by lead-in-substrate from a bike?  No, they don't - because there is no evidence that any child was ever injured by lead-in-substrate anywhere using any product at any time.  Did you realize that one of the big problems in making a bike comply with this moronic law is that bikes use recycled steel for the frames - and the law provides that paint does not constitute a "barrier" over the steel.  The lead content of recycled steel is hard or impossible to consistently control at the levels dictated by the law.  The industry representative submitted testimony and evidence to the CPSC (consistent with evidence I have also supplied) showing that tests on the SAME PART in ten places yields ten different lead contents. 

This law is killing jobs, products, companies and markets.  The evidence and data is right there for any thinking individual to read and consider.  The true believers stand in the way of rationality.

Please send Mr. Waxman and Mr. Obama a thank you note for the weak, sinking economy.  They have CHOSEN this path of Nanny Statism to keep you "safe" although they really can't demonstrate you were ever unsafe or that you needed this further protection.  If you are one of the unlucky 9.1% who can't find a job, perhaps you will take some comfort in knowing that your Dem-led government made this choice for you.  Safe but unemployed - that's what you need, what you want, what you got.  The best government money can buy . . . .

The solution to fools in charge is to amend the CPSIA and restore sanity in safety administration.  PASS ECADA AND END THE CPSIA CHARADE!

Wednesday, June 8, 2011

CPSIA - Consumers Union is Hazardous to Your Health

Lies, innuendos, misstatements, twists - which is it this time?

Today Ami Gadhia, one of the Consumers Union CPSIA hacks (a.k.a. "Policy Counsel") weighed in with her usual bunk about the lurking "dangers" in children's products.  In particular, today's tripe is a protest against modifying the CPSIA.  Her writings and utterances are invariably infuriating for their lack of perspective, tall tales and general fear mongering.  In her article "Turning Back the Clock on Child Safety Protections", Ms. Gadhia continues her fine tradition of twisting and obfuscating the facts.  Considering her background in the subject matter and her law degree, one must assume ill-intent.  This can't be accidental.

Let me debunk her junk one-by-one:

a.  "Turning Back the Clock on Child Safety Protections":  The Op-Ed's title is absurd in light of the actual bill's wording.  The CPSIA Amendment (ECADA) is a mild and surgical bill intended to offer minimal but effective relief from over-regulation while preserving the structure of the CPSIA.  Killing the CPSIA is politically impossible, it appears, so this is the best that can be offered at this time.  Ms. Gadhia must be asserting that ANY change in the CPSIA is a setback.  This argument is always left unproven - but no one ever holds her accountable so why not tell the tall tale?  The consumer groups rely on the appeal of the "zero sum" argument which also goes unchallenged.  It goes like this:  ANY change in the CPSIA which might benefit a business is THEREFORE a setback for children's safety.  If the Cubs lose 15-5, they are somehow better off if they instead lose 13-5.  Right. . . .

b.  Ms. Gadhia, like her fellow manipulators in the consumer "advocacy" field, relies on an emotional appeal to kick off her crock - the story of a child who swallowed magnets, leading to gory injury.  A few notes on this line of reasoning:
  • The CPSIA is NOT a toy law.  Despite Ms. Gadhia's relentlessly repetitive references to toy safety, the law applies equally to ALL children's products, from shoes and t-shirts to pens to rhinestones to ATVs and bikes to books to educational products to carpet to what-have-you.  By focusing on toy gore, Ms. Gadhia lulls her reader into overlooking the awesome overreach of this bill.  We don't want kids injured by magnets . . . ergo, we should ban all hazards in all things.  Huh?
  • The magnet hazard she refers to had never been seen by the agency previously.  It was a classic latent hazard, unregulated specifically because it was unrecognized.  You can see Gib Mullan, the current General Counsel of the House Energy and Commerce Committee and former General Counsel and Director of Compliance at the CPSC say ON VIDEOTAPE (at the CPSC Tracking Labels hearing) that the agency first thought the problem was a small parts issue, not a strong magnets issue.  No law can effectively regulate UNKNOWN hazards.  Claiming that the CPSIA "solves" this safety issue is pure baloney.
  • The magnet hazard was addressed promptly and effectively by the agency without the need for changes implemented by the CPSIA. The agency had this power under its 1972 enabling legislation and following laws.
  • Sometimes bad things happen to good people.
c.  Ms. Gadhia intones ominously about banned phthalates and their links to "a variety of health risks".  As has been well-documented here, that provision was placed in the law at the last minute by Diane Feinstein, true to her San Francisco roots.  This is the same place that worked for years to ban circumcision.  Yes, they are really scientific in that community.  For a discussion of phthalates, please watch the 60 Minutes segment in which I appeared.

d.  Ms. Gadhia trots out yet another misleading but longstanding justification for not changing the CPSIA - namely that it passed by an overwhelming majority of Congress.  I fail to grasp the intellectual power of this "infallibility of Congress" argument, and further note that dozens of members of Congress have been trying to change the law ever since.  There has been more than a dozen bills floated to amend this "perfect" law since August 2008.  In addition, the timing of passage of this law (three months ahead of the 2008 Presidential poll electing Mr. Obama) made it very dangerous politically to vote against this terrible law if you wanted to keep your job in Congress.  Even Mr. Bush had to sign it for political reasons.  The political and media frenzy in 2008 made rationality impossible, and minds were made up.  Have you ever made a bad call when you were furious?  'Nuf said . . . by everyone except the dangerous Ms. Gadhia.

e.  The Consumers Union storyteller informs us that ECADA "would poke some serious holes in the product safety net".  What a dream if Ms. Gadhia were actually right that this amendment would actually dent the CPSIA that I hate.  It doesn't, regrettably.  To "prove" her points, she lists four lies:
  • "The bill undermines safety testing for children's products".  The bill eliminates MANDATORY testing as required by the CPSIA.  It does not ban testing, nor does it discourage or remove the incentive to test.  Excessive testing is one of the original problems cited in the bill, and has cost our company well in excess of $1 million since the passage of the bill - all without making even one product in our product range safer, even a little bit.  This term is the brainchild of the consumer groups (Rachel Weintraub?), reasoning that if the government didn't require mandatory testing, no testing would be done.  This misconception overlooks the enforcement of the new standards.  It is IMPOSSIBLE to assess whether you comply with the standard without testing.  Enforcement of the standard, as is anticipated, means that everyone WILL test.  What is being eliminated is the role of Mother Government "helping" us by telling us how to run our businesses.  If the standard is enforced, people will HAVE TO test.  If they don't enforce the standard, they won't enforce mandatory testing either. What's the big deal here?  Just the opportunity for Ms. Gadhia to mindlessly bang her drum.
  • "The bill undermines lead protections".   Ms. Gadhia informs us that consumer confidence would "erode" if the current one-size-fits-all standard is replaced with "a variety of standards that will be different depending on when the product was manufactured, the age of the child for whom the product is designed, whether it contains small parts, and other factors."  OMG - standards that are reasonably tailored to the individual hazard and individual product!  NO - please tell me we still live in a world where books, t-shirts, diamonds and rubies, ATVs, bicycles, appliances, pens, carpets, DVDs and toys are ALL subject to exactly the same rules. What is the world coming to???  I presume Ms. Gadhia thinks we are idiots, or else this is all she has, which ain't much.  Anyone surprised?
  • "The bill undermines the effectiveness of the new crib safety standard".  I have previously addressed this issue - the three Dem Commissioners made this same baseless accusation a few days ago.  See my reply in this space.
  • "The bill undermines the new public database for people to report and read about product safety problems".  Ms. Gadhia warns "the provisions in this legislation would place onerous burdens on the person making the complaint, thereby discouraging parties with valuable safety information from reporting."  Whoa - you mean we won't get to see stuff like this, this and this again???
Ms. Gadhia needs to get one last jab in:  "The Leisy family's experience shouldn't happen to another child."  Okay, I don't want to see any child injured ever again for any reason . . . but does Ms. Gadhia even make a coherent argument here?  Does one thing have ANYTHING to do with another?

It's time to turn back the clock on irrationality and lowest common denominator government.  Who should set the tone for us - the Anthony Weiners of the world (did you hear that his wife is pregnant?) or people that are interested in children's safety AND the viability of American businesses that provide jobs to your neighbors and valued products to your kids?  I think it's time that our representatives in Congress, especially those in Congress calling themselves Democrats, to stand up for WHAT'S RIGHT rather than what's easy or what's safe (for their job security).  We pay them to lead, not to cower.  PASS ECADA AND END THE CPSIA CHARADE!

Tuesday, June 7, 2011

CPSIA - Nancy Nord Points Out the Unpleasant Truth

In the June 1st edition of the WSJ, Nancy Nord was featured in a Letter to the Editor about over-regulation.   Commissioner Nord has had a front seat for the baloney "effort" by the Obama Dems to "reduce" burdensome regulation and to eliminate "uneconomic" regulations.  As Ms. Nord points out, the CPSC has been an oasis of normalcy during this period of regulatory introspection.  Certainly no such deregulation project has been started at the CPSC.  As she notes, she has lost vote after vote requesting cost-benefit analysis for CPSIA and other regulations - all on a party line vote.  Yes, the Dems are voting AGAINST a cost-benefit analysis again and again on the CPSC Commission.

It's your money they are spending.  It's your business that is crumpling under the burden of their over-reaching laws and rules.  There's nothing we can do to stop it - except to vote ALL Democrats out of office, including the big guy.  Since they won't play ball, this is their just desserts.

Here is Nancy Nord's letter:

Administration Isn't Serious About Regulatory Reform

I read with interest Cass Sunstein's assertion that federal agencies are working to eliminate excessively burdensome regulations ("21st-Century Regulation: An Update on the President's Reforms," op-ed, May 26). As a commissioner at the U.S. Consumer Product Safety Commission (CPSC), I can attest that no such activity is happening at this agency. We certainly have not combed through our regulations to eliminate those that are "out-of-date, unnecessary, [or] excessively burdensome," as he suggests is being done across the government. Instead, we are regulating at an unprecedented pace and have pretty much abandoned any efforts to weigh societal benefits from regulations with the costs imposed on the public.

The CPSC is an independent regulatory agency and therefore, technically, it is not required to follow the president's executive orders such as the one Mr. Sunstein refers to mandating a "cost-effective approach to regulation." In past administrations, the agency has always followed the lead of the Office of Information and Regulatory Affairs, which Mr. Sunstein heads, in such matters. However, under this administration, we have ignored the recent direction to look for and eliminate burdensome regulations. We are just too busy putting out new regulations.

I have repeatedly requested that the agency do cost-benefit analysis on our various regulations only to have that request voted down by my fellow commissioners on a party-line basis. Consequently, we are issuing regulations without having done the necessary work to understand the impact of our actions both on those being regulated and on the public. As a result we have imposed regulatory burdens and caused people to lose their livelihoods without a real payback in terms of safety. At the CPSC, common sense regulation doesn't even get a head-nod.

Nancy A. Nord
Consumer Product Safety Commission

Monday, June 6, 2011

CPSIA - He Was Always a Weiner

Rep. Anthony Weiner (D-NY) is the latest politician caught doing naughty things ("The Incredible Shrinking Weiner", "Weiner Admits He Sent Lewd Photos; Vows Not to Resign", etc.).  It is no small irony that the zesty Mr. Weiner blew hot and cold on the CPSIA. It's one of his issues - he is a long-time member of the House Energy and Commerce Committee and one of the people we are ostensibly supposed to BEG for help on the CPSIA.  On two occasions, he sent letters asking questions about this noxious law (July 7, 2010 and January 7, 2009) but never actually voted to help us.  His letters are evidence that he knew that there were serious problems affecting, among others, his constituents.

Thus, we cannot nominate the Weinerman for the Hall of Fame, notwithstanding his apparent interest in our problems.  It is regrettably true that Mr. Weiner never actually DID anything for us other than send the letters.  As per the usual for EVERY SINGLE DEM, Weinerboy fell into line with the Waxmanis and refused to break ranks to support efforts to amend a law he himself questioned.  Now that's great government! 

At least he was never so heavily committed to our cause that it took time away from his hobbies.  Work-life balance is so important!

Dare we hope to someday miss Mr. Weiner???

CPSIA - Status of CPSIA Amendment (ECADA)

Having delayed the mark-up of the CPSIA Amendment bill (ECADA), the House is out of session for the next week.  The timing for resumption of the consideration of this bill has not been released. 

I think it is incumbent on us to make a fuss over this delay and to press our Congressional representatives to act to pass this law.  Other industry groups are pushing for the meager and surgical relief offered by this law - but the Dems continue to resist.  The Dems moan and groan as though ECADA guts the CPSIA, perhaps banking on a docile media to not challenge their characterization of a very balanced and frankly, rather undramatic bill.  In fact, I was just interviewed by a reporter whose opening question was why the controversy over a bill that changes so little about the CPSIA.  Good question.

I have an explanation to offer you  - it's just politics, pure and simple, 100% politics.  As previously noted, the Republicans were sensitive to the excesses of the law before it was passed.  Given that the CPSIA was passed in August 2008, as America headed to the polls en masse to overwhelmingly elect Mr. Obama as our President, all members of Congress (other than Rand Paul and three others) saw the wisdom of supporting this bill.  The political cost of opposition to the CPSIA was unbearable - as my own representative told me face-to-face in July 2008, even though the CPSIA was over-the-top, he had to vote for it, otherwise he would face election commercials accusing him of defending corporations over children's safety.  He would not sacrifice his job over this vote.  He assured me that Congress usually goes too far in its bills, but would go back in 12-to-18 months to fix it. 

Not in this case, apparently.

So the Republicans, like the Democrats, preferred the safe route politically in the summer of 2008, but by all appearances, wanted to go back and fix the bill as predicted by my district's representative.  To their credit, the Republicans have used the majority  power in the House restored in the 2010 midterm elections to reach out to both sides on this issue, as well as to the Dems, to find appropriate middle ground on this contentious issue.  [I have discussed these efforts in this space over the course of 2011.]  The new General Counsel of the House Energy and Commerce Committee, Gib Mullan, is the ex-General Counsel and ex-Director of Compliance and Field Operations at the CPSC, so let's posit that he understands the law pretty well from all angles.

Even with this new horsepower (intellectual and political), the Dems haven't responded to the Republicans' entreaties and resolutely won't yield on any points.  They continue to fight ECADA tooth and nail. Why?

It's politics, just politics.  Drop any notion that the Dems care about you . . . or your employees . . . or your suppliers . . . or your dealers . . . . or the consumers, teachers, families or schools that want, need and use your products every day.   Jobs, schmobs.  The well-documented and negative consequences of the CPSIA on our markets and economy (not to mention the paltry or nonexistent acheivements of the law) are just not on the Dems' radar. They only care about getting reelected - their concern is simply themselves.  As in 2008, the ECADA issue is tailor-made for political gains.  As far as I can tell, that's too tempting a morsel to pass up, damn the consequences on the "little people".  The Dems argue to the populace that anything that makes the world better for your business necessarily makes life worse for kids.  Zero sum.  It's a stupid, nonsensical argument, but if you give it no thought, it might SOUND good.  The Dems know their position makes them look good to a dozing electorate and a gullible media, and makes the Republicans push a lot of chips into the center of the table to do the right thing for our country.

The Dems are also catering to their power base, the consumerists.  The consumer groups have their own axes to grind. For one thing, if they give an inch here, some people might accuse them of being hypocrites.  After all, they have repeated the Big Lie ("There is no safe level of lead") for so long that it would come as a shock and disappointment to their true believers if they conceded the (intentional) error of their bumper sticker slogan.  In addition, their budgets are paid for by trial lawyers.  If they give in, there will less money available for tort lawyers to suck out of the system. That won't work, will it?

So the Dems are opposing restoring sanity to the safety laws for entirely self-interested political reasons.  Not ONE Democrat has EVER broken with the Waxman line. They have stuck together like glue.  Hats off to them for being well-organized.  But the Dems should be ashamed of themselves as public citizens - by putting their own PERSONAL interests ahead of the country and its economic engine, they are taking the low road.  Throwing our company, our jobs, our products, the families and schools that need our products, throwing everyone under the bus all to save their own jobs - that's contemptible.  This is your government at work.

Please reach out to your Congressmen to express your outrage.  Send emails and faxes, and ask your friends, relatives and associates to do it, too. Let's clog the inboxes with complaints.  It's time to stand up for what's right!