Democrat tool Rachel Weintraub is never at a loss for words on the topic of CPSIA and true to form, she has today published more misstatements, distortions and innuendo to bolster Dem efforts to block amendment of the CPSIA. In the space below, I rebut Ms. Weintraub's "view of the world".
It is worth noting that a much more erudite explanation of the pending CPSIA Amendment (ECADA) was published side-by-side with Weintraub's smear campaign, namely "Fix bill would make products safer, not less so" by Eric Stone. For those who don't know Eric, his credentials include more than 33 years at the CPSC, including as Legal Director in the Office of Compliance and as Acting Director of the Recalls and Compliance Division. He faced the real questions of safety at the agency and made the judgments subject to the scrutiny of the public, Congress and the legal system.
As Eric Stone notes, "In crafting its new safety bill, Congress proved that moral outrage and good intentions do not necessarily result in good law." Amen.
My responses to Ms. Weintraub are in blue and red.
Don't set safety clock backwards for kids products
By Rachel Weintraub
Florida Sun-Sentinel
July 24, 2011
The House Energy and Commerce Committee will soon vote on HR 1939, the "Enhancing CPSC Authority and Discretion Act of 2011," or ECADA, a bill that guts the Consumer Product Safety Improvement Act, a vital law that keeps unsafe toys and other dangerous products off the shelves.
RW - It is a typical ploy of the Lefties opposing amendment of the CPSIA to frame everything in terms of toys. Toys are but one category affected by this awful law, but by using it as the CPSIA poster child, Weintraub puts you where she wants you - afraid of ECADA's potential effects on innocents by "evil toymakers". Aside from the fact that "evil toymakers" are no more or less prevalent in our society than any other category of "evil" something-or-anothers, Weintraub's characterization greatly distorts what CPSIA really is. CPSIA applies to ANYTHING that is intended to be sold to children. The list is well-known but, as a reminder, it includes t-shirts and shoes, carpets, pens, ATVs, bikes, books, science kits, DVDs and CDs, furniture, brass musical instruments, rhinestones and so on. Focusing on toys is just to get you going.
Congress passed CPSIA by an overwhelming, bipartisan vote in 2008, and President Bush signed the bill into law that year. After a year of careful deliberations, CPSIA's passage followed a record number of recalls of children's products that injured and killed children. The measure gave new life to the U.S. Consumer Product Safety Commission, a weakened federal oversight agency that had failed in its meager efforts to protect the public's safety. The law represents a giant step forward in protecting America's children.
RW - Another defensive ploy of the CPSIA defenders is the "infallibility of Congress" argument, namely that everyone voted for it so why is anyone against it now. This argument only makes sense if you don't think about it too much. For one thing, the CPSIA was passed in anger. Have you ever said or done anything in anger that you later regretted? That point aside, it is important to consider that this law was devised by a Dem-controlled Congress dominated by the strong-willed Left Winger Nancy Pelosi of San Francisco. Pelosi takes no prisoners and tolerates no dissent among her Dem followers. The law was dictated by Dems to the Republicans, as insiders acknowledge, and was passed just ahead of the Obama wave in the Presidential election cycle. The votes of Republicans for such an extreme law cannot properly be deemed "voluntary" in any conventional sense. Everyone knew this law was a great chess move by the Dems, forcing Republicans to go along, and even President Bush got into the act by agreeing to sign to protect his party. Weintraub's distorted rewrite of history is a good illustration of the rule that history is written by the victors. Consider the source . . . .
CPSIA currently requires that children's products be tested for safety before they arrive on store shelves — something that many consumers already assumed was happening.
RW - Another oft-repeated consumer group assertion, never proven. It has always struck me that this argument is just transference. I have no doubt that folks like Weintraub always wanted this, and simply assume that everyone shares their "common sense" desires and fears.
It sets limits on lead in children's products, sets infant product and toy safety standards, and bans certain phthalates, which are chemicals linked to a variety of health risks. The law also creates a much-needed public database where consumers can easily report and research product safety problems.
We have already seen the successful results of CPSIA. Most recently, on June 28, 2011, new crib standards went into effect, which means that cribs sold in stores must meet the most protective safety standards in the world. This will give parents and caregivers the long-overdue peace of mind that when they purchase a new crib, it will be a truly safe place for their baby.
Some small toy manufacturers have raised concerns about the costs of testing their products to the new safety standards. These concerns, and narrowly tailored ways to reduce the costs for very small children's product manufacturers, are useful to discuss.
RW - The nauseating cynicism of this remark cannot go unaddressed. Ms. Weintraub argued for two years that the agency "needed time" to implement the law and to work out the kinks. At that time, she and the other Dems argued that there was "nothing wrong" with the CPSIA that the CPSC couldn't fix in its implementation and that consideration of legislative fixes was not merited until that process was complete. Three years later we are still subject to this on-going implementation . . . that is, those of us who haven't gone belly up. Weintraub expressed little interest in "discussing" these issues way back then.
Later, Ms. Weintraub tried to justify Henry Waxman's lame-o effort at a cursory amendment of the CPSIA that offers negligible relief. Here is an excerpt from her House testimony dated April 28, 2010 (15 months ago) on this topic:
"Special provisions for small businesses includes allowing certain businesses to be exempt from third party testing when the Commission finds that reasonable testing methods assure compliance with relevant consumer product safety standards. We believe, however, that the term "small batch manufacturer" is defined too broadly. We commend the fact that the language does not allow small batch manufacturers to obtain exceptions for durable infant or toddler products or lead paint, cribs, pacifiers, small parts, children’s metal jewelry, baby bouncers, walkers and jumpers. Because of the fatal nature of the defects in many of these types of products, as demonstrated by recalls in the past, all manufacturers should be required to meet the same safety and testing requirements. We could not accept a broadening of either the definition of small batch manufacturer or a limitation of those products not covered by this provision." [Emphasis added]
The CPSC never did identify any such "reasonable testing methods" even though the "hunt" has gone on for three years now. Even Ms. Weintraub must blush when she tells you that such issues deserve "discussion".
Unfortunately, instead of fixing concerns of the truly small manufacturers, HR 1939 goes too far and rolls back important consumer protections created by CPSIA in a number of ways.
HR 1939 reduces safety testing for children's products by undermining independent safety testing requirements for most children's products. This would place us in the same dangerous situation we were in 2007 and 2008, when millions of beloved toys were recalled because of excessive lead paint, strong magnets that when swallowed in multiples could rip apart a child's intestines and chemicals that turned into the date-rape drug when swallowed.
RW - The issue in 2007 and 2008 was NOT that the law did not protect consumers. In fact, if anything, the issue was that the agency did not (adequately) protect consumers. The bad behavior that prompted the CPSIA was clearly illegal, as the agency could act to enforce if it so chose. After all, they issued hundreds of recalls under prior law. Please pause and give that a little thought. Weintraub's argument is pure urban legend, but helpful urban legend for the tall tale she is trying to sell.
It is also worth noting that Gib Mullan, the then head of Compliance at the CPSC admitted during the second session question-and-answer session at the CPSC Tracking Labels hearing on May 12, 2009 that the agency had never seen the strong magnet hazard evidenced by Magnetix previously and at first mistook it as a "small parts" issue. No law can prevent the unknown and the not previously experienced from happening. That is a safety fantasy. In addition, the "date-rape drug" incident involved an unapproved change in materials by a factory which no testing regime would have caught (CPSIA or not). The safety issue was completely unprecedented and the product was immediately recalled without argument by a very safety conscious toymaker. Only in Weintraub's self-serving world is this incident useful . . . to terrorize. Under most circumstances, it should be held up as a great public-private partnership and a sign that there are good people in the industry.
Under this bill, virtually all toys would no longer have to be tested for safety before they come into our homes — these products would be safety-tested only if and when CPSC undertook a laborious and complicated series of steps, including a cost-benefit analysis that emphasizes testing costs over health and safety benefits.
RW - Weintraub here spurns the President's Executive Order which MANDATES cost-benefit analysis by the CPSC. This arch position conforms to the surprising world view of Bob "Over My Dead Body" Adler and Inez Tenenbaum and certainly suits their Dem agenda. It is, unfortunately, an affront to the President's order. It is also economic nonsense. The OPPOSITE is correct, at least according to the Nobel Prize committee which awarded the 1991 Economics Prize to Ronald Coase for his work proving the need for regulatory cost-benefit analysis. Mr. Coase proved that ignoring cost-benefit analysis exposes all of us to the risk of being impoverished by government regulation. Thanks, Rachel, for the great idea!
It is unclear if CPSC would ever have the resources, time or information to complete what this bill demands of them, and it is therefore unclear if toys would ever be subject to independent testing. Independent testing not only prevents unnecessary injuries to children, but it can also prevent costly recalls for the manufacturer — a benefit to consumers as well as manufacturers.
RW - Here Rachel spins an even bigger tall tale, that preserving mandatory testing is in manufacturers' best interests. Apparently she is the only one who knows this. The people who actually work for companies affected by this rule have been howling for three years-plus. Here Rachel sets us all straight - the problem is we're wrong and she's right. Oh, now I see it! Her reasoning relies on the urban legend that in the absence of mandated testing, testing will cease. That's nonsense and is not supported by data. We have been testing since I got to Learning Resources, more than 20 years ago. So, if mandated testing is necessary to force testing, why were we testing way back then? Simple - we wanted to know we were complying with the standards. Standards drive testing, and enforcement can make testing prevalent, even universal. Mandated testing just raises costs, unfortunately. I have previously addressed this issue in a blogpost.
HR 1939 increases the amount of lead that would be permitted in children's products. CPSIA currently requires that all parts of children's products comply with a single, unambiguous standard for lead content. The proposed legislation would replace that clarity 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. As a result, parents and other consumers will no longer have the confidence that all parts of all children's products are safe for their children. Lead is a known toxin where even small amounts can be harmful by decreasing a child's IQ. There is no reason why there shouldn't be a single, strong standard that simply keeps lead out of children's products.
RW - No reason, huh? Space does not permit me to reduce this absurd statement to rubble. I have been writing about the many common sense reasons to modify standards for three years now. ECADA as a matter of fact does very little to change standards except to codify some sensible concessions already made by the CPSC in stays applying to metals. If you are terrorized by the prospect of bicycle licking or the horrors of playing brass instruments in the school band, ECADA's changes will no doubt keep you up at night. Your fears are nothing that our proposed National Xanax Fund can't address.
The idea that different standards for different products aimed at different ages of children are somehow "defective" flies in the face not only of common sense but also the regulatory tradition at the CPSC. Before whackjobs began to dominate the safety discussion, and before the agency had its brain removed by Congress, the regulators were able to see the sense of crafting different rules for two year olds, six year olds and twelve year olds. And nobody thought the same rules should apply to rhinestones, pens, ATVs and books. If you are an experienced parent, you might know something about the need to modify rules for different ages of children. I have tried to regulate teenagers with the same rules as toddlers and received some "pushback". And when I try to keep toddlers safe by applying sensible rules designed for teenagers, that doesn't seem to work either.
HR 1939 undermines the effectiveness of the new crib safety standard. The bill would carve out a large exception to the bipartisan standard for cribs in child-care facilities. Under the bill, some child-care facilities would not have to replace existing fixed-side cribs even if the cribs violate the most basic crib safety standards — slats too far apart, non-compliant corner posts and failing mattress supports. Parents should be assured that the cribs their babies sleep in meet the strongest crib standards — both at home and in child-care facilities. The new, robust crib standards just went into effect for new cribs consumers can buy in stores and will apply to hotels, motels and child-care facilities in 18 months. Carving out child-care center cribs from this important protection moves the safety bar backwards.
RW - I have tried to avoid biting on the bait of the consumer group attacks on ECADA for the innocuous and sensible crib rule changes. It is in Ms. Weintraub's interest to make you feel that there is some sort of evil cabal dominating the Republican Party which somehow induces them to play roulette with your babies' lives. Anyhow, it's all a fiction but a helpful fiction to Ms. Weintraub's purpose, namely to subvert efforts to amend the CPSIA. Here is the "deadly" language that Ms. Weintraub protests so intensely:
"(B) SPECIAL RULE FOR FIXED-SIDE CRIBS SUBJECT TO CERTAIN STATE OR LOCAL LAW REQUIREMENTS- Paragraph (1) shall not apply to a fixed-side crib that has not been recalled and that is offered or provided for use in a licensed child care facility (other than a family child care home) that is subject to the following requirements under the law of a State or a political subdivision of a State: (i) The facility may not allow a child to remain in a crib for any significant amount of time while the child is awake, (ii) The facility may not place in a crib a child over the age of 16 months, (iii) An adult must be present whenever a child is in a crib."
Ms. Weintraub fails to deliver evidence that this exceedingly modest change could harm children based on actual injury data. She just wants you to push the panic button. ECADA only permits certain legacy FIXED SIDE cribs to remain in service. I thought fixed side cribs were the "answer". Not if their inclusion in ECADA might help get it passed, apparently.
HR 1939 allows the use of dangerous phthalates, which are hormone-disrupting chemicals that have been added to child-care articles like teething rings. This proposed bill would undermine CPSIA's landmark protections against phthalates by allowing large, undefined exemptions to both the prohibition and interim bans on phthalates in toys and child-care articles.
RW - Rachel again ventures into Whopperville to scare you about phthalates. Let's start by deciding how "dangerous" phthalates are. Ms. Weintraub reasons that if (the infallible) Congress banned them, the chemicals are ergo dangerous. The law, in fact, only bans three chemicals permanently and has directed the agency to investigate another three. On two previous occasions the agency has done just that . . . and concluded that phthalates don't present a risk to children. Ms. Weintraub omits to let you know that this provision was added to CPSIA at the last moment, without hearings or investigation, by California Senator Diane Feinstein of San Francisco and mentor to Nancy Pelosi. Aha. The science on phthalates is hardly an open-and-shut case - just watch 60 Minutes for perspective.
Ultimately, the greatest disservice to truth performed by Ms. Weintraub here is to distort what measly relief is being offered. ECADA only allows us to stop testing components that cannot be touched or licked by kids. That's it. The actual words: "ACCESSIBLE COMPONENT PARTS- Effective on the date of enactment of this Act, subsections (a) and (b)(1) and any rule promulgated under subsection (b)(3) shall apply to any accessible, plasticized component part of a children’s toy or child care article."
HR 1939 undermines the new CSPC product safety database. This new database allows public access to consumer complaints about product safety problems while giving the industry ample opportunity to view and comment upon such safety-related reports before they are posted. The database, available at http://www.saferproducts.gov, just went live in March. It will help consumers research products, help CPSC identify emerging hazard trends and help prevent unnecessary deaths and injuries. HR 1939 would place onerous hurdles on those seeking to report a safety problem, thereby discouraging the sharing of potentially lifesaving information with other consumers, companies and the government.
RW - Oy vey. There has been so much written on this subject that I can't bear to write it again. Ms. Weintraub intentionally ignores any point inconsistent with her political agenda. I will leave it at that, but feel free to pour over my prior writings on the database (tagged on the side of the blog) for further details.
Consumers demanded and received strong product safety reform from Congress in 2008. Undermining these important product safety improvements puts all of our children at risk. HR 1939 will not protect our children from product safety hazards. Rather, HR 1939 rolls the safety clock backwards and creates huge and unnecessary loopholes in our nation's safety net.
RW - One last point, to quote Eric Stone: "ECADA gives CPSC broader subpoena and investigational authority. Not surprisingly, opponents do not mention such provisions since they do not fit the 'Republican-industry conspiracy' narrative." I love the "Republican-industry conspiracy narrative" part. You can see how that might work well for Rachel.
Rachel Weintraub is director of product safety and senior counsel at the Consumer Federation of America in Washington, D.C.
Showing posts with label More Government Needed. Show all posts
Showing posts with label More Government Needed. Show all posts
Sunday, July 24, 2011
Tuesday, July 12, 2011
CPSIA - The Cost of Government Regulation Examined
I recommend that you check out Wayne Crews' article in Forbes dated July 6 entitled "The Cost of Government Regulation". This article predates the recent House Oversight hearing or the Obama Executive Order on Independent Agencies and Regulatory Reform.
Mr. Crews cites regulatory costs in excess of $1 trillion for this excess ($1.4 trillion for the self-destructive overreaction to Enron, Sarbanes-Oxley alone). Costs of this magnitude makes cost-benefit analysis something of joke. He notes:
"Agencies think within their squares and have conflicts of interest in assessing their own benefits. Regulators can ignore the opportunity costs and moral hazard they create. Even now they are in the process of distorting entire industry structures via limiting access to energy, antitrust regulatory abuse and “net neutrality” rules in telecommunications and government “stimulus” with regulatory strings attached."
Enough already!!!
Mr. Crews cites regulatory costs in excess of $1 trillion for this excess ($1.4 trillion for the self-destructive overreaction to Enron, Sarbanes-Oxley alone). Costs of this magnitude makes cost-benefit analysis something of joke. He notes:
"Agencies think within their squares and have conflicts of interest in assessing their own benefits. Regulators can ignore the opportunity costs and moral hazard they create. Even now they are in the process of distorting entire industry structures via limiting access to energy, antitrust regulatory abuse and “net neutrality” rules in telecommunications and government “stimulus” with regulatory strings attached."
Enough already!!!
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
Commissioner
Consumer Product Safety Commission
Washington
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
Commissioner
Consumer Product Safety Commission
Washington
Sunday, April 10, 2011
CPSIA - Oh No, They Didn't Go Away
As you may have heard, the federal government stuck around this week. No shutdown, which means that the CPSC is still busy, busy, busy protecting us. We should all appreciate it. At least that's what they tell us.
So why do I have such a bad attitude? How would you feel if the people running this federal agency told Congress in writing that you were intent on poisoning children. They didn't accuse me by name, or you, but instead accused us all together. Perhaps they think we are all intent on doing it. They said, clear as day, that we were ready and waiting to "dose" children with lead. The purposefully-chosen word "dose" suggests an act of volition, something intentional and sinister. The word connotes an unwitting victim. Bottom line, they are saying that we are perversely stalking innocent children unaware of their "fate". Really, really nice. Especially by a Chairman of the CPSC and her cohorts holding a majority vote controlling the agency.
Those of us in business, we tend to take our reputation seriously. It is deeply offensive to be insulted by strangers, people unable to know us or our intentions. I don't think the word "slander" is too far a stretch. How can the three Democrats (Inez Tenenbaum, Bob Adler and Thomas Moore) be so arrogant to stand before Congress and assert that they (and their law) stand between the American consumer and infamy? I simply can't say. It really is disgusting.
Not only is this is a devastating insult, but it is frankly a crushing blow to the FUTURE restoration of trust in this agency. NEVER previously has there been such a broadcasting of intentions, a profound and dirty bias against manufacturers and in favor of media pandering. Whether they are taking instructions from someone off-stage or not, their letter to Congress confirms that they cannot be trusted to be fair or open-minded. The three Democrats are certainly not a government for all of us because manufacturers and retailers are now frozen out of the community. The Dems have pushed them out. This is not an American government anyone would want.
What will Congress do? Rumorville has it that I am not the only one whose jaw hit the ground and whose blood began to boil when they read the Dems' letter. Some people around town actually care about the fairness of government. Some people believe in fairness and are sensitive to any odor of ignorant prejudice, minds made up before evidence is presented. Some people believe government must be accountable. Some people believe there is no excuse for this kind of behavior.
The Dems put themselves in the soup. G-d willing, they will be held to account. Stay tuned.
So why do I have such a bad attitude? How would you feel if the people running this federal agency told Congress in writing that you were intent on poisoning children. They didn't accuse me by name, or you, but instead accused us all together. Perhaps they think we are all intent on doing it. They said, clear as day, that we were ready and waiting to "dose" children with lead. The purposefully-chosen word "dose" suggests an act of volition, something intentional and sinister. The word connotes an unwitting victim. Bottom line, they are saying that we are perversely stalking innocent children unaware of their "fate". Really, really nice. Especially by a Chairman of the CPSC and her cohorts holding a majority vote controlling the agency.
Those of us in business, we tend to take our reputation seriously. It is deeply offensive to be insulted by strangers, people unable to know us or our intentions. I don't think the word "slander" is too far a stretch. How can the three Democrats (Inez Tenenbaum, Bob Adler and Thomas Moore) be so arrogant to stand before Congress and assert that they (and their law) stand between the American consumer and infamy? I simply can't say. It really is disgusting.
Not only is this is a devastating insult, but it is frankly a crushing blow to the FUTURE restoration of trust in this agency. NEVER previously has there been such a broadcasting of intentions, a profound and dirty bias against manufacturers and in favor of media pandering. Whether they are taking instructions from someone off-stage or not, their letter to Congress confirms that they cannot be trusted to be fair or open-minded. The three Democrats are certainly not a government for all of us because manufacturers and retailers are now frozen out of the community. The Dems have pushed them out. This is not an American government anyone would want.
What will Congress do? Rumorville has it that I am not the only one whose jaw hit the ground and whose blood began to boil when they read the Dems' letter. Some people around town actually care about the fairness of government. Some people believe in fairness and are sensitive to any odor of ignorant prejudice, minds made up before evidence is presented. Some people believe government must be accountable. Some people believe there is no excuse for this kind of behavior.
The Dems put themselves in the soup. G-d willing, they will be held to account. Stay tuned.
Thursday, March 10, 2011
CPSIA - My Answer to Slate.com on the CPSIA Database
Dear Mr. Noah,
I read with interest your March 8th article on the CPSC database entitled “Who’s Afraid of the CPSC?” and was disappointed at the inaccuracies in the piece and your blanket dismissal of the business community's legitimate concerns about the database. The database has devolved into a divisive partisan issue simply because of the utter refusal of consumer groups and their Congressional allies to acknowledge the flaws in the database as well as the law that established it – the Consumer Product Safety Improvement Act (CPSIA).
I'll try to address the inaccuracies one-by-one:
Database cost - $3 million or $29 million? The cost figure of $3 million sparked a public dispute between the CPSC Chairman Inez Tenenbaum and her fellow Commissioner Anne Northup at a House hearing last month. In response to Ms. Tenenbaum’s testimony on the cost of the database, Ms. Northup testified that the figure of $3 million had never been shared with the CPSC Commission and that the only database cost figure she was familiar with was $29 million. Interestingly, in April 2010, the Associated Press reported, based on information provided by the CPSC, that the cost of the http://www.saferproducts.gov/ website would be about $20 million, and the CPSC apparently saw no reason to update the media with the good news that the cost had shriveled to $3 million until the February 2011 hearing. . . . Hmmm.
The supposedly noncontroversial CPSIA database. Why didn’t anyone kick up a fuss about the database in 2008? A better question is “Why didn’t Congress listen when the business community protested?” Here’s what I said in a letter to each Congressional conferee dated June 25, 2008: “While we support public notice of recalls, we oppose a national database of reports of injury, illness, death or risk of injury. This forum will not be subject to appropriate findings of fact and thus will be a forum subject to considerable abuse. In a society where tort lawsuits are an ever-present risk for all businesses, a risk that can wipe out a lifetime’s work in a heartbeat, the very real potential for abuse by competitors or mischief-makers far outweighs the public’s ‘right to know’. Once the CPSC has adjudicated a case appropriately, made a reasonable finding of fact and determined the right course of corrective action, public notice would be appropriate.”
I continued to try to make my point to CPSIA Congressional conferees in another letter dated July 21, 2008, just ahead of final consideration of the CPSIA: “CPSC Searchable Database: The well-intentioned idea for complete safety transparency is an open invitation to mischief makers. This is a real threat to our business, as we know from hard experience. The better way is to let the CPSC filter this data first. Please remember, even YouTube will take down videos on request. The proposed law won’t give defenseless toy companies the same recourse as YouTube. Is that an appropriate way to regulate an entire industry?”
It wasn't only me. Many others in the business community opposed the creation of a database that would contain inaccurate or misleading accusations and complaints. That’s the story of the CPSIA in a nutshell – no one was listening when the law was originally drafted, and now three years later, we are fighting City Hall to restore common sense to federal safety law. Please consider the assertion that consumers really need this database, that it is essential to their children’s safety. In fact, there are many places on the Internet where consumers can and do post their experiences without controversy. Why would a federal database be a greater cause for concern? Well, for one thing, this one is called “SaferProducts.gov” and is sponsored by the federal government. Notwithstanding the lawyer language disclaimers all over the website, it is crystal clear that the public will place a lot of credence in these postings. After all, why would our federal government allow misleading or inaccurate information to be posted on a website called SaferProducts.gov? Ms. Tenenbaum is famous for her defense of “dot gov” websites: “I say don't believe everything you read on the Internet, except what you read on Web sites that end in dot gov.” [Keynote speech at ICPHSO, February 17, 2010] She may not be the only one who feels this way.
The NHTSA database exists; ergo a CPSIA database is a good idea? The NHTSA database can be distinguished in several important ways: (a) auto accidents are a leading cause of death in this country (consumer products are not), (b) every use of automobiles is known to be hazardous and the risk to human life from reckless use of cars is obviously magnified (not true for consumer products), (c) the auto industry is one of the largest components of our entire economy - we all use cars and many of us owe our livelihoods to automobiles in one way or the other (the average sale of consumer products is far less than a car), and (d) at all levels, the auto industry is highly consolidated among a relatively small number of massive companies that are well-prepared for litigation and regulatory issues (consumer products is not a consolidated market and there are many small companies involved in the trade). I think GM, Ford, Toyota and other multi-billion dollar automakers can handle the burden and risk of a database of consumer deaths and serious injuries from use of their products. Our family business, Learning Resources, on the other hand, ain't no GM or Toyota. The NHTSA database is NOT an appropriate precedent for consumer products for all of the foregoing reasons.
"One of the ironies in Pompeo and others screaming bloody murder that the database will kill jobs is that most of the appliances likely to get dinged in the database won't even be American products." This remark completely misses the point, unfortunately. It is American companies that are going to be hurt by the misinformation in the database, whether those companies are manufacturers, importers, private labelers or retailers. Even worse, thousands of American small businesses are going to be put at risk with no practical means to defend themselves. Is this the “American Way” at work? Who will pay when jobs are lost from companies shifting away from this market or dropping products to limit exposure to liability? This is just going to be another self-inflicted economic injury from misguided and overzealous regulation.
Whether the product is made in China, the U.S. or India, it should not matter from a safety perspective. Companies must ensure that they market safe and appropriate products no matter where the products are made. The reality is that every product can break, and accidents and other bad things happen to good people. The database will be unforgiving and if filled with post-it-and-forget-it garbage, will harm innocent victims – American companies that employ your neighbors and make products for your schools. Unqualified and unverified complaints on SaferProducts.gov WILL induce consumers to take our products away from children - pending a recall that may never be forthcoming . . . because nothing's wrong.
Chairman Tenenbaum has publicly encouraged consumers to rely on the postings in the database - to draw conclusions on the likelihood of future injury. This is quite alarming, given that Ms. Tenenbaum also testified in a Congressional hearing in February that the agency will likely post unverified or inaccurate information to the database. She admits that this information will be faulty. As she said in testimony, "that's what the rub is".
Claims of inaccuracies are low in the soft launch. Given the short life of the database in its test phase and the small population of registered users, reports of few data problems must be greeted with skepticism. Less than 1000 companies have registered with the CPSC for the database, an absurdly small percentage of the number of companies whose products will be in the database. Taking into account that many consumer product companies (such as Disney) will need to register numerous brands, product lines and corporate divisions to ensure that the right data flows to the right paper pusher, the current registrations are even paltrier. If companies are not registered, it is unlikely they are even aware of the soft launch, let alone that there may be inaccurate claims against their products being sponsored by the federal government.
Sadly, we are likely to confirm that the CPSC’s faulty processes are damaging companies only AFTER the damage is done. Let’s not forget that the agency is all set to launch a big “public awareness” campaign for the new database – in other words, the federal government will soon be beating the bushes for consumer complaint submissions. As usual, consumer advocates hype uncertain and unquantifiable losses (someone somewhere might not know about something that COULD have been in the database and later be injured) to distract Congress and the media from the certain losses that will befall companies with damaged reputations. Good for plaintiff lawyers but maybe no one else.
Our small company in Illinois has already experienced a materially inaccurate submission – in the very first “complaint” we faced – and were unable to block it from the database. The anonymous posting concerned a consumer’s “feelings” about one of our products based on a photograph she found on the Internet. Unfortunately, she was clearly wrong and we could prove it. The CPSC wasn’t impressed by our valid CPSIA test reports or photographic evidence of the consumer’s error. I can safely assure you that misleading and inaccurate claims will not only be submitted to the database and but will be posted by the CPSC knowing full well that the claims are untrue. I wrote about my experiences in my blog.
I hope you will reconsider your views on the CPSIA database and weigh more carefully the legitimate concerns of businesses serving the children’s marketplace. We are in this business for a reason – we are devoted to making children’s lives BETTER. The new database will not further our mission, nor will a database filled with garbage benefit consumers. We can do better, and we MUST do better.
Sincerely,
Richard Woldenberg
Chairman
Learning Resources, Inc.
Vernon Hills, IL
My blog: http://www.learningresourcesinc.blogspot.com/
I read with interest your March 8th article on the CPSC database entitled “Who’s Afraid of the CPSC?” and was disappointed at the inaccuracies in the piece and your blanket dismissal of the business community's legitimate concerns about the database. The database has devolved into a divisive partisan issue simply because of the utter refusal of consumer groups and their Congressional allies to acknowledge the flaws in the database as well as the law that established it – the Consumer Product Safety Improvement Act (CPSIA).
I'll try to address the inaccuracies one-by-one:
Database cost - $3 million or $29 million? The cost figure of $3 million sparked a public dispute between the CPSC Chairman Inez Tenenbaum and her fellow Commissioner Anne Northup at a House hearing last month. In response to Ms. Tenenbaum’s testimony on the cost of the database, Ms. Northup testified that the figure of $3 million had never been shared with the CPSC Commission and that the only database cost figure she was familiar with was $29 million. Interestingly, in April 2010, the Associated Press reported, based on information provided by the CPSC, that the cost of the http://www.saferproducts.gov/ website would be about $20 million, and the CPSC apparently saw no reason to update the media with the good news that the cost had shriveled to $3 million until the February 2011 hearing. . . . Hmmm.
The supposedly noncontroversial CPSIA database. Why didn’t anyone kick up a fuss about the database in 2008? A better question is “Why didn’t Congress listen when the business community protested?” Here’s what I said in a letter to each Congressional conferee dated June 25, 2008: “While we support public notice of recalls, we oppose a national database of reports of injury, illness, death or risk of injury. This forum will not be subject to appropriate findings of fact and thus will be a forum subject to considerable abuse. In a society where tort lawsuits are an ever-present risk for all businesses, a risk that can wipe out a lifetime’s work in a heartbeat, the very real potential for abuse by competitors or mischief-makers far outweighs the public’s ‘right to know’. Once the CPSC has adjudicated a case appropriately, made a reasonable finding of fact and determined the right course of corrective action, public notice would be appropriate.”
I continued to try to make my point to CPSIA Congressional conferees in another letter dated July 21, 2008, just ahead of final consideration of the CPSIA: “CPSC Searchable Database: The well-intentioned idea for complete safety transparency is an open invitation to mischief makers. This is a real threat to our business, as we know from hard experience. The better way is to let the CPSC filter this data first. Please remember, even YouTube will take down videos on request. The proposed law won’t give defenseless toy companies the same recourse as YouTube. Is that an appropriate way to regulate an entire industry?”
It wasn't only me. Many others in the business community opposed the creation of a database that would contain inaccurate or misleading accusations and complaints. That’s the story of the CPSIA in a nutshell – no one was listening when the law was originally drafted, and now three years later, we are fighting City Hall to restore common sense to federal safety law. Please consider the assertion that consumers really need this database, that it is essential to their children’s safety. In fact, there are many places on the Internet where consumers can and do post their experiences without controversy. Why would a federal database be a greater cause for concern? Well, for one thing, this one is called “SaferProducts.gov” and is sponsored by the federal government. Notwithstanding the lawyer language disclaimers all over the website, it is crystal clear that the public will place a lot of credence in these postings. After all, why would our federal government allow misleading or inaccurate information to be posted on a website called SaferProducts.gov? Ms. Tenenbaum is famous for her defense of “dot gov” websites: “I say don't believe everything you read on the Internet, except what you read on Web sites that end in dot gov.” [Keynote speech at ICPHSO, February 17, 2010] She may not be the only one who feels this way.
The NHTSA database exists; ergo a CPSIA database is a good idea? The NHTSA database can be distinguished in several important ways: (a) auto accidents are a leading cause of death in this country (consumer products are not), (b) every use of automobiles is known to be hazardous and the risk to human life from reckless use of cars is obviously magnified (not true for consumer products), (c) the auto industry is one of the largest components of our entire economy - we all use cars and many of us owe our livelihoods to automobiles in one way or the other (the average sale of consumer products is far less than a car), and (d) at all levels, the auto industry is highly consolidated among a relatively small number of massive companies that are well-prepared for litigation and regulatory issues (consumer products is not a consolidated market and there are many small companies involved in the trade). I think GM, Ford, Toyota and other multi-billion dollar automakers can handle the burden and risk of a database of consumer deaths and serious injuries from use of their products. Our family business, Learning Resources, on the other hand, ain't no GM or Toyota. The NHTSA database is NOT an appropriate precedent for consumer products for all of the foregoing reasons.
"One of the ironies in Pompeo and others screaming bloody murder that the database will kill jobs is that most of the appliances likely to get dinged in the database won't even be American products." This remark completely misses the point, unfortunately. It is American companies that are going to be hurt by the misinformation in the database, whether those companies are manufacturers, importers, private labelers or retailers. Even worse, thousands of American small businesses are going to be put at risk with no practical means to defend themselves. Is this the “American Way” at work? Who will pay when jobs are lost from companies shifting away from this market or dropping products to limit exposure to liability? This is just going to be another self-inflicted economic injury from misguided and overzealous regulation.
Whether the product is made in China, the U.S. or India, it should not matter from a safety perspective. Companies must ensure that they market safe and appropriate products no matter where the products are made. The reality is that every product can break, and accidents and other bad things happen to good people. The database will be unforgiving and if filled with post-it-and-forget-it garbage, will harm innocent victims – American companies that employ your neighbors and make products for your schools. Unqualified and unverified complaints on SaferProducts.gov WILL induce consumers to take our products away from children - pending a recall that may never be forthcoming . . . because nothing's wrong.
Chairman Tenenbaum has publicly encouraged consumers to rely on the postings in the database - to draw conclusions on the likelihood of future injury. This is quite alarming, given that Ms. Tenenbaum also testified in a Congressional hearing in February that the agency will likely post unverified or inaccurate information to the database. She admits that this information will be faulty. As she said in testimony, "that's what the rub is".
Claims of inaccuracies are low in the soft launch. Given the short life of the database in its test phase and the small population of registered users, reports of few data problems must be greeted with skepticism. Less than 1000 companies have registered with the CPSC for the database, an absurdly small percentage of the number of companies whose products will be in the database. Taking into account that many consumer product companies (such as Disney) will need to register numerous brands, product lines and corporate divisions to ensure that the right data flows to the right paper pusher, the current registrations are even paltrier. If companies are not registered, it is unlikely they are even aware of the soft launch, let alone that there may be inaccurate claims against their products being sponsored by the federal government.
Sadly, we are likely to confirm that the CPSC’s faulty processes are damaging companies only AFTER the damage is done. Let’s not forget that the agency is all set to launch a big “public awareness” campaign for the new database – in other words, the federal government will soon be beating the bushes for consumer complaint submissions. As usual, consumer advocates hype uncertain and unquantifiable losses (someone somewhere might not know about something that COULD have been in the database and later be injured) to distract Congress and the media from the certain losses that will befall companies with damaged reputations. Good for plaintiff lawyers but maybe no one else.
Our small company in Illinois has already experienced a materially inaccurate submission – in the very first “complaint” we faced – and were unable to block it from the database. The anonymous posting concerned a consumer’s “feelings” about one of our products based on a photograph she found on the Internet. Unfortunately, she was clearly wrong and we could prove it. The CPSC wasn’t impressed by our valid CPSIA test reports or photographic evidence of the consumer’s error. I can safely assure you that misleading and inaccurate claims will not only be submitted to the database and but will be posted by the CPSC knowing full well that the claims are untrue. I wrote about my experiences in my blog.
I hope you will reconsider your views on the CPSIA database and weigh more carefully the legitimate concerns of businesses serving the children’s marketplace. We are in this business for a reason – we are devoted to making children’s lives BETTER. The new database will not further our mission, nor will a database filled with garbage benefit consumers. We can do better, and we MUST do better.
Sincerely,
Richard Woldenberg
Chairman
Learning Resources, Inc.
Vernon Hills, IL
My blog: http://www.learningresourcesinc.blogspot.com/
Thursday, February 24, 2011
CPSIA - Nancy Nord Chimes in on Baby Monitors
You gotta read Nancy Nord's blog on the baby monitor recall. It speaks for itself and is basically on the topic of why they call certain actions "recalls" and others something else. In the controversial recall of Summer Infant baby monitor, Ms. Nord notably admits the involvement of the CPSC in this recall. Check it out. This is NOT my imagination.
Saturday, January 1, 2011
CPSIA - John Stuart Mill and Crib Safety
"I have observed that not the man who hopes when others despair, but the man who despairs when others hope, is admired by a large class of persons as a sage."
John Stuart Mill
1828
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:
John Stuart Mill
1828
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 . . . .
Tuesday, November 16, 2010
CPSIA - Vote on Database DELAYED
The CPSC Commission vote on the public database scheduled for tomorrow has been delayed until the day before Thanksgiving (November 24th). Talk about Turkey Day . . . .
We have seen delays like this in the past. These pauses generally reflect infighting among the Commissioners. Don't be fooled by the squabbling - it doesn't mean that any light bulbs are going on. The Commissioners know exactly what they're doing when they install a database gift wrapped for trial lawyers. The Democratic majority and Republican minority may be on different sides but neither group is dumb - they don't buy the baloney that the leftist consumer advocates fling around - they know it isn't "extremely difficult" to keep your family safe from "dangerous products", they know that American consumers have many ways and places to share negative experiences with products online, they know that this venue will be an abasement of basic due process rights of manufacturers. They get it - they know they will be sending us down the river when they adopt this rule.
The difference is that the Republicans don't want to send us down the river. The Dems show absolutely NO SIGN of caring. The outcome of the vote is certain. So is the eventual loss of more jobs.
So what's the point of the delay? Why not just get it over with? The extra week gives them more time to bicker among themselves. Perhaps that gives the appearance of dialogue and "debate". Then they will pull the trigger.
You can guess where the bullet will go.
We have seen delays like this in the past. These pauses generally reflect infighting among the Commissioners. Don't be fooled by the squabbling - it doesn't mean that any light bulbs are going on. The Commissioners know exactly what they're doing when they install a database gift wrapped for trial lawyers. The Democratic majority and Republican minority may be on different sides but neither group is dumb - they don't buy the baloney that the leftist consumer advocates fling around - they know it isn't "extremely difficult" to keep your family safe from "dangerous products", they know that American consumers have many ways and places to share negative experiences with products online, they know that this venue will be an abasement of basic due process rights of manufacturers. They get it - they know they will be sending us down the river when they adopt this rule.
The difference is that the Republicans don't want to send us down the river. The Dems show absolutely NO SIGN of caring. The outcome of the vote is certain. So is the eventual loss of more jobs.
So what's the point of the delay? Why not just get it over with? The extra week gives them more time to bicker among themselves. Perhaps that gives the appearance of dialogue and "debate". Then they will pull the trigger.
You can guess where the bullet will go.
Sunday, October 24, 2010
CPSIA - Jan Schakowsky Wants to Design Your New Home, Too.
801 days have passed since ANY Democrat in Congress did ANYTHING to help us on the CPSIA. There are only 9 days left until Election Day.
801 days without ANY help. Amazing . . . .
Rep. Jan Schakowsky, the Illinois Congresswoman who informed the WSJ that I am a "cynical special interest" because I dared to participate in the upcoming midterm elections, is not content with rearranging your business and the Children's Product industry. Now she wants to redesign your new home.
Does she have good taste, you ask. Well, read on and see what you think of Jan Schakowsky as your architect or decorator.
Your home is your last refuge, right? Not if she gets her way - but then again, she knows what's best for you! After all, a bigger government involved in every aspect of your life is a BETTER government. The estimable Ms. Schakowsky is the sponsor of HR 1408 Inclusive Home Design Act of 2009. In other words, this law-in-the-makings is her handiwork.
She brags about this pending legislation on her Facebook page in posts dated October 6, so she must be pretty psyched about it. I gather she wants the electorate to know of her excellent leadership in Congress, so I thought I'd help out. Happy to lend a hand to such a "great" leader.
Best I can tell, Ms. Schakowsky latest brain wave is to require you to redesign your new home to be disability-friendly if you get "federal assistance". The so-called purpose of the act is "[t]o require all newly constructed, federally assisted, single-family houses and town houses to meet minimum standards of visitability for persons with disabilities."
And what might she have in mind, precisely? Anyone who receives "federal assistance" needs to design new homes to meet several ADA-like standards even if they are useless to the buyers. No matter that this will cost money or that you don't want it. It's good for you, Jan says so. It may also make it difficult for you to find new homes without these features. Like cod liver oil, you'll get used to it!
As noted, to get into this spot, you need to receive federal assistance. Here's a sample of what might constitute "federal assistance":
"any assistance that is provided or otherwise made available by the Secretary of Housing and Urban Development or the Secretary of Veterans Affairs, or any program or activity or such agencies, through any grant, loan, contract, or any other arrangement, after the expiration of the one-year period beginning on the date of the enactment of this Act, including . . . grants, subsidies, or any other funds . . . services of Federal personnel . . . any tax credit, mortgage or loan guarantee or insurance. . . ."
In other words, if you even brush against the federal government in constructing your new home, you are COVERED by this law. Tax credit for your new energy-efficient furnace? You're IN. HUD loan refinance for a development of several homes? You're IN. Fannie Mae or Freddie Mac involved? You're IN. Vet benefits? You're IN. Inspected by a federal employee for some reason? You get the idea.
Hey, here's the REAL idea - the government belongs in EVERY aspect of your life. Ms. Schakowsky doesn't even think you should be allowed to measure the door frames in your house without her oversight. It doesn't even matter if you have a disabled person living in the house - you MIGHT be visited by one and certainly, you would not able to accommodate that visit without Ms. Schakowsky's supervision.
Perhaps you should invite her, too, just to work out the kinks. Uh-oh, I sense an amendment coming!
Had enough yet? If not, vote DEM on November 2nd so society can be reengineered a little bit more. On the other hand, if you have the vaguest sense that this is a runaway train and might need to be stopped before it's too late . . . vote the other way.
The Dems brought this on themselves. They put people like Schakowsky in leadership roles. The Children's Product industry is in tatters as a result. PLEASE STOP THE INSANITY ON NOVEMBER 2ND!!!
801 days without ANY help. Amazing . . . .
Rep. Jan Schakowsky, the Illinois Congresswoman who informed the WSJ that I am a "cynical special interest" because I dared to participate in the upcoming midterm elections, is not content with rearranging your business and the Children's Product industry. Now she wants to redesign your new home.
Does she have good taste, you ask. Well, read on and see what you think of Jan Schakowsky as your architect or decorator.
Your home is your last refuge, right? Not if she gets her way - but then again, she knows what's best for you! After all, a bigger government involved in every aspect of your life is a BETTER government. The estimable Ms. Schakowsky is the sponsor of HR 1408 Inclusive Home Design Act of 2009. In other words, this law-in-the-makings is her handiwork.
She brags about this pending legislation on her Facebook page in posts dated October 6, so she must be pretty psyched about it. I gather she wants the electorate to know of her excellent leadership in Congress, so I thought I'd help out. Happy to lend a hand to such a "great" leader.
Best I can tell, Ms. Schakowsky latest brain wave is to require you to redesign your new home to be disability-friendly if you get "federal assistance". The so-called purpose of the act is "[t]o require all newly constructed, federally assisted, single-family houses and town houses to meet minimum standards of visitability for persons with disabilities."
And what might she have in mind, precisely? Anyone who receives "federal assistance" needs to design new homes to meet several ADA-like standards even if they are useless to the buyers. No matter that this will cost money or that you don't want it. It's good for you, Jan says so. It may also make it difficult for you to find new homes without these features. Like cod liver oil, you'll get used to it!
As noted, to get into this spot, you need to receive federal assistance. Here's a sample of what might constitute "federal assistance":
"any assistance that is provided or otherwise made available by the Secretary of Housing and Urban Development or the Secretary of Veterans Affairs, or any program or activity or such agencies, through any grant, loan, contract, or any other arrangement, after the expiration of the one-year period beginning on the date of the enactment of this Act, including . . . grants, subsidies, or any other funds . . . services of Federal personnel . . . any tax credit, mortgage or loan guarantee or insurance. . . ."
In other words, if you even brush against the federal government in constructing your new home, you are COVERED by this law. Tax credit for your new energy-efficient furnace? You're IN. HUD loan refinance for a development of several homes? You're IN. Fannie Mae or Freddie Mac involved? You're IN. Vet benefits? You're IN. Inspected by a federal employee for some reason? You get the idea.
Hey, here's the REAL idea - the government belongs in EVERY aspect of your life. Ms. Schakowsky doesn't even think you should be allowed to measure the door frames in your house without her oversight. It doesn't even matter if you have a disabled person living in the house - you MIGHT be visited by one and certainly, you would not able to accommodate that visit without Ms. Schakowsky's supervision.
Perhaps you should invite her, too, just to work out the kinks. Uh-oh, I sense an amendment coming!
Had enough yet? If not, vote DEM on November 2nd so society can be reengineered a little bit more. On the other hand, if you have the vaguest sense that this is a runaway train and might need to be stopped before it's too late . . . vote the other way.
The Dems brought this on themselves. They put people like Schakowsky in leadership roles. The Children's Product industry is in tatters as a result. PLEASE STOP THE INSANITY ON NOVEMBER 2ND!!!
Tuesday, October 19, 2010
CPSIA - Do We Need More Government? [No!]
796 days have passed since ANY Democrat in Congress did ANYTHING to help us on the CPSIA. There are only 14 days left until Election Day.
Hey, have any of you noticed that since I began a daily reminder of our abandonment by this Democrat-led government (reminders began on August 22nd when 738 days had passed without help), no Democrat has done a single thing to help us? Have you also noticed that as they weren't rising up to help us, the Dems were actually engaged in making things WORSE? Definition of Children's Products, the so-called "15 Month Rule", making carpets subject to testing, further implementation of a database certain to make our business environment FAR more hostile.
Do we need a lot more of this?
Mr. Obama says we do: "The basic idea is that if we put our blind faith in the market and we let corporations do whatever they want and we leave everybody else to fend for themselves, then America somehow automatically is going to grow and prosper." The implication is clear - more government is the solution, we can't trust markets. Corporations need overseers, heavy regulation.
Hey, have any of you noticed that since I began a daily reminder of our abandonment by this Democrat-led government (reminders began on August 22nd when 738 days had passed without help), no Democrat has done a single thing to help us? Have you also noticed that as they weren't rising up to help us, the Dems were actually engaged in making things WORSE? Definition of Children's Products, the so-called "15 Month Rule", making carpets subject to testing, further implementation of a database certain to make our business environment FAR more hostile.
Do we need a lot more of this?
Mr. Obama says we do: "The basic idea is that if we put our blind faith in the market and we let corporations do whatever they want and we leave everybody else to fend for themselves, then America somehow automatically is going to grow and prosper." The implication is clear - more government is the solution, we can't trust markets. Corporations need overseers, heavy regulation.
This quote is from a remarkable WSJ article that appeared last week by Daniel Henninger entitled "Capitalism Saved the Miners". Beleaguered victims of the awful CPSIA should read this article. Let me sum it up with his concluding remarks:
"The U.S. has a government led by a mindset obsessed with 250K-a-year 'millionaires' and given to mocking 'our blind faith in the market.' In a fast-moving world filled with nations intent on catching up with or passing us, this policy path is a waste of time. The miners' rescue is a thrilling moment for Chile, an imprimatur on its rising status. But I'm thinking of that 74-person outfit in Berlin, Pa., whose high-tech drill bit opened the earth to free them. You know there are tens of thousands of stories like this in the U.S., as big as Google and small as Center Rock. I'm glad one of them helped save the Chileans. What's needed now is a new American economic model that lets our innovators rescue the rest of us." [Emphasis added]
I don't know about you, but I think we operated our company very well before Mother Government invited herself into our affairs. We knew the difference between right and wrong, and were pretty good at allocating our capital to its highest and best use. Now we must play "Mother May I" with the self-appointed experts who arrived to protect against "dangers" they can't accurately describe or measure. The vacuuming up of our money, our resources, our mind share, our energy, destroys our ability and will to compete.
Fine, ignore the reality. Wait for the bodies. Assert your superiority and your authority. But the facts are the facts. The case against the CPSIA is crystal clear and the only ones who don't "get it" are the Democrats. After two years of banging my head against the wall, I can only conclude that they don't WANT to get it.
It's no mystery - I know why the Dems refuse to listen. They are rather transparent about it. When I spoke to Rep. Jan Schakowsky (D-IL9) at a candidate forum eight days ago, I asked her why she called me a "cynical special interest" to the WSJ. She asked me who I was, and then told me she didn't know me. That fact didn't stop her from trashing me, a private citizen, to a nationally-prominent newspaper. Pointing the finger at me serves her interest in getting reelected - she's saving the populace . . . again. Who is in a position to argue with her? When I protested that our products had been safe for 26 years, she replied that she "didn't understand what the problem is" and turned to a voter standing nearby to assert that she just wants to protect children against lead. The higher moral ground . . . for people who don't know what they're talking about. Unfortunately, scare tactics sell very well.
I believe the Mob also sells protection. Do you want to buy some protection from them?
The Chilean miners were saved by companies that invested their money to make the world a better place incentivized by the opportunity to make a profit. Our industry, the one that serves children as our reason-to-be, is being depleted by a heavy tax - the intrusion of a heavy-handed government that treats us as "guilty-until-proven-innocent". The government REFUSES to listen to us.
Those of you with children will pay the consequences.
Thank you, Mother Government. The market saved the miners, but you will happliy kill us.
Vote on November 2nd for a fresh start.
Sunday, October 10, 2010
CPSIA - What Are We Trying Achieve?
787 days have passed since ANY Democrat in Congress did ANYTHING to help us on the CPSIA. There are only 23 days left until Election Day.
Sean Oberle published a lengthy contemplation of the issue raised in my last post on the relationship between compliance and safety as objectives for regulators and for industry. Mr. Oberle's essay speaks for itself, so I will not attempt to summarize it. He concludes with the following message: "Therein lies the frustrating and frightening aspect of product safety. Those of you tasked with ensuring product safety – industry rep, consumerist, and regulator alike – are trying to quantify ambiguity amid a chaos of demands … all of them in flux … I don't envy you."
Sean, boy are you right!
I think it's worth discussing a few issues on compliance versus safety since Mr. Oberle devoted so much ink (or electrons) to the topic.
1. The law defines what the CPSC can and cannot do. It's a shame no one told them . . . .
First and foremost, the CPSC exists because of the CPSA and its activities are governed by the CPSA. Recall authority is governed by Section 15 which limits the agency's recall authority to "substantial product hazards", namely a product that ". . . creates a substantial risk of injury to the public". [Section 12 gives the agency additional powers to seek a court order for "imminent hazards".] In other words, the CPSC does not have the legislative authority to tilt at windmills - it cannot demand recalls for anything unless it presents a "substantial risk of injury to the public".
Consider recalling 12 million glasses that the CPSC acknowledges in writing are SAFE. Substantial risk of injury?
Consider recalling more than seven million trikes sold over 14 years that caused six children to cut themselves. Children who were under three years of age and should have been under the care of attentive adults. Substantial risk of injury?
Consider recalling more than 400,000 Sarge cars because the little yellow dot on the wheel hubcap violated the lead-in-paint ban, and those dots were produced from two cans of paint. Substantial risk of injury?
One must distinguish between legerdemain and reality, between policy and what the law intended. It is a little focused-upon responsibility of the agency to exercise this judgment. Is it even possible for everything that happens to be a "substantial" risk? We know of cases where a single broken toy without an injury provoked an official investigation at the agency. Fair? Is this an activity that the CPSA authorizes? It is . . . if you are running the agency and you say it is. Arguably, the recall of the 480,000 Mattel Wheelies on September 30 was just such a case. Consumers apparently reported two broken cars with wheels that fell off, and no injuries were reported or implied. Substantial risk of injury? I question that.
2. The notion that we need all this supervision flies in the face of injury statistics. But it sure makes the CPSC look irreplaceable, doesn't it?
I have already published and discussed ad nauseum the historical injury statistics from lead based on CPSC recall notices - ONE DEATH and THREE UNVERIFIED INJURIES over 11 years (1999-2010). If we were facing such a dire public health crisis, why weren't kids dropping like flies from lead poisoning over such a long time period of "lax regulation"? If the harm was so widespread and so devastating, why aren't any of these actual victims known? Names, addresses, photos, case histories?
A friend replied to me recently reasoning that there is no safe level of lead. Okay, I concede that lead can be dangerous but it is absolutely true that lead in present throughout our environment and in the air, food and water that we consume every minute of every day. So since we take in lead from several sources all the time, we know we are building up lead and this leads to several questions. If lead is so harmful at all levels, why aren't we ALL showing the effect of our cumulative build-up of lead? How can you demonstrate that children's products contribute meaningfully to the asserted "problem"? How can you prove that "fixing" children's products will meaningfully change lead blood levels? And if you could prove those things (which cannot be done), how can you measure the return on investment of our multi-billion dollar annual investment? Remember, we can only spend those dollars one time - so is flushing them down the toilet on test reports REALLY our best use of scarce and irreplaceable dollars? How would you measure that?
But the more that the CPSC enforces the law against "bad" corporations, the more they scam the public into thinking they needed the help all along. They talk about recall statistics but never put them in the context of injury statistics. The proponents never compare lead injury statistics to other injury statistics like swimming pools.
[Is a child injured by lead "worse" that a child killed in a pool? It better be - because we are spending billions to prophylactically eliminate the possibility of purported lead injuries while leaving swimming pools open to continue a continuing skein of killings of more than one child each day. That's okay according to our Democrat-run Congress. Tell that to the family of drowning victim - they can take comfort in knowing that their child didn't have lead poisoning thanks to the relentless and remorseless enforcement of the CPSIA . . . .]
So as the regulators abuse and confuse the definition of hazard, they create an atmosphere of dependence. Oh thank you Mother Government for saving me! What would I do without you?!
3. Mr. Oberle reminds us that "Lack of incidents may not mean a product is safe." And just because you're paranoid doesn't mean they AREN'T out to get you.
Mr. Oberle does not take an offensive stance on this topic, btw. He is right, you can sometimes catch something dangerous before it creates harm. Presumably a quicker recognition of the hazard in Magnetix might have prevented injuries. Responsible companies need to always keep a lookout for insights that reveal latent hazards.
On the other hand, injury statistics are a useful tool. If, as is the case for lead, the assertion is that the hazard is widespread and present over a lengthy period of time, injury statistics become QUITE relevant. So, if lead was such a terrible problem in children's products (putting lead-in-paint aside, long ago banned), injury statistics over many years would reveal a latent problem. Think of the breadth of the definition of "Children's Products" and think of the years of recall data available for study. We are looking at TRILLIONS of interactions with children every year in the United States alone. Where are all the lead victims? We cannot say that we don't know the scale of this problem. We have apparently been running an "experiment" on the U.S. public for decades in the period the zealots label as "lax regulations" or "lax enforcement". If lead-in-substrate were so dangerous, wouldn't you expect to see SOME evidence of it?
If we must imagine the scale of the danger, can we spend imaginary dollars to deal with it?
4. The compliance hawks want to frame this as a financial question - how much is your safety worth? I think that's the wrong question - I think the question is "how long do you want to have a job?"
I have already reported that our compliance group is currently up to six people from a historical one or two, and of course, our products are no safer today than in the past. They were always safe and still are, but it costs us a lot more to operate. That's not good for you or for me.
So how do we pay for all this new bureaucracy? We have not raised prices, that's impossible these days. We are lucky to have customers and cannot spit in their faces with a price increase. Think of your business - it won't fly.
We also need to hit profitability targets because we need to remain financable. We do not get money from "money fairies" - we have to deal with a bank, just like you. Our bank prefers to see that we make money. I know that doesn't seem very civic-minded but I can't fault them for their POV. In any event, I think it's elementary that a business needs to make a profit to have the model sustain itself. Therefore, we cannot commit ourselves to ever-eroding profitability. When our costs rise, we cut elsewhere . . . just like you do.
Needless to say, we have skinnied up a lot since 2007. We have a much-reduced headcount and operate far more efficiently. This is how everyone behaved during the financial crisis and the jobs have not returned, in part because the economy remains sluggish. With our rising overhead relating to pointless regulations, what can we do? We must recover the money from activities that are focused on raising revenues. In effect, we are discontinuing activities that create growth to fund activities that are pure costs.
What's the math behind this? Consider how we recover a dollar of bureaucratic cost from productive activities. If you are already operating efficiently and cannot wring out big productivity gains (as may be the case post-financial crisis cost reductions), then how do you pay for an additional dollar of overhead cost? When you eliminate a "productive" dollar of cost to pay for an unproductive dollar of cost (e.g., you trade a dollar of marketing promotion for a dollar of test costs), it's not an even trade. No, because your dollar of productive cost creates gross margin whereas your overhead produces no profit whatsoever. Your productive dollar of cost produces gross profit which defrays your operating costs and produces marginal net profit on top of that. Wiping out the dollar of productive cost also wipes out the contribution to operating costs, so effectively, only the associated marginal net profit can defray the unproductive cost. Since profit percentages are generally low for most of us, the ratio of productive cost dollars needed to be sacrificed to cover unproductive costs is probably on the order of 2:1 or 3:1. Hire another QC person and fire the equivalent of two people elsewhere. In our case, we do it by attrition. We just shrink away.
As if this weren't bad enough, it's also a recipe for disaster or business death in a worst case. The continued erosion of productive spending to finance unproductive spending has a dramatic impact on growth. Revenue flattens out or stays in a downward trend. It's no surprise - you are starving your company of investment dollars as you spend at constant levels. You have simply shifted your spending from productive uses favoring growth to unproductive uses that will not create growth. Presumably, those of you with children have discussed the merits of eating fruits and vegetables versus eating potato chips. It's no different for a business and how it consumes dollars. We will never grow up to be big and strong if Mother Government restricts our financial diet this way.
Sean's right. I don't envy you . . . or me. This makes me very pessimistic about the future.
I hope you are mad as hell and won't take it anymore. In 23 days, you will get to vote. DO IT!
Sean Oberle published a lengthy contemplation of the issue raised in my last post on the relationship between compliance and safety as objectives for regulators and for industry. Mr. Oberle's essay speaks for itself, so I will not attempt to summarize it. He concludes with the following message: "Therein lies the frustrating and frightening aspect of product safety. Those of you tasked with ensuring product safety – industry rep, consumerist, and regulator alike – are trying to quantify ambiguity amid a chaos of demands … all of them in flux … I don't envy you."
Sean, boy are you right!
I think it's worth discussing a few issues on compliance versus safety since Mr. Oberle devoted so much ink (or electrons) to the topic.
1. The law defines what the CPSC can and cannot do. It's a shame no one told them . . . .
First and foremost, the CPSC exists because of the CPSA and its activities are governed by the CPSA. Recall authority is governed by Section 15 which limits the agency's recall authority to "substantial product hazards", namely a product that ". . . creates a substantial risk of injury to the public". [Section 12 gives the agency additional powers to seek a court order for "imminent hazards".] In other words, the CPSC does not have the legislative authority to tilt at windmills - it cannot demand recalls for anything unless it presents a "substantial risk of injury to the public".
Consider recalling 12 million glasses that the CPSC acknowledges in writing are SAFE. Substantial risk of injury?
Consider recalling more than seven million trikes sold over 14 years that caused six children to cut themselves. Children who were under three years of age and should have been under the care of attentive adults. Substantial risk of injury?
Consider recalling more than 400,000 Sarge cars because the little yellow dot on the wheel hubcap violated the lead-in-paint ban, and those dots were produced from two cans of paint. Substantial risk of injury?
One must distinguish between legerdemain and reality, between policy and what the law intended. It is a little focused-upon responsibility of the agency to exercise this judgment. Is it even possible for everything that happens to be a "substantial" risk? We know of cases where a single broken toy without an injury provoked an official investigation at the agency. Fair? Is this an activity that the CPSA authorizes? It is . . . if you are running the agency and you say it is. Arguably, the recall of the 480,000 Mattel Wheelies on September 30 was just such a case. Consumers apparently reported two broken cars with wheels that fell off, and no injuries were reported or implied. Substantial risk of injury? I question that.
2. The notion that we need all this supervision flies in the face of injury statistics. But it sure makes the CPSC look irreplaceable, doesn't it?
I have already published and discussed ad nauseum the historical injury statistics from lead based on CPSC recall notices - ONE DEATH and THREE UNVERIFIED INJURIES over 11 years (1999-2010). If we were facing such a dire public health crisis, why weren't kids dropping like flies from lead poisoning over such a long time period of "lax regulation"? If the harm was so widespread and so devastating, why aren't any of these actual victims known? Names, addresses, photos, case histories?
A friend replied to me recently reasoning that there is no safe level of lead. Okay, I concede that lead can be dangerous but it is absolutely true that lead in present throughout our environment and in the air, food and water that we consume every minute of every day. So since we take in lead from several sources all the time, we know we are building up lead and this leads to several questions. If lead is so harmful at all levels, why aren't we ALL showing the effect of our cumulative build-up of lead? How can you demonstrate that children's products contribute meaningfully to the asserted "problem"? How can you prove that "fixing" children's products will meaningfully change lead blood levels? And if you could prove those things (which cannot be done), how can you measure the return on investment of our multi-billion dollar annual investment? Remember, we can only spend those dollars one time - so is flushing them down the toilet on test reports REALLY our best use of scarce and irreplaceable dollars? How would you measure that?
But the more that the CPSC enforces the law against "bad" corporations, the more they scam the public into thinking they needed the help all along. They talk about recall statistics but never put them in the context of injury statistics. The proponents never compare lead injury statistics to other injury statistics like swimming pools.
[Is a child injured by lead "worse" that a child killed in a pool? It better be - because we are spending billions to prophylactically eliminate the possibility of purported lead injuries while leaving swimming pools open to continue a continuing skein of killings of more than one child each day. That's okay according to our Democrat-run Congress. Tell that to the family of drowning victim - they can take comfort in knowing that their child didn't have lead poisoning thanks to the relentless and remorseless enforcement of the CPSIA . . . .]
So as the regulators abuse and confuse the definition of hazard, they create an atmosphere of dependence. Oh thank you Mother Government for saving me! What would I do without you?!
3. Mr. Oberle reminds us that "Lack of incidents may not mean a product is safe." And just because you're paranoid doesn't mean they AREN'T out to get you.
Mr. Oberle does not take an offensive stance on this topic, btw. He is right, you can sometimes catch something dangerous before it creates harm. Presumably a quicker recognition of the hazard in Magnetix might have prevented injuries. Responsible companies need to always keep a lookout for insights that reveal latent hazards.
On the other hand, injury statistics are a useful tool. If, as is the case for lead, the assertion is that the hazard is widespread and present over a lengthy period of time, injury statistics become QUITE relevant. So, if lead was such a terrible problem in children's products (putting lead-in-paint aside, long ago banned), injury statistics over many years would reveal a latent problem. Think of the breadth of the definition of "Children's Products" and think of the years of recall data available for study. We are looking at TRILLIONS of interactions with children every year in the United States alone. Where are all the lead victims? We cannot say that we don't know the scale of this problem. We have apparently been running an "experiment" on the U.S. public for decades in the period the zealots label as "lax regulations" or "lax enforcement". If lead-in-substrate were so dangerous, wouldn't you expect to see SOME evidence of it?
If we must imagine the scale of the danger, can we spend imaginary dollars to deal with it?
4. The compliance hawks want to frame this as a financial question - how much is your safety worth? I think that's the wrong question - I think the question is "how long do you want to have a job?"
I have already reported that our compliance group is currently up to six people from a historical one or two, and of course, our products are no safer today than in the past. They were always safe and still are, but it costs us a lot more to operate. That's not good for you or for me.
So how do we pay for all this new bureaucracy? We have not raised prices, that's impossible these days. We are lucky to have customers and cannot spit in their faces with a price increase. Think of your business - it won't fly.
We also need to hit profitability targets because we need to remain financable. We do not get money from "money fairies" - we have to deal with a bank, just like you. Our bank prefers to see that we make money. I know that doesn't seem very civic-minded but I can't fault them for their POV. In any event, I think it's elementary that a business needs to make a profit to have the model sustain itself. Therefore, we cannot commit ourselves to ever-eroding profitability. When our costs rise, we cut elsewhere . . . just like you do.
Needless to say, we have skinnied up a lot since 2007. We have a much-reduced headcount and operate far more efficiently. This is how everyone behaved during the financial crisis and the jobs have not returned, in part because the economy remains sluggish. With our rising overhead relating to pointless regulations, what can we do? We must recover the money from activities that are focused on raising revenues. In effect, we are discontinuing activities that create growth to fund activities that are pure costs.
What's the math behind this? Consider how we recover a dollar of bureaucratic cost from productive activities. If you are already operating efficiently and cannot wring out big productivity gains (as may be the case post-financial crisis cost reductions), then how do you pay for an additional dollar of overhead cost? When you eliminate a "productive" dollar of cost to pay for an unproductive dollar of cost (e.g., you trade a dollar of marketing promotion for a dollar of test costs), it's not an even trade. No, because your dollar of productive cost creates gross margin whereas your overhead produces no profit whatsoever. Your productive dollar of cost produces gross profit which defrays your operating costs and produces marginal net profit on top of that. Wiping out the dollar of productive cost also wipes out the contribution to operating costs, so effectively, only the associated marginal net profit can defray the unproductive cost. Since profit percentages are generally low for most of us, the ratio of productive cost dollars needed to be sacrificed to cover unproductive costs is probably on the order of 2:1 or 3:1. Hire another QC person and fire the equivalent of two people elsewhere. In our case, we do it by attrition. We just shrink away.
As if this weren't bad enough, it's also a recipe for disaster or business death in a worst case. The continued erosion of productive spending to finance unproductive spending has a dramatic impact on growth. Revenue flattens out or stays in a downward trend. It's no surprise - you are starving your company of investment dollars as you spend at constant levels. You have simply shifted your spending from productive uses favoring growth to unproductive uses that will not create growth. Presumably, those of you with children have discussed the merits of eating fruits and vegetables versus eating potato chips. It's no different for a business and how it consumes dollars. We will never grow up to be big and strong if Mother Government restricts our financial diet this way.
Sean's right. I don't envy you . . . or me. This makes me very pessimistic about the future.
I hope you are mad as hell and won't take it anymore. In 23 days, you will get to vote. DO IT!
Monday, September 27, 2010
CPSIA - Regulations Are Killing Us
774 days have passed since ANY Democrat in Congress did ANYTHING to help us on the CPSIA. There are only 36 days left until Election Day.
The headline in the WSJ says it all (thanks, Jennifer):
"The Regulation Tax Keeps Growing. Blame Washington, not China, for the decline of American manufacturing." [Emphasis added]
I have written endlessly on this topic in relation to the poisonous CPSIA. You know the drill.
Of course, it can hardly be surprising that this is happening under the "too little government, too little regulation" administration of Barack Obama. It is a rich irony that the supervisor of regulations appointed by Mr. Obama is Cass Sunstein, my former law school professor. As the cognoscenti know, Sunstein is known for his aversion to uneconomic regulations. Consider this prediction from February 2009:
"Even his detractors recognize Sunstein, 54, as an amazingly prolific legal scholar with a keen intellect. But they worry about his insistence on tying regulations to cost-benefit analysis, the bedrock principle of his Bush-era predecessor, John Graham. They're also concerned about his prediction last year that Obama will be a deregulator. 'He is off on the wrong track,' says Rena Steinzor, a progressive University of Maryland law professor." [Emphasis added]
Either Sunstein was given a sham of a job, or the appointment was a sham, or the administration subverted a purportedly sensible initiative, reining in regulations using a cost-benefit philosophy. Whatever happened, it is clear that Mr. Sunstein has been utterly ineffective in any purported efforts to control the beast. As noted, we have covered this topic repeatedly in this space.
The WSJ notes:
"In a report released last week for the Office of Advocacy of the U.S. Small Business Administration, we find that small businesses bear a disproportionately large share of regulatory costs. The portion of these costs that falls initially on businesses overall was $8,086 per employee in 2008. But these costs are not borne equally by businesses of all sizes. Larger firms benefit from economies of scale in compliance; small businesses do not have that advantage . . . . Small manufacturers bear compliance costs that are 110% higher than those of medium-sized firms and 125% higher than large firms' costs. As much as it is fashionable to blame China for the demise of small manufacturing in America, the evidence suggests that looking for some reasons closer to home is warranted." [Emphasis added]
What-a-shock! Who could have seen this coming?
The WSJ article is full of useful quotes, check it out. All roads lead to Rome - the regulatory monster is choking us to DEATH. And as usual, there is little motivation to do anything about this self-induced disaster until the bodies pile up the sky.
Sadly, my arguments fail simply because of the offense of not being dead yet.
Hey, CPSC, keep your head in the sand. Can't see it, must not be there. . . .
The headline in the WSJ says it all (thanks, Jennifer):
"The Regulation Tax Keeps Growing. Blame Washington, not China, for the decline of American manufacturing." [Emphasis added]
I have written endlessly on this topic in relation to the poisonous CPSIA. You know the drill.
Of course, it can hardly be surprising that this is happening under the "too little government, too little regulation" administration of Barack Obama. It is a rich irony that the supervisor of regulations appointed by Mr. Obama is Cass Sunstein, my former law school professor. As the cognoscenti know, Sunstein is known for his aversion to uneconomic regulations. Consider this prediction from February 2009:
"Even his detractors recognize Sunstein, 54, as an amazingly prolific legal scholar with a keen intellect. But they worry about his insistence on tying regulations to cost-benefit analysis, the bedrock principle of his Bush-era predecessor, John Graham. They're also concerned about his prediction last year that Obama will be a deregulator. 'He is off on the wrong track,' says Rena Steinzor, a progressive University of Maryland law professor." [Emphasis added]
Either Sunstein was given a sham of a job, or the appointment was a sham, or the administration subverted a purportedly sensible initiative, reining in regulations using a cost-benefit philosophy. Whatever happened, it is clear that Mr. Sunstein has been utterly ineffective in any purported efforts to control the beast. As noted, we have covered this topic repeatedly in this space.
The WSJ notes:
"In a report released last week for the Office of Advocacy of the U.S. Small Business Administration, we find that small businesses bear a disproportionately large share of regulatory costs. The portion of these costs that falls initially on businesses overall was $8,086 per employee in 2008. But these costs are not borne equally by businesses of all sizes. Larger firms benefit from economies of scale in compliance; small businesses do not have that advantage . . . . Small manufacturers bear compliance costs that are 110% higher than those of medium-sized firms and 125% higher than large firms' costs. As much as it is fashionable to blame China for the demise of small manufacturing in America, the evidence suggests that looking for some reasons closer to home is warranted." [Emphasis added]
What-a-shock! Who could have seen this coming?
The WSJ article is full of useful quotes, check it out. All roads lead to Rome - the regulatory monster is choking us to DEATH. And as usual, there is little motivation to do anything about this self-induced disaster until the bodies pile up the sky.
Sadly, my arguments fail simply because of the offense of not being dead yet.
Hey, CPSC, keep your head in the sand. Can't see it, must not be there. . . .
Thursday, August 19, 2010
CPSIA - Obama Doesn't Get It . . . .
In response to the release of yet more terrible jobless claims numbers this AM, President Obama renewed his call to lower taxes on small business and to ease the small business credit crunch. The legislation, which promises to lower certain taxes on small business and to increase federal funding of loans to small businesses through various means, is "stuck" in Congress. Mr. Obama blamed the Republicans for "blocking" the bill: "'There will be plenty of time between now and November to play politics,' Obama said. 'Let’s put aside the partisanship for a while and work together.'”
I think this is rich, personally. We run a small business and I know what it feels like to be a small business in the Obama-cized children's product market. We are facing skyrocketing costs nicely matched with soft revenues and mounting taxes (funded by the company, too). Cost increases include $300K in new medical plan expenses to accommodate the terms of the Obamacare initiative, plus astronomical all-in costs for increased safety testing under the new CPSIA rules and related manias. The increased testing has yet to reveal any useful information of identify any health threat that constitutes a human safety risk - so all that money is wasted.
These costs have a common link - they are both a result of increasing regulation. I know, I know, Mr. Obama has lectured us that we really need all these new regulations. Well, I don't agree, but in any event, we see these regulations as major impediments in our business. These high costs affect our cash flow and our business outlook - to the bad. Do the Democrats think we maintain our sunny disposition when we face a shaky market lacking confidence (soft revenues), higher costs (a lot higher) and mounting cash needs from higher taxes and other federal regulatory expenses? This is rather a recipe for managers who want to hide until the storm passes. Who will spend money on new investment now? While we are not cutting our product development efforts, we haven't bought new equipment, fixtures or additional office/warehouse space in several years now. And we have no plans to do so. Welcome to the Dems' economy. No wonder new jobless claims are over 500,000 in the last month.
In the case of the CPSIA, the Dems are only too happy to whack us with heavy regulations, all justified by imaginary benefits. The imaginary benefits of the new CPSIA regulations are as invisible as the imaginary problems they are designed to solve. The absence of data on effectiveness is matched by the absence of data suggesting that there was a problem in the first place - the "know nothing's" jacked up your costs and destabilized your business to no purpose. Now Mr. Obama wants to fix it all with another handout. Throwing money at the problem is new style. And after that handout is parcelled out, the Dems will proceed to raise taxes on higher income individuals (read, small business owners, particularly S Corp owners) to attempt to staunch the hemorrhaging Federal deficit, and then express "shock" at the sluggish economy. No doubt the next step will have to be more handouts and perhaps Cap-and-Trade to raise more costs. What a great cycle. . . .
Is there another way? Well, as for small businesses in the children's product market, I would note that the voluminous new CSPIA rules (two feet high and growing) impose massive costs on industry (to comply) AND on government (to enforce). I think of the stupid health official bent on enforcing his food handler's license rule against the little girl in Portland operating a lemonade stand - many of the new CPSIA rules are pointless from a safety standpoint and cost big money to administer as well as to comply with. If the Dems seriously want to stimulate the economy and add jobs, here's an efficient way to do it for NO out-of-pocket cost - DROP your boundless regulations and go back to something more modest and manageable. This also means that the Obamite idea that life is better with lots more government needs to be shelved. I submit the recent rules on testing frequency and "reasonable" testing programs as evidence that inviting bureaucrats to become involved in operating businesses brings nothing but trouble, inefficiency and devastation. There must be a better way.
Hey, I figured out some time ago that I am talking to myself here. The CPSC certainly doesn't care or understand what I am talking about (or else they might have done something about it perhaps 300 blogposts ago). The Democrats in Congress likewise are deaf and disinterested. I cannot name a single Democrat, NOT ONE SINGLE DEMOCRAT, who will stand up in front of their peers and demand significant amendment or revocation of the CPSIA. The Dems are in lockstep agreement - no light shines in if your head is in the sand, after all.
You can't work with people like this.
I urge you (URGE YOU) to select the CPSIA perpetrator of your choosing and WORK to knock them out of Congress in this election cycle. Remember - they are trying to put YOU out of business. You need to return the favor.
Return the favor . . . this is my theme song until polls close on November 2. Then the party begins.
I think this is rich, personally. We run a small business and I know what it feels like to be a small business in the Obama-cized children's product market. We are facing skyrocketing costs nicely matched with soft revenues and mounting taxes (funded by the company, too). Cost increases include $300K in new medical plan expenses to accommodate the terms of the Obamacare initiative, plus astronomical all-in costs for increased safety testing under the new CPSIA rules and related manias. The increased testing has yet to reveal any useful information of identify any health threat that constitutes a human safety risk - so all that money is wasted.
These costs have a common link - they are both a result of increasing regulation. I know, I know, Mr. Obama has lectured us that we really need all these new regulations. Well, I don't agree, but in any event, we see these regulations as major impediments in our business. These high costs affect our cash flow and our business outlook - to the bad. Do the Democrats think we maintain our sunny disposition when we face a shaky market lacking confidence (soft revenues), higher costs (a lot higher) and mounting cash needs from higher taxes and other federal regulatory expenses? This is rather a recipe for managers who want to hide until the storm passes. Who will spend money on new investment now? While we are not cutting our product development efforts, we haven't bought new equipment, fixtures or additional office/warehouse space in several years now. And we have no plans to do so. Welcome to the Dems' economy. No wonder new jobless claims are over 500,000 in the last month.
In the case of the CPSIA, the Dems are only too happy to whack us with heavy regulations, all justified by imaginary benefits. The imaginary benefits of the new CPSIA regulations are as invisible as the imaginary problems they are designed to solve. The absence of data on effectiveness is matched by the absence of data suggesting that there was a problem in the first place - the "know nothing's" jacked up your costs and destabilized your business to no purpose. Now Mr. Obama wants to fix it all with another handout. Throwing money at the problem is new style. And after that handout is parcelled out, the Dems will proceed to raise taxes on higher income individuals (read, small business owners, particularly S Corp owners) to attempt to staunch the hemorrhaging Federal deficit, and then express "shock" at the sluggish economy. No doubt the next step will have to be more handouts and perhaps Cap-and-Trade to raise more costs. What a great cycle. . . .
Is there another way? Well, as for small businesses in the children's product market, I would note that the voluminous new CSPIA rules (two feet high and growing) impose massive costs on industry (to comply) AND on government (to enforce). I think of the stupid health official bent on enforcing his food handler's license rule against the little girl in Portland operating a lemonade stand - many of the new CPSIA rules are pointless from a safety standpoint and cost big money to administer as well as to comply with. If the Dems seriously want to stimulate the economy and add jobs, here's an efficient way to do it for NO out-of-pocket cost - DROP your boundless regulations and go back to something more modest and manageable. This also means that the Obamite idea that life is better with lots more government needs to be shelved. I submit the recent rules on testing frequency and "reasonable" testing programs as evidence that inviting bureaucrats to become involved in operating businesses brings nothing but trouble, inefficiency and devastation. There must be a better way.
Hey, I figured out some time ago that I am talking to myself here. The CPSC certainly doesn't care or understand what I am talking about (or else they might have done something about it perhaps 300 blogposts ago). The Democrats in Congress likewise are deaf and disinterested. I cannot name a single Democrat, NOT ONE SINGLE DEMOCRAT, who will stand up in front of their peers and demand significant amendment or revocation of the CPSIA. The Dems are in lockstep agreement - no light shines in if your head is in the sand, after all.
You can't work with people like this.
I urge you (URGE YOU) to select the CPSIA perpetrator of your choosing and WORK to knock them out of Congress in this election cycle. Remember - they are trying to put YOU out of business. You need to return the favor.
Return the favor . . . this is my theme song until polls close on November 2. Then the party begins.
Tuesday, June 29, 2010
CPSIA - Your Partner in Mischief, Congress
Never content to leave an economy merely in tatters, Henry Waxman and Bobby Rush jumped into action this week to create an international trade war, all in the name of "protecting" you. In fact, their troubling new legislation includes a sneak amendment of the CPSIA. It also takes an idea dropped from the CPSIA (submission to U.S. jurisdiction) and applies it across several new industries. Sounds promising, right?
Nominally introduced by Rep. Betty Sutton (D-OH), a wobbly Democrat said to need propping up in her faltering reelection campaign, the new bill (called "H.R.4678 -- Foreign Manufacturers Legal Accountability Act of 2010") is scheduled for mark-up tomorrow (in Rush's subcommittee. This innocuous and technical sounding bill is packed with trouble for you and for our country. In Sutton's blue collar industrial district, that kind of work is prized. Or so the Dems must think.
Here is the GovTrack version of the bill. In fact, I have obtained a more recent version of the bill, a "manager's mark-up" , which includes many new provisions. The revised version of the bill packs quite a punch, right to the gut. I discuss the newer version of the bill below.
The purpose of this bill is to make foreign manufacturers of finished goods and parts intended to be used as components in those finished goods register for service of process in this country. In other words, foreign manufacturers must register here so our plaintiff's bar and the government can sue them with ease. The new law prohibits trade with foreign manufacturers unless they are registered, and enlists the aid of the federal government's snarling dog, the U.S. Customs and Border Patrol, to enforce this law.
This means that every factory we use outside the U.S. will have to register for service of process in the U.S. if we want to continue to import our products from them. The law goes even FURTHER, asking that each agency involved to study ways to force manufacturers of components to register here, too. So, for example, if you make a toy in China and your factory buys boxes from a local printer who has NO contractual relationship with you, this law asks the agencies to study the feasibility of getting such box printers to register for service of process in this country. To accomplish that lofty goal, of course, you have to know their identity. Our customers do not know our vendors' names and we aren't telling. It's none of their business. Do you think it's any different for our factories relative to us? Will they ever disclose that information to our Mother Government (to them, a foreign government)? Please - would you disclose your sources to the Chinese government? And who pays the administrative and out-of-pocket costs of this exercise? And what about the consequences of the fear factor and the costs of new litigation on markets?
What-a-stimulus program! Naturally, those groups most linked to your future business health and ability to create jobs, the plaintiff's bar and consumer groups, think this legislation is long overdue!
The scope of this law covers the EPA, the CPSC, the FDA and NHTSA, and applies to drugs, cosmetics, medical devices, "biological products", consumer products, chemicals and chemical mixtures under TSCA (the coming storm), pesticides, motor vehicles or "motor vehicle equipment", plus components for the foregoing. That's pretty much everything and everyone.
Oh, by the way, the manager's mark-up adds a little provision that gives you five working days to inform the CPSC if you have "a safety recall or other safety campaign" in any country, whether initiated by the company or by the foreign government. Just thought they'd slip that one in, just in case you weren't watching!
So, who cares? Doesn't this "solve" the Chinese drywall problem? In fact, it's going to make things a lot worse. This is Major League trade war material. It is not entirely unlike Smoot-Hawley, the bill that precipitated the Depression. None of our factories will be willing to accept exposure to our ravenous tort system and out-of-control invasive government regulators as a condition of doing business with us. To most of them, this will be too risky and too hard to understand. Our suppliers are small businesses like us - they will NEVER have the resources or skills to master the minute details of our legal system and myriad risks and rules. It will also be breathtakingly expensive for them, and they run very low margin businesses with no ability to absorb those costs.
Even if some of our factories will take this risk, many will not. As with Smoot-Hawley's tariffs, this kind of rule will spur quick responses by foreign governments. If the U.S. wants the right to reach across borders and take the assets of foreign companies without a legal presence in this country, then foreign governments will extend the same "privilege" to U.S. companies selling products inside their borders. Won't that be nice?! Learning Resources sells its products in dozens of countries. Will we have to register in each country to continue to do so? Will we be exposed to lawsuits all over the world as a result? Will we have to pay to settle "strike suits" in dozens of new jurisdictions? If the answer is yes, I cannot imagine staying in business across borders.
The provision about foreign "safety campaigns" is intended to make sure that we don't miss a trick here. The Waxmanis want a worldwide recall system. Does ANYONE IN CONGRESS know what this will cost? Congress must want to terminate small businesses in our economy.
Rumor has it that Ways and Means wants to take this bill out of the hands of the Energy and Commerce Committee. Of course. Speaker Pelosi can skip that step if she wants. Ways and Means purportedly knows there are BIG problems here and I am assured the Republicans on that committee will fight to restrain this bill. Still, it is in keeping with recent House practice to pass something irresponsible and dangerous like this bill, relying on the Senate to stop it. It's a "message" bill, unless it somehow gets passed into law . . . . Then there's the rumor that the Dems intend to stick it into a moving bill, like a jobs bill, to make it impossible to stop. You know, because it's for our own good.
This is an example of how I learned to HATE Congress and Democrats. These rules descend on our business in suffocating waves, adding no value but creating major distractions and feeding fear. On the other hand, perhaps I will be eating crow when Obama's recently announced master plan to reduce the deficit by two-thirds in three years through increased spending, increased entitlements, increased taxes and increased regulation works like a charm. Maybe this law is part of the implementation of that great plan.
It must be me.
It must be me. . . right?
Nominally introduced by Rep. Betty Sutton (D-OH), a wobbly Democrat said to need propping up in her faltering reelection campaign, the new bill (called "H.R.4678 -- Foreign Manufacturers Legal Accountability Act of 2010") is scheduled for mark-up tomorrow (in Rush's subcommittee. This innocuous and technical sounding bill is packed with trouble for you and for our country. In Sutton's blue collar industrial district, that kind of work is prized. Or so the Dems must think.
Here is the GovTrack version of the bill. In fact, I have obtained a more recent version of the bill, a "manager's mark-up" , which includes many new provisions. The revised version of the bill packs quite a punch, right to the gut. I discuss the newer version of the bill below.
The purpose of this bill is to make foreign manufacturers of finished goods and parts intended to be used as components in those finished goods register for service of process in this country. In other words, foreign manufacturers must register here so our plaintiff's bar and the government can sue them with ease. The new law prohibits trade with foreign manufacturers unless they are registered, and enlists the aid of the federal government's snarling dog, the U.S. Customs and Border Patrol, to enforce this law.
This means that every factory we use outside the U.S. will have to register for service of process in the U.S. if we want to continue to import our products from them. The law goes even FURTHER, asking that each agency involved to study ways to force manufacturers of components to register here, too. So, for example, if you make a toy in China and your factory buys boxes from a local printer who has NO contractual relationship with you, this law asks the agencies to study the feasibility of getting such box printers to register for service of process in this country. To accomplish that lofty goal, of course, you have to know their identity. Our customers do not know our vendors' names and we aren't telling. It's none of their business. Do you think it's any different for our factories relative to us? Will they ever disclose that information to our Mother Government (to them, a foreign government)? Please - would you disclose your sources to the Chinese government? And who pays the administrative and out-of-pocket costs of this exercise? And what about the consequences of the fear factor and the costs of new litigation on markets?
What-a-stimulus program! Naturally, those groups most linked to your future business health and ability to create jobs, the plaintiff's bar and consumer groups, think this legislation is long overdue!
The scope of this law covers the EPA, the CPSC, the FDA and NHTSA, and applies to drugs, cosmetics, medical devices, "biological products", consumer products, chemicals and chemical mixtures under TSCA (the coming storm), pesticides, motor vehicles or "motor vehicle equipment", plus components for the foregoing. That's pretty much everything and everyone.
Oh, by the way, the manager's mark-up adds a little provision that gives you five working days to inform the CPSC if you have "a safety recall or other safety campaign" in any country, whether initiated by the company or by the foreign government. Just thought they'd slip that one in, just in case you weren't watching!
So, who cares? Doesn't this "solve" the Chinese drywall problem? In fact, it's going to make things a lot worse. This is Major League trade war material. It is not entirely unlike Smoot-Hawley, the bill that precipitated the Depression. None of our factories will be willing to accept exposure to our ravenous tort system and out-of-control invasive government regulators as a condition of doing business with us. To most of them, this will be too risky and too hard to understand. Our suppliers are small businesses like us - they will NEVER have the resources or skills to master the minute details of our legal system and myriad risks and rules. It will also be breathtakingly expensive for them, and they run very low margin businesses with no ability to absorb those costs.
Even if some of our factories will take this risk, many will not. As with Smoot-Hawley's tariffs, this kind of rule will spur quick responses by foreign governments. If the U.S. wants the right to reach across borders and take the assets of foreign companies without a legal presence in this country, then foreign governments will extend the same "privilege" to U.S. companies selling products inside their borders. Won't that be nice?! Learning Resources sells its products in dozens of countries. Will we have to register in each country to continue to do so? Will we be exposed to lawsuits all over the world as a result? Will we have to pay to settle "strike suits" in dozens of new jurisdictions? If the answer is yes, I cannot imagine staying in business across borders.
The provision about foreign "safety campaigns" is intended to make sure that we don't miss a trick here. The Waxmanis want a worldwide recall system. Does ANYONE IN CONGRESS know what this will cost? Congress must want to terminate small businesses in our economy.
Rumor has it that Ways and Means wants to take this bill out of the hands of the Energy and Commerce Committee. Of course. Speaker Pelosi can skip that step if she wants. Ways and Means purportedly knows there are BIG problems here and I am assured the Republicans on that committee will fight to restrain this bill. Still, it is in keeping with recent House practice to pass something irresponsible and dangerous like this bill, relying on the Senate to stop it. It's a "message" bill, unless it somehow gets passed into law . . . . Then there's the rumor that the Dems intend to stick it into a moving bill, like a jobs bill, to make it impossible to stop. You know, because it's for our own good.
This is an example of how I learned to HATE Congress and Democrats. These rules descend on our business in suffocating waves, adding no value but creating major distractions and feeding fear. On the other hand, perhaps I will be eating crow when Obama's recently announced master plan to reduce the deficit by two-thirds in three years through increased spending, increased entitlements, increased taxes and increased regulation works like a charm. Maybe this law is part of the implementation of that great plan.
It must be me.
It must be me. . . right?
Monday, June 28, 2010
CPSIA - Thumbscrews, Jobs and You
This week we learned that the G-20 nations established near term fiscal deficit reduction as a twin priority with economic growth. The U.S. says it will reduce its fiscal deficit from this year's breathtaking 10.2% of GDP to a mere 4.2% in 2013 (that goal translates to about $600 billion in red ink, more or less). This fantastic goal is apparently based on the premise that Mr. Obama's big spending plans are going to stimulate so much growth that the United States will literally grow away from this problem.
[Please don't bring up the additional expense of new federal entitlements like health care reform - I believe the plan is for magic or heaven above to provide those multi-billions.]
Rosy scenario? To my way of thinking, it is delusional government or at least government in a deep state of denial. Those of us suffering from the CPSIA debacle know why - Obama's new withering regulations are strangling businesses and the markets. The environment created by these awful rules are killing jobs everywhere. Mr. Obama's apparent belief that we need a lot more government will render his plan to reduce deficits moot. The passage of time will reveal that thumbscrews are just not a good jobs program.
Consider the trajectory of our companies' employment ranks over the past four years. Our headcount reduction in 2007 was 3.2%, 2008 was 15.9% and 2009 was 6.6%. There were two big factors in those reductions - a really lousy economy and a really terrible law affecting children's products. But what about the glorious recovery sparked by our wonderful government? Please note that our businesses are presumably a "beneficiary" of much of that largess because of our dependence on educational sales - schools received MANY billions under the stimulus spending plans. Revenues for first quarter 2010 rose sharply in many industries (an easy comparison to 1Q 2009 but up is up!), so what about jobs at our companies? January - May: our employee headcount shrunk by 2.3%.
We are still not creating net jobs. While we pour endless resources into regulatory compliance, none of which is producing a scintilla of results (and certainly not any sales), we are allowing attrition to lower our costs. We have only so much money - and the government has plans for us to waste it in large quantities. The result - fewer and fewer jobs and a very difficult environment to create jobs. Our total four-year job loss is 25.7%. Some job program. . . .
Mr. Obama prefers to look the other way. While the WSJ notes that "an influential group of U.S. corporate leaders this week accused Mr. Obama of retarding growth with a slew of new taxes and rules", Mr. Obama simply noted at the news conference at the close of the G-20 meeting “We must recognize that our fiscal health tomorrow will rest in no small measure on our ability to create jobs today.” Time for a hearing test?
And if it weren't bad enough that Obama endorsed a wishful thinking plan to reduce the deficit through high spending while at the very same time creating the most hostile business environment in recent memory, there is another shoe to drop . . . on you: "President Obama said that next year he would present 'very difficult choices' to the country in an effort to meet deficit goals. The president cited his disappointment with the U.S. tax code. 'Next year, when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits and debt step up, 'cause I'm calling their bluff.'"
What you aren't spending on new health care costs or CPSIA compliance, the government plans to take away from you. And by the way, create some jobs while you're at it.
I cannot help but connect the national issues being discussed with our own travails. We are being sent to the gallows by a truly unconcerned CPSC Democratic leadership. They assert that they are making everyone "safer" without looking at data or considering the serious problems being created in the market. Warnings, dire warnings backed up with data and reason, are falling on deaf ears - it's as if the Dems are daring us to go out of business to prove our point. Theirs is a catastrophic policy but it seems as though they are bound and determined to see it through. This is terrible news for you, for your customers and suppliers and for our country.
Humpty Dumpty was never the same after he fell over, as we all know. I am committed to prevent this disaster, notwithstanding an uncaring Dem-controlled Congress and Dem-controlled CPSC. I am working for change in Congressional leadership come November, and I URGE YOU to raise money and commit time to candidates offering to help us reform this terrible law. The people who did this to you and me should pay with their jobs. Soon.
[Please don't bring up the additional expense of new federal entitlements like health care reform - I believe the plan is for magic or heaven above to provide those multi-billions.]
Rosy scenario? To my way of thinking, it is delusional government or at least government in a deep state of denial. Those of us suffering from the CPSIA debacle know why - Obama's new withering regulations are strangling businesses and the markets. The environment created by these awful rules are killing jobs everywhere. Mr. Obama's apparent belief that we need a lot more government will render his plan to reduce deficits moot. The passage of time will reveal that thumbscrews are just not a good jobs program.
Consider the trajectory of our companies' employment ranks over the past four years. Our headcount reduction in 2007 was 3.2%, 2008 was 15.9% and 2009 was 6.6%. There were two big factors in those reductions - a really lousy economy and a really terrible law affecting children's products. But what about the glorious recovery sparked by our wonderful government? Please note that our businesses are presumably a "beneficiary" of much of that largess because of our dependence on educational sales - schools received MANY billions under the stimulus spending plans. Revenues for first quarter 2010 rose sharply in many industries (an easy comparison to 1Q 2009 but up is up!), so what about jobs at our companies? January - May: our employee headcount shrunk by 2.3%.
We are still not creating net jobs. While we pour endless resources into regulatory compliance, none of which is producing a scintilla of results (and certainly not any sales), we are allowing attrition to lower our costs. We have only so much money - and the government has plans for us to waste it in large quantities. The result - fewer and fewer jobs and a very difficult environment to create jobs. Our total four-year job loss is 25.7%. Some job program. . . .
Mr. Obama prefers to look the other way. While the WSJ notes that "an influential group of U.S. corporate leaders this week accused Mr. Obama of retarding growth with a slew of new taxes and rules", Mr. Obama simply noted at the news conference at the close of the G-20 meeting “We must recognize that our fiscal health tomorrow will rest in no small measure on our ability to create jobs today.” Time for a hearing test?
And if it weren't bad enough that Obama endorsed a wishful thinking plan to reduce the deficit through high spending while at the very same time creating the most hostile business environment in recent memory, there is another shoe to drop . . . on you: "President Obama said that next year he would present 'very difficult choices' to the country in an effort to meet deficit goals. The president cited his disappointment with the U.S. tax code. 'Next year, when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits and debt step up, 'cause I'm calling their bluff.'"
What you aren't spending on new health care costs or CPSIA compliance, the government plans to take away from you. And by the way, create some jobs while you're at it.
I cannot help but connect the national issues being discussed with our own travails. We are being sent to the gallows by a truly unconcerned CPSC Democratic leadership. They assert that they are making everyone "safer" without looking at data or considering the serious problems being created in the market. Warnings, dire warnings backed up with data and reason, are falling on deaf ears - it's as if the Dems are daring us to go out of business to prove our point. Theirs is a catastrophic policy but it seems as though they are bound and determined to see it through. This is terrible news for you, for your customers and suppliers and for our country.
Humpty Dumpty was never the same after he fell over, as we all know. I am committed to prevent this disaster, notwithstanding an uncaring Dem-controlled Congress and Dem-controlled CPSC. I am working for change in Congressional leadership come November, and I URGE YOU to raise money and commit time to candidates offering to help us reform this terrible law. The people who did this to you and me should pay with their jobs. Soon.
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