Sunday, January 30, 2011
Let me give you a hint who is winning . . . it has the initials "B.G."
Here is the body of the article:
This is a story about artisanal cheese and hand-polished wooden toys, organic spinach and exquisitely smocked baby dresses—the burgeoning small-scale economy so beloved by members of the "creative class." But it's also about another, much-discussed growth industry: the production of political cynicism among formerly idealistic Americans.
The story begins in 2007, an unusually good year for Peapods Natural Toys and Baby Care, in St. Paul, Minn., and many similar mom-and-pop businesses. Frightened by news that toys made in China contained unsafe levels of lead, customers were looking for alternatives to the usual big-box offerings. Just as organic farmers gain market share whenever there's a food-safety panic, the lead scare boosted sales of artisanal children's goods. "People wanted made-in-USA products, and we were the only place in town that had them," says Dan Marshall, the owner of Peapods.
Vendors offering organic materials and a personal touch seemed poised to prosper. But the short-term boon soon turned into a long-term disaster. In response to the lead panic, Congress passed the Consumer Product Safety Improvement Act, or CPSIA, by an overwhelming majority. The law mandates third-party testing and detailed labels not only for toys but for every single product aimed at children 12 and under.
"It's everything from shoes to hair bows, Boy Scout patches and bicycles—it's everything," says Mr. Marshall. But few people producing or selling artisanal kids' products even realized that the CPSIA applied to them until months after President George W. Bush had signed it. By then it was too late.
Although big companies like Mattel could spread the extra costs over millions of toys, Mr. Marshall's small-scale suppliers couldn't. Unable to afford thousands of dollars in testing per product, some went out of business. Others moved production to China to cut costs. Many slashed their product lines, reserving the expensive new tests for only their top sellers. The European companies that used to sell Peapods such specialty items as wooden swords and shields or beeswax-finished cherry-wood rattles simply abandoned the U.S. market. The survivors jacked up prices.
Mr. Marshall and other entrepreneurs formed the Handmade Toy Alliance to try to get the law changed, without success. "When Ron Paul's the only guy who votes against something it's really hard to go back and fix it," says Mr. Marshall, exaggerating only slightly. Neither political officials nor the mainstream media have been especially sympathetic.
"I'm a lot more cynical than I was," says Cecilia Leibovitz, who owns Craftsbury Kids, an online shop selling handmade toys and children's clothes, and also leads the CPSIA discussion group among Etsy.com's online sellers. Mostly individuals producing one-of-a-kind items, Etsy crafters find it especially hard to comply with, or even interpret, the law's requirements.
By contrast, consider the recently enacted Food and Drug Administration Food Safety Modernization Act. Like the CPSIA, it establishes expensive new labeling, record-keeping, inspection and reporting requirements. But, unlike the CPSIA, it carves out an exception for small operations.
The reason for the exemption is not that small farms are safer than big ones. It's that a vocal, established and well-connected interest group didn't want the law to put small farmers out of business.
Agriculture is a highly politicized industry, and proponents of small-scale farming are organized, ideological, and well represented in the elite media. Buying handmade toys may be nice, but eating produce from the farmer's market is a quasi-religious ritual of group identity. The exemption is what Michael Pollan, the best-selling author and leading locavore, calls "a very important signal—that this is a different economy and it's going to play by slightly different rules."
Other artisanal businesses have gotten a less supportive signal. It's not enough, they've learned, to light a single hand-poured beeswax candle rather than curse the mass-market darkness. Unless you have the right protection, Congress can easily snuff it out.
Friday, January 28, 2011
The CPSC explains that extension of the stay is only one of its options. It can do nothing, it can roll all the existing stays forward, or just some of them (to heck with the ATV'rs and the bike industry). Presumably, they will choose to roll all of it forward to September 14, 2011. We can all be screwed on the same day. I like the symmetry of that!
The CPSC has not lost sight of the issues. They know they haven't finished their work. They note that two years ago on February 9. 2009 when the Commission first extended the testing stay. it was because delaying implementation of the testing requirement by a year "give[s] us the time needed to develop sound rules and requirements as well as implement outreach efforts to explain these [new] requirements of the CPSIA and their applicability."
How time flies! That didn't happen, so the Commission again extended the stay by another year on December 8, 2010. Why? Chairman Tenenbaum: "I voted to extend the stay on lead content testing and certification until February 10, 2011, in order to allow component testing adequate time to develop and to give our stakeholders adequate notice of new requirements." Commissioner Robert Adler: "One of the primary rationales advanced for extending the stay is to await the effective date of the so-called 15-month rule."
Where does the time go?? None of that ever happened. Hey, CPSC, take all the time you need!
So now the Commission is poised to kick the can down the road until September 14, 2011. Why that date? The CPSC Staff report notes that this gives the Commission time to sort out the new, lower lead standard due to be imposed on August 10, 2011. The CPSC is holding a hearing on February 16 on the feasibility of the 100 ppm standard. As Staff notes, if the Commission doesn't determine that 100 ppm is feasible, then they will have to set a standard between 300 ppm and 100 ppm that is feasible. "Feasibility" was defined in the CPSIA, lest there should be any disagreement, to exclude ANY consideration of economics. In other words, if it's possible at any price or under any condition, it is considered "feasible" and thus mandated by the law. I can save the CPSC some time - under that definition, it's definitely feasible. Completely unreasonable and unnecessary but "feasible".
The idea promoted in the Staff memo is that we will time to get used to all this if the stay lifts a month after the implementation of the new lead standard. [The concept of "learning disability" floats through my head. Have we heard this song before?] "Staff recommends that the Commission extend the stay to allow time for the Commission to determine whether it is technologically feasible to lower the amount of lead in children's products to 100 ppm." I guess once the Commission makes up its collective mind, the CPSC will wave a magic wand and make your business, your supply chain and your sales channel comply with the new rules in a matter of days. The fact that the rules are hazy after almost three years is no concern of theirs. Is it a concern of yours?
I love magical rules and magical plans! It must be a job requirement for Commissioners to be wizards, too.
All concerns over the "15 Month Rule" seem to have evaporated. This is presumably Robert Adler's doing (see his statement above, which is a rant that the 15 Month Rule and the stay are separable issues). The Staff report intones: "While a Commission decision to extend the current stay of enforcement will give industry an opportunity to test and certify finished products and components according to the final rule and provide the Commission time to clarify any confusion regarding the new rule, it is not necessary for the testing rule to be complete to lift the stay as to the initial test for lead compliance." Can't see any problem there, can you???
The CPSC doesn't want you to worry, however. They have apparently promulgated several documents that set out their policy and whatnot on lead, namely "Statement of Commission Enforcement Policy on Section 101 Lead Limits" (February 6, 2009) (6 pages); "Children's Products Containing Lead: Interpretative Rule on Inaccessible Component Parts" (August 7, 2009)(32 pages); "Statement of Policy: Testing and Certification of Lead Content in Children's Products" (October 2009)(5 pages); and "Interim Enforcement Policy on Component Testing and Certification of Children's Products and Other Consumer Products to the August 14,2009 Lead Limits" (December 28, 2009) (4 pages). If these four documents totalling 47 pages don't clear up everything, the CPSC is ready for you. "Manufacturers of children's products can seek guidance for what the Commission considers reasonable and representative testing in these rules."
You may have to wait a few years for a reply, but darn it, they're going to answer your question. And that's because they really CARE. We're the government and we're here to help!
A few more cock-ups aren't deterring the agency. The phthalates standard is still undrafted, likewise the certification procedures for phthalate testing labs. Oopsie! Well, they've been busy . . . and the much fantasized-over component testing "market" has failed to materialize. Imagine that, businesses that inadvertently serve the children's market with components or which derive a small percentage of sales from children's products aren't volunteering to test their items and expose themselves to the ravages of a crazy and out-of-control federal agency. Shocking!
Those of you who live in the past may recall my mentioning this very issue on November 6, 2008 (yes, 2008) when I addressed the CPSC Lead Panel. [It's a safe assumption no one was listening at the agency - opportunities for stakeholder feedback is not for listening, it's for venting.] I talked about the futility of expecting our suppliers of aluminum foil (widely used in schools in science kits) to test their products. After all, they are allowed to sell it for use with food without testing, so why should they test for me? If I asked them for a test for compliance with the CPSIA, they would certainly refuse and then ask in outrage why I was selling aluminum foil to kids anyway. As I said, who could see this coming? No one . . . .
For all the outrages that this sick situation brings to mind, NOTHING is as shameful as the CPSC's refusal to admit that this is all administrative, bureaucratic nonsense (or use your own word for "nonsense") that has nothing to do with SAFETY. Oh yeah, safety - isn't that word in the name of this agency - the Consumer Product SAFETY Commission. What about safety, guys? Are you concerned about that anymore? This failure of leadership is the basic issue I have with the folks running the agency today. There's a reason that bureaucrats are called "soul-less".
The fact is that this administration at the CPSC (Democrats) will not stand up for what's right - they are prepared to go down with the ship. It's ironic that they remain so strident and so stubborn. Mr. Obama can smell change in the air and even he has called for reconsideration of the deluge of regulations. The Republicans in the House have declared war on over-regulations and the House Energy and Commerce Committee has made reform of the CPSIA the top priority of Mary Bono-Mack's subcommittee.
As I have said again and again - this is YOUR government at work. Their shameful acts which are harming your markets and your business are destroying jobs, discouraging innovation and hurting children by impairing the activities of businesses devoted to children's welfare. This intolerable situation will only be fixed when you MAKE it change. You can do it and you must. There is a new Congress in town and they need to hear from you. Don't let the Democrats keep on wrecking your industry. This isn't about safety and never was. This is politics, pure and simple.
Make them pay for their sins. Call your Congressman.
Wednesday, January 26, 2011
Maybe Congress should make the CPSC hang on for something they want, like their budget. Talk of a 50% budget cut might get the message across to these administrators about the need the plan ahead.
This is your government at work. Remember, in the U.S., the government is by the People. If you don't like this treatment, make yourself heard. Call your Congressman or send them a fax (or ten). This outrage needs to be outed.
Tuesday, January 25, 2011
You may decide for yourself whether congratulations are in order.
Do you like it? Does it build confidence in that relationship?
We are experiencing this phenomenon once again with our trusted partner in safety, the CPSC. The expiration of the testing and certification stay is due to occur in about two weeks now on February 10th. The conditions precedent to lifting the stay, namely completion of the hilariously-named "15 Month Rule" (it was due to be completed on November 14, 2009) and the components testing rule, were not completed. These two rules were issued in draft form earlier in 2010 and after howls of protest . . . nothing. Did this affect the CPSC's plans? Apparently not. No action, no comment. Silence. [The Republican Commissioners have been talking about it but don't have the votes to force movement. Safety IS a partisan issue, it turns out.]
With mere days to go, the CPSC is letting thousands of businesses plan for unknown contingencies. What rules will apply? What will the world look like if the stay is lifted and these critical rules are not settled? Even worse, would the Commission jam through clearly defective rules just to "save face"?
It seems that the shabby treatment we get from the CPSC has hit rock bottom . . . and they have started to dig. O wonderful world.
The last time the Commission faced this question, they acted on December 9, 2009 to extend the stay for a year to February 10, 2011. In other words, they did not let the children's product market flap in the wind and gave ten weeks notice that disaster was not looming. Of course, their extension of the stay was designed to permit finalization of rules that, ummm, they never finished.
So now they prefer to jerk us around, rather than face the music and admit their own failures. This is politicians behaving badly, to save their own reputation at the expense of your business and your market. Better that you should suffer than that they should look bad. Or incompetent. Accountability is not part of the lexecon.
All is not lost, however. Rep. Darrell Issa is calling over oversight on over-regulation, and the CPSC is on that list. The House Energy and Commerce Committee has also named the CPSIA as the top priority of the Subcommittee on Commerce, Manufacturing and Trade Agenda. The government is listening. Is the CPSC?
What will happen? One thing's for sure, you will find out soon. If the Commission extends the stay, as they should, the wolf will move away from the door. Even if that happens, however, the CPSC should be shamed. They are now in the middle of the third year of implementation of a defective law and have yet to admit that it can't be done. That's their real crime - the sin of denial. The solution requires political bravery - standing up to Mr. Waxman and Mr. Pryor and telling them the TRUTH. The Democratic leadership at this agency failed that test and re-fail it every day as they persist in sustaining the illusion that the law makes sense or is workable.
Thursday, January 13, 2011
In this tale, Mr. Shaw recounts how Illinois' 67% tax increase was passed by a single vote Tuesday evening during a short, one-week lame duck session. You see, the Dems who run this State with an iron fist were facing the loss of several seats to the Republicans when the new legislature was sworn into office on Wednesday, hence the need to pass the tax increase Tuesday in the middle of the night. How to do it, how to do it???
"She is somebody somebody sent.
In the best—or maybe it’s the worst—tradition of local politics. And she was pressured into voting for a multi-billion dollar hike in the state income tax in the wee hours of Wednesday morning. By her Democratic Party allies in Springfield.
Some of her friends and neighbors may be unhappy with the tax vote but she won’t be facing any political consequences or voter backlash. And here’s why: She stepped down as an Illinois State Representative at noon on Wednesday. After one week on the job. That’s right—one week. She was, in simple terms, the lamest lame duck in a feckless Springfield flock. A billion-dollar baby.
“She” is Kathy Moore, a Lincoln Park friend and former public school teacher who was put in that unenviable position by the stark reality of political hide-and-seek. Or, in this case, seek-and-hide. Her reliably Democratic 11th District, which includes Lincoln Park and Lakeview, elected a brand new state representative, Ann Williams, in November, to replace John Fritchey, a popular long-time rep who won election to a seat on the Cook County Board. Fritchey began his new job in December, so Williams could have been sworn in as a state rep a month ago to represent the district in the lame-duck session going on in Springfield this past week. That was her initial plan.
But there were questions about how she would vote if a tax plan was on the lame-duck agenda. Williams claims that local Democratic leaders, including Fritchey and Senate President John Cullerton, wanted her commitment to support the tax hike before arranging for her to be sworn in. They say she got cold feet and decided not to start early—choosing instead to wait until Wednesday, when the rest of the freshman legislative class was sworn in.
(That, parenthetically, will save the taxpayers a few bucks because Williams won’t qualify for a more generous legislative pension than the one awaiting the new class in Springfield, thanks to a modest pension reform bill that took effect on Jan. 1. But her decision will cost the 11th District politically because, instead of moving to the top of the seniority list of new legislators by starting in December, she will be near the bottom since she’s entering with all of the other newbies, and her last name begins with “W,” a letter near the end of the alphabet. Oh well.)
Meanwhile, back at the raunch—yes, I said raunch and not ranch—Williams’s decision not to be seated early meant the political bosses in the district—Fritchey, Cullerton and the other ward committeemen—had to find someone else to fill the seat for the one-week lame-duck session. So they recruited Kathy Moore, the wife of Tom Moore, a well-known Lincoln Park zoning lawyer—because Kathy had the time and the willingness to “serve.” And down I-55 she went. Admitting sheepishly at a party last week that “they tell me what (voting) button to push and I push it.” Democracy in action.
So when the tax bill passed, without a single vote to spare, our lawmaker-for-a-week was a major reason. She says she’s not happy about voting for a gargantuan tax increase but she doesn’t think that she, or the state, had any other choice. Even though, as of Sunday, she hadn’t seen a bill. Or a press release. Or a fact sheet. Or a list of cuts, accountability measures and streamlining to go along with the increase.
“I hope it works,” she said wistfully in a text message on Wednesday morning. Williams says, for the record, that she would’ve had a hard time supporting the tax bill in its present form.
In any event, Kathy Moore was back home in Chicago by Wednesday night after morphing into a regular resident following her week as a political pumpkin. Kind of like “Cinderella” in reverse. And she may not be the life of the cocktail parties in the neighborhood for awhile, at least among the well-healed wine-and-cheese folks who will have several-thousand fewer dollars in their pockets for each of the next four years.
As for Ann Williams, the newly elected House member, she assumed her duties as the new representative of the 11th district at noon on Wednesday. And my spies at her Springfield welcoming parties report there was no evidence of any dust, dirt or snow from the rock she’s been hiding under.
Don’t you just love the Illinois Way? And can’t you see why we love being civic watchdogs?"
Wednesday, January 12, 2011
Last week, a number of interested stakeholders met with the staff of the House Energy and Commerce Committee to discuss what to do about the CPSIA. Do I need to explain why the situation is urgent? The list is long, and the victims are basically defenseless. Mass market companies are inconvenienced but not hobbled; small businesses are crushed, confused and scattering into other markets. Consumers, unaware that the federal government has meddled in an unprecedented way with a market upon which they depend, are oblivious to the threat posed by the weakening or departure of their suppliers. And the Dems just smile and tell us this is all for our own good. Don't worry, they know what's best!
Various stakeholders tried to explain the many ways this law has caused harm and the reasons why it is appropriate to loosen the noose around the business community's neck. Scan my remarks, the HTA's presentation or the words of the AAFA as an example, and you will see how high the stakes are.
No meeting on the CPSIA would be complete without consumer groups chiming in to defend this "perfect" regulatory scheme. In this case, Consumers Union, the Consumer Federation of America and the American Academy of Pediatrics all touted the triumph that is CPSIA. CU spent a fair amount of time asserting that the public database rules adequately protect manufacturers and that the perceived defects in the proposed database plan had already been addressed by the Commission. [See Nord's blog and Northup's blog on this topic.] What, me worry?! CU also noted that there WAS broad support for the CPSIA (back in 2008), as if that were sufficient justification to stick with a clearly defective law. This was nothing more than the Waxmanis' argument that no further discussion is merited because of the Perfect Legislative Process. Ah, the infallible Congress, how could I forget?
My special friend Rachel Weintraub of CFA took the opportunity to reassure the gathered crowd that the law has done us all a lot of good. [She was careful to not put anything in writing. Given that limitation, I must work off my notes and apologize for any inaccuracies.] Her reasoning relied on the assertion that consumers "thought" that someone issued a "stamp of approval" for children's products being sold in U.S. markets. This strikes me as "transference", meaning that this may be how Rachel feels herself or how she feels we the general public OUGHT to feel. In any event, there are a lot of consumers out there, and I rather doubt Rachel is able to know how they all felt. She went on to assert that consumers lost faith int he regulatory system. Ditto. After recounting the many wondrous things the law has engendered, she asked that the law be given more "time to work".
More time to work? To what end, to finish the job and put everyone out of business . . . other than CFA? OMG.
And then there is my personal favorite, the AAP through their Washington representative Cindy Pelligrini. Ms. Pelligrini has been making trouble over lead for many years. I first encountered her when the 2007 testimony she ghosted for Dr. Dana Best was used to justify the Illinois lead labeling law (see below). For last week's meeting, the AAP submitted a position paper announcing its unwillingness to support any change to age limits, lead limits or even the consideration of risk by the CPSC. Why do you suppose the AAP cannot support the consideration of risk? Ms. Pelligrini explained in her oral remarks that the AAP felt consideration of risk would be too BURDENSOME ON THE AGENCY. What a heartbreaking scenario, the terrible burden! The AAP is so considerate to think of the quality of life of CPSC Commissioners.
The AAP was able to muster support for tightening the lead limits in the CPSIA to 40 ppm, however. Perish the thought of dropping the 100 ppm standard! When I questioned the process by which this position paper was created by the AAP, Ms. Pelligrini wrote me to explain that it is old news, derived from their January 21, 2009 letter to Henry Waxman. So, apparently, nothing has happened in the last 24 months nor any additional data developed to merit reconsidering their recommendations. I see.
Of course, I recognize that the metabolic impact of lead has not changed because of the development of injury statistics (or, more accurately, the development of no-injury statistics), and in this sense, I suppose, the AAP position need never change. On the other hand, I have previously addressed the issue of science being used as a bludgeon to "prove" preconceived notions. In my post of December 14, I discussed an article entitled "The Truth Wears Off". It could have been about the story the AAP tells about lead.
Without going into the arguments about the falsity of the AAP's claims (or at least their fatally misleading nature), I would like to draw your attention to the "detached from reality" position they take on lead limits. They want to establish a limit of 40 ppm for lead. Anyone remember that Mr. Obama's vegetable garden at the White House was at 93 ppm? The AAP points to research they conducted with the U.S. Geological Survey to come up with this limit. In other words, it is their estimate (however faulty) of background lead "contamination" in our environment. [As if the natural presence of an atomic element constitutes "contamination".]
AAP's suggested lead limit of 40 ppm is basically below the reliably measurable limit and imposes uncontrollable economic risks on manufacturers. By uncontrollable, I mean that the odds of finding a part or component with lead levels in excess of 40 ppm are pretty good in almost any manufacturing setting - given the disorder, irregularities and complexities of the real world, defects of this nature are not really preventable, at least in a prophylactic way. [This is different than saying anyone is likely to be injured, please note.] Even a Six Sigma company would find this a major challenge. Remember, if you find such a part or component, the entire lot becomes a liability and may have to be discarded, a total loss. The imposition of this kind of manufacturing risk will cause many market departures and other bad economic impacts. You will only have to discard one big lot to get the message - find something less regulated to do.
My word against hers, right? Well, perhaps not. My home state of Illinois is running a test on this point. Illinois has a new law that requires labeling toys (you know, a warning label that Scott Wolfson doesn't think matters) if they have paint with lead over 40 ppm. Actually, since lead-in-paint is now illegal under federal law at 90 ppm, the Illinois law effectively requires labeling for paint on toys BETWEEN 40 and 90 ppm. Feel safer already? Not everyone does. See the coverage in the Akron Beacon-Journal on such labeling. The headlines of the article says it all: "Label on doll shoes made by Toys R Us subsidiary worries parents. Warning about lead is cause for concern. Company says product is safe, but some experts say children shouldn't be exposed to even small levels of metal in toys." The AAP thinks this would be a jolly good rule for the entire economy.
I could go on. [If you are bored, you are welcome to consult my response to the "no safe level of lead" argument in response to Bob Adler's attempt to "prove" this point.] In point of fact, the consumer groups are just trying to gum up the works. There are apparently still some members of Congress (I am not ready to name names) who are "true believers" and according to rumor, are ready to block any sensible effort to fix this law. I guess it's tough for some people to admit a big screw-up. Keep this in mind the next time you hear the media blame Republicans for "gridlock".
In any event, you should not feel particularly comfortable just because the Republicans are running the show in the House. The Republicans are in fact very aware of the issues and the details of the problems under the CPSIA and at the CPSC, and are motivated to do something about it. They have the votes and the intent to move something useful forward. However, the Senate is still controlled by populist Democrats who just seem deaf to reason, argument or data. As long as they (or even just one of them) stands in the way of putting this part of the economy back on track, we are stuck. Even with the grudging cooperation of Senate Democrats, we also need the White House to sign the law. And then there's the persistent zealotry on the CPSC Commission. Many variables and risks remain.
Despite the odds and the death march aspect of this "war", we must carry on. We must keep fighting, we must keep calling, we must keep protesting. The words of Ronald Reagan ring in my ears:
"I do not believe in a fate that will befall us no matter what we do. . . .
I do believe in a fate that will fall on us if we do nothing."
We are the People, this is our country. We do not need to be held hostage by a small group of zealots. The task of taking back America did not end at the 2010 midterm elections. If the Dems will not help us, and if the consumer groups are going to be obstructionist to the very last, then we must fight and we must fight with vigor and intensity. No one is going save you . . . but you.
The link can be found here.
Tuesday, January 11, 2011
The AAFA letter draws from the NAM letter posted in this space yesterday.
PLEASE send this email and ask all your friends, associates, suppliers and customers to add their voice to this important plea.
Monday, January 10, 2011
Friday, January 7, 2011
In the meantime, here are some basic documents to read. The meeting was attended by the following people or groups, and some of them presented their positions in writing. If they gave out written remarks, I have linked to the documents below:
American Academy of Pediatrics
Handmade Toy Alliance
American Apparel & Footwear Association
Consumer Federation of America
Printing Industries of America
Toy Industry Association
Fashion Jewelry and Accessories Trade Association
National Association of Manufacturers
Alliance for Children's Product Safety (yours truly)
American Chemistry Council
Retail Industry Leaders Association
The meeting was also attended by staff representing both the Majority (Republicans) and Minority (Democrats) on the House Energy and Commerce Committee, as well as interested parties like staff from the offices of various members of Congress (notably, Rep. Mary Bono-Mack, incoming Chair of the Subcommittee on Commerce, Manufacturing and Trade).
Subcommittee on Commerce, Trade, and Consumer Protection
Committee on Energy and Commerce
United States House of Representatives
January 6, 2011
Thank you for the opportunity to present my views today. My name is Richard Woldenberg. I am Chairman of Learning Resources, Inc., a Vernon Hills, Illinois-based manufacturer of educational materials.
Despite its lofty goals, the CPSIA has had little impact on safety while severely disrupting markets and sharply raising operating costs. I have previously testified that our testing costs rose 8 times between 2006 and 2009 and are expected to multiply again. We have also cut back on our marketing and sales expenses to pay for the increase in our QC department from one to five.
This so-called “toy law” was designed to solve a problem that frankly didn’t exist. In 2007/8, there were some notorious toy recalls for lead-in-paint violations – yet there were almost no injuries. The CPSIA was an almost hysterical over-reaction to a simple compliance issue concerning a small number of companies.
Ironically, the CPSIA has already “cured” the compliance problem in the toy industry despite the glacial pace of implementation. Today, 30 months after passage of the law, lead-in-substrate testing is still not mandatory – yet toy recalls have fallen dramatically. How did it happen? I believe publicity, industry outreach and the commitment of new resources by industry improved compliance. Revised lead standards had NOTHING to do with it.
The CPSIA is causing a lasting trauma in our market. Small businesses left the market in droves. For instance, we decided not to enter the toddler market with new educational products. While foregone business opportunities don’t produce a pile of bodies, the economic damage is still severe. In an efficient marketplace, capital is redeployed and products and companies just move elsewhere. We need to fix this problem pronto.
The solution to the CPSIA problem lies in fixing the four horsemen of this apocalypse: (a) cost, (b) complexity, (c) risk and (d) government intrusion.
The worst CPSIA cost impact relates to needless and repetitive testing. Mandatory testing for everything but lead-in-paint should be dropped. An amended CPSIA should apply ONLY to those products specifically identified as presenting a substantial risk of injury or death from lead or lead-in-paint at the specified mandatory standards. This will sensibly knock out the vast majority of products subject to this law. The CPSC Commission should be mandated by law to rigorously apply this rule – the agency should bear the burden of proof.
The excesses of the current “precautionary principle” era cannot be allowed to continue. Lax application of the “substantial product hazard” law has created real doubt about the meaning of our safety laws. Strict adherence to this rule should be mandated by Congress to eliminate the many artificial crises spawned by the CPSIA. Discretion to set age limits, the applicability of the phthalates ban, tracking labels and the reduction of the lead standards should be subject to the same rigorous rule.
To preserve the competitiveness of American schools, special exemptions must be made for educational products (particularly science and special needs items).
The phthalates ban should be limited to products for children three and under to sharply reduce CPSIA compliance costs. This is a reasonable compromise pending resolution of any remaining doubts over the safety of these specific chemicals.
Complexity must be sharply reduced. The old rules were a manageable 100 pages or so but now top 3000 pages and growing. We need to return to a “keep it simple” set of rules with limited reporting requirements. Congress or the CPSC must choose top priorities, and promulgate limited and focused rules. I can assure you that no one understands the moving target of CPSC rules anymore. This MUST be remedied in any amendment of the CPSIA.
Needless bureaucracy should be eliminated, such as CPSC certification of labs, including in-house labs. Fraud and/or incompetence in testing have always been rare. Customs involvement in the CPSC supply chain should be shaped by a cost-benefit basis. Dealing with product safety like the prevention of terrorism is absurdly disproportionate to the risk and far too costly.
Implementation of the public database should be delayed until reasonable protections of due process rights of manufacturers are in place. Congress never intended to create an indistinguishable mixed bag of truths, half-truths and falsehoods – that’s what we have the Internet for. The adopted “anything goes” rules went way too far, and will accelerate market exits.
Government intrusion and excessive government power casts a pall over the children’s product market now. Open-ended penalty provisions allow for emotional and disproportionate punishments. The Commission has also asserted unprecedented powers to retroactively ban products and to mandate their replacement. Clearly, strict procedural controls and protections are missing. The era of “death penalties” without oversight must end.
Some CPSIA fixes are not legislative. Among other things, the CPSC needs to embrace industry as its partner in safety. As the past two years demonstrates, engaging industry is the key to long term improvements in safety.
Notwithstanding the media’s misrepresentation of our industry, we have an enviable record of safety. This is not a case of bad people, venal companies or lazy regulators. The problem is one of misapplied resources and ineffective regulatory strategy. The solution doesn’t require more money or more chest thumping. A well-designed law, combined with good education and industry outreach practices, will create the safer market that everyone wants.
Thank you for considering my views today. I would be happy to answer any questions you may have.
Wednesday, January 5, 2011
In a TV piece called "Mom Outraged Over Lead in Baby's Toy" (watch the video here), a Georgia mother found "an ominous warning" on a toy drum she purchased for her 16 month old from Toys R Us (one of the toughest retailers on legal compliance and quality control, btw). The label read: "Warning: contains lead. May be harmful if eaten or chewed. May generate dust containing lead."
And I was wondering why anyone would buy a drum for a 16 month old . . . .
Mom was not happy: "Even if it's just a little bit of lead, I think lead in anything for a child is just insane."
When consulted, the CPSC assured her that it didn't mean anything. It's all about a California law that requires labels for lead levels that have nothing to do with safety. Scott Wolfson, who can really turn a phrase, intoned: "We respect California law, but parents should know that the safety of their children is not necessarily at risk if they see that label."
This is so rich on so many levels.
First, the CPSC is prohibited from assessing risk under the CPSIA. How is it that their spokesman is allowed to assess risk? I thought Congress decides what's risky now. The CPSC can't be trusted, right? As usual, particularly when Mr. Wolfson is involved, the CPSC's position is whatever is best for THEM. To heck with you. For purposes of this story, they magically regained the ability to assess risk.
Let's review - as a matter of law, the CPSC's job is to enforce the standards. They are literally prohibited from considering whether compliant products pose a risk. They are just measurers now, the "cop on the beat", determining whether products are inside the circle or outside the circle but never whether the circle is in the right place. So how can they fashion a judgment that lesser levels of lead aren't risky? The best they can say is that Congress didn't apparently think those lead levels deserved attention.
I am thinking of Sargeant Schultz from "Hogan's Heroes" . . . .
Second, the CPSIA is loaded with superfluous labels. The philosophy of warning consumers through labels pasted over labels is central to the precautionary principle that drove this law. How Mr. Wolfson can advise consumers to ignore a warning label without blushing is beyond me.
I believe the reason they try this stuff is because they think we're so stupid that we won't notice. Or that we're so docile we won't say anything. In any event, it hardly matters because they sure aren't going to listen to us.
Third, this situation proves beyond a shadow of a doubt what I have been saying for three years - that lead labels are a tacit ban. I have long resisted lead labels on any of our products. [Please NOTE - this is only happens under technical application of these stupid rules (gotcha's), such as labels for rocks, light bulbs, coated electrical cords, etc., and only on educational products.] If you put a label like the Georgia label on your product, it will die and you will have to drop it. Plain and simple - listen to the Georgia Mom. She's normal and has some common sense - if the company is warning you about lead, don't ask any questions, just don't use the product. Why else would they be warning you? Duh.
A tacit ban.
So the Illinois law and the California law that require these labels are not only violations of Constitutional protection of interstate commerce, but they are also preempted by federal law. The States are not allowed to ban products that are permitted to be sold by Federal law - they are preempted from taking that step. When you put a label on a product that causes consumers to not buy the product, you destroy the economic viability of the product, thereby killing it. This is a tacit ban, a ban in as many words. It is illegal.
Scott Wolfson apparently doesn't see the problem. Consumers should know that this label isn't serious, he says. I assume he thinks consumers should know that the other labels they should know are serious. If they have any questions, perhaps they should call him. He knows-it-all.
Or maybe Moms everywhere should get better at reading Scott's mind. That's the ticket. Fuggedaboutit.
Saturday, January 1, 2011
John Stuart Mill
The CPSC recently congratulated itself for banning drop-side cribs. Scott Wolfson clucked on Twitter: "RT @Scott_wolfson: The lifesaving crib rules approved by #CPSC today are a key part of the #CPSIA. #CPSC wants all babies to have a #safesleep." Other people, like Rep. Jan Schakowsky, also rushed forward to take credit for this change in regulation.
To judge from these press releases, a real crisis in public safety has been addressed. Is that true?
Wasn't it Winston Churchill who once said that history is written by the victors???
I have not touched the crib issue previously because, frankly, it's too hot to handle. Who would want to defend a product associated with baby deaths? There but for the grace of G-d goes I. On the other hand, the projected compliance expense of $550 million is breathtaking, particularly given the fact that the agency's ruling is both retroactive and mandates replacement of cribs in certain childcare facilities. Even Commissioner Robert Adler calls this expansion of the CPSC's role as "uncharted territory". This sets a new precedent for government (CPSC) intrusion that I find troubling, even under these circumstances.
The always astute Lenore Skenazy questions the CPSC's justification of three fatalities a year linked to drop-side cribs. She labels herself "subversive" for looking at the numbers. [You know you were thinking it, admit it!] Based on the injury figures released by the CPSC, she notes that the deaths attributed to drop-side cribs are less than those attributed to spider bites (five per year). She puts the drop-side crib-related deaths in the context of 4 million births per year and asks where the limit is in our effort to save ourselves.
Skenazy rattles off many other death statistics (such as 1,300 per year from stair falls) for further perspective on the scale of the drop-side crib "crisis". She does not discuss pool deaths, which number between 1-2 per day and generate 11-12 childhood emergency room treatments for serious injuries daily. But the obsession of this CPSC is drop-side cribs, so we should not worry about those other things . . . .
Lenore makes a good point. What IS the limit? And how much should we pay? Is this really a public health crisis, and if it is, aren't all those other causes of childhood deaths similarly a crisis? Who gets to decide which crisis is our top priority?
As J.S. Mill points out, despair sells well so we are naturally inclined to accept on face value the shrill self-congratulations of the politicians who are so busy making us so safe. I have been battling the same self-justifications and self-praise by politicians and consumer "advocates" over lead for three years. Does the absence of injury statistics matter to anyone?
Interestingly, the CPSC provides some context on its crib decision. If you read through the document announcing the change, you will find out a few interesting tidbits:
- Despite Ms. Schakowsky's claim to have created this regulatory storm, the industry has been working on standards for many years. ASTM F 1169–10, the full-size crib standard, was originally published in 1999 and has been revised several times since 1999, including 2010. The same can be said of the voluntary standards for non-full-size cribs. The statement in the CPSC press release noting that "[t]he federal crib standards had not been updated in nearly 30 years" is pretty misleading - the voluntary standards relied upon by the agency and the industry have been regularly revised. [Until this administration took over, the CPSC relied on voluntary standards as a matter of public policy.] Even more remarkably, please note that the current CPSC action adopts these voluntary standards as the new mandatory standards with minimal amendments, calling the adopted standards "substantially the same" as the voluntary standards. Hmmm.
- The CPSC initially issued mandatory standards for cribs in 1973 and amended them in 1982. There has been on-and-off activity at the agency in the ensuing years. Crib safety was not a new subject to the Commission when Ms. Schakowsky announced the latest crisis. Ms. Schakowsky didn't solve the crisis either when she purportedly wrote this provision of the CPSIA. Is it actually certain that there ever was a crisis in drop-side cribs . . . or was Ms. Schakowsky simply looking to bulk up her hagiography?
- Annual sales of cribs are estimated at 2.4 million per year, including non-full-size cribs (approximately 300K per year). Thus, over 11 years (2000-2010), that's 32 deaths and an estimated 26.4 million cribs sold and 40 million babies born. Crisis? There are approximately 591 models of full-size cribs and 81 non-full-size cribs on the U.S. market, according to the CPSC. In recent years, the CPSC has recalled 11 million "dangerous" cribs defect" since 2007 (about 40% of the estimated total sales in the last 11 years).
- A pilot CPSC project of data gathering on crib injuries from November 1, 2007 to April 11, 2010 generated a total of 3,584 "incidents", including 147 deaths associated with full-size cribs. Some of these incidents go back as far as 1986, btw. Of the 147 fatalities, 107 were not related to any structural defect in any way. Of the 35 fatalities related to "structural problems", 18 were related to drop-side cribs. [The CPSC document contains a detailed analysis of the injuries, as well.] So of entire pool of fatalities from cribs in this period, 18 of 147 were related to drop-side cribs in some way - 12% of the total fatalities. The CPSC press release somehow omitted this additional fact.
This data cannot be correlated to the December 17 CPSC press release in which they note 32 deaths since 2000 (11 years). There is no data provided on the AGE, CONDITION or QUALITY of the cribs involved in the deaths, no information on the MAINTENANCE or STRUCTURAL INTEGRITY of those cribs or whether the hardware failure was apparent or not. In its May 7th press release, the CPSC notes however that the 32 deaths include "some [fatalities which] occurred in cribs where the drop side detached without caregivers noticing the detachment, while some other deaths occurred after a consumer tried to repair the detached drop side, but the repair ultimately failed." [Check out the photos to see what a consumer "repair" might look like.] No quantification whatsoever. Arguably, this CPSC statement suggests that any solution to the problem involves, in whole or in part, user education.
The CPSC did not supply data to distinguish between product failures/defects and parental or caregiver error or misuse. It's all laid at the feet of the crib design. The CPSC's "analysis" is pretty simple - you don't need drop-sides for your baby to sleep comfortably in a crib, and if we eliminate drop-sides from the market, presumably a certain number of unnecessary infant deaths can be avoided. It's a presumption, however.
It's hard to argue with their logic but it's also hard to know what has been accomplished. We do know that the ban of drop-side cribs costs a lot of money, however. Isn't that relevant, even a little bit? If user education is essential to ANY "solution", how do we know we have spent our $550 million well or achieved anything whatsoever? The precise mechanism leading to the fatalities cannot be determined from the paltry data released to the public. Table pounding by advocates is, regrettably, not data. As Mr. J.S. Mill notes, the advocates' histrionics are likely to be taken as "sage" in this case. What if we knew that ten years out, the replacement cribs caused the same number of deaths or perhaps even MORE deaths? The rate of fatalities in these cribs in already remarkably low. How can we be sure that the new cribs will be better? Should we just take Nancy Cowles' word for it?
I find it interesting that the crib industry has been rather quiet on this change in rules. There are literally dozens of suppliers of cribs in this country, and more than 11 million units have been recalled. Why such quiet from these companies? I suspect the reason is that most consumer do not blame the brands for these recalls, and few people are motivated to return their cribs. [That includes me. Consumer advocates label recalls "unsuccessful" when we the people don't do what they want us to do.] So the cost of the recalls is probably modest BUT the government is mandating that $550 million be spent by childcare providers on NEW cribs. Why would crib manufacturers object to this cost-effective stimulus plan?! Surely many people taking the old drop-side crib out of the attic will say "Whoa, that was recalled. I better buy a new one . . . ." Many, many people.
Thank you, CPSC, for making us so darned safe! The crib industry probably loves you (secretly). Not so sure about hotels and childcare providers. Ultimately I know who pays for all this, however, and it isn't the consumer advocates or the regulators. It's the guy who stares back at you from your bathroom mirror.
The CPSC for its part did something easy and self-serving: they saved us from yet another lurking danger that none of us could see, all at our expense. I wonder if the CPSC would be as enthusiastic in their actions if they had to pay for it out of their own budget (or pocket). The money they spend is OURS, and they never even need to steady their hand to write the check. I don't know about you, but I think it's much easier to spend someone else's money, especially when there are a lot of zeroes involved. The CPSC is making us do it for our own good. Does anyone see a problem here?
The new rule sets dangerous new standards for CPSC (government) intrusion into our businesses and into our lives. The CPSC's action means that the Commission thinks it's now okay to take retroactive action with impunity. This is a BIG change in regulatory policy. Bob Adler notes: "The Commission has never before entered into a rulemaking, whether or not required by Congress, that not only has retroactive applicability, but also requires the replacement of every product in a given product class – particularly in an occupational setting like child care facilities." OMG - and this is okay . . . why??? Because he says it's a crisis and it's important to do.
This is government power without restraint, and it's a serious issue. This is much more serious that drop-side crib deaths. I do not know how to run a business in a market regulated by people who make up the rules to suit their mood. I thought there were protections against this.
Let's hope Mr. Adler and his associates made a good judgment for all of us. They are spending our money and we have no choice but to do as we're told. That's "government of the people, by the people, for the people" nowadays, I guess.
I wonder what Abe Lincoln would think of this government . . . .