CPSIA - "Bad Optics" or Did Bob Adler Actually Learn His Lesson?

"Bad Optics".

I was thinking of that phase today as I was pondering the astounding mental gymnastics employed by Chairman Inez Tenenbaum and Commissioner Bob Adler to justify keeping private the Commissioners' debate over the agency's recommendations to change the CPSIA until the report is delivered to Congress. Tenenbaum and Adler both asserted yesterday that the private deliberations currently going on were more than sufficient to create the necessary "vigorous debate" all of us Americans hope would occur on a five-person Commission.

You are probably scratching your head. What's the big deal about the Commissioners sitting in one room and discussing an important issue? Well, there's a legal problem here: the Government in the Sunshine Act prohibits meetings of more than two Commissioners without announcing the meeting publicly and making it available to the public. [You owe C-SPAN to this law.] Arguably, three Commissioners can't take a taxi together or gather around the water cooler to resolve issues relating to the Cubs Spring Training line-up without an Internet camera firing away.

Here's some background on the Sunshine Act:

"The Government in the Sunshine Act was passed by the Congress of the United States in 1976. It required for the first time that all multithreaded federal agencies (meaning those which have units that work independent of each other) hold their meetings regularly in public session. The bill explicitly defined meetings as essentially any gathering, formal or informal, of agency members, stretching so far as to include conference calls.

Many federal agencies, most notably the independent regulatory agencies, are headed by collegial bodies. A clear example of this setup can be found in the five commissioners of the Federal Trade Commission. These agencies make most of their decisions through discussions and voting by the board or commissions members. This law was created so that these meetings would be in the public domain for all of us to review, so that if we wish, we can investigate the procedures and decisions of any multithreaded federal agency.

This bill was conceived and passed in the wake of the Watergate scandal, when American mistrust of government was running very high. The government responded by creating various committees to open the meetings of the government, but without a legal backbone to stand on, these groups were wholly ineffective. After some pressure from the public, the act was passed in order to provide a legal backbone for the opening of meeting records to the public."

So the Commissioners are not allowed to meet as a group unless you (the general public) are invited. As the above link attests, this means Commissioners may be constrained in what they choose to say - because you are peering in. Mr. Adler noted this issue yesterday and also expressed his frustration that as soon as he says something in a public meeting, "it's all over the blogosphere". You know, like in this column. Aside from the fact that the Sunshine Act is MEANT to facilitate precisely that, it also fosters accountability. I believe these same concepts underlie the Freedom of Speech, something we are all dependent on.

Ms. Nord pointed out that the purpose of a five-person Commission is to meet and work as a group. I would note (the obvious) that the debate proposed by Ms. Northup would occur AFTER all the private deliberations, and thus might occur at a very productive time. Whatever, Mr. Adler said he was satisfied with the current process, notwithstanding Ms. Northup's point that if meetings involved more than two Commissioners or were exposed to the light of day, errors might get corrected.

Errors - that's an interesting point, isn't it? Correcting erroneous information, probably a good thing, right? Bad information could lead to bad decisions. . . .

This leads us back to "bad optics". As you may recall, the Commission held a hearing on November 4th to decide the fate of Learning Curve and its famous brass bushings. Despite conceding that the brass bushings were perfectly safe, Mr. Adler voted against the exemption petition. Along the way (at about 25:00 in the video of the hearing), Mr. Adler launched into an unprompted and rather condescending bashing of Learning Curve, accusing them of "bad optics". Why did he do this? As I explained in a blogpost on November 5, Mr. Adler had received erroneous information about the company's sales practices from a member of another Commissioner's staff. Taking this information as fact, he gratuitously offered the company some coaching on managing appearances in Washington: "If I had to give any advice to [Learning Curve] on 'optics', I don't think it's such a good idea to come in and say 'We admit we're breaking the law, we'd like an exclusion but oh, by the way, we're going to continue selling this product during the pendency of the proceeding.' I would urge them at least as a matter of courtesy to withhold sale and distribution during the pendency of this proceeding." [Emphasis added] Of course, Learning Curve never said any of this.

You can imagine how Learning Curve must have felt about this - they were later to get whacked with a massive penalty for lead-in-paint, and those negotiations must have been going on at that very moment. When I wrote about this on November 4, Learning Curve's lawyer read my blog and contacted Mr. Adler, who then urgently called me (as I sat down to dinner while on vacation) to ask that I publish his retraction right away. You will find the retraction in the November 5 blogpost above and on the CPSC website.

Presumably this kind of experience leaves scars but now two months later, Mr. Adler appears to have forgotten it all. In early November, he was left exposed and embarrassed by erroneous information passed along in a private meeting. He was not protected by checks-and-balances because the Commissioners are unable to meet in groups and as a result, laid an egg in a very important hearing. To judge by the urgency of his appeal in November (and his remarks in yesterday's meeting), Mr. Adler does not like to be wrong nor be exposed as wrong. YET he now defends the very system that caused his own demise.

"Bad optics", indeed. Mr. Adler, what is the message here?

CPSIA - Learning Resources Testifies About Internet Privacy

My associate Michelle Bougie was invited to testify at the November 19 hearing held by a joint session of subcommittees of the House Committee on Energy and Commerce on the subject of Internet privacy. In a re-run of last year's feeding frenzy on toy safety, consumer groups are promoting paranoia about the collection and use of consumer data on the Internet. As a result of the building pressure to regulate the use of data both online and offline, the interests of small businesses are again threatened. Michelle gave insightful testimony on the current direct marketing practices online and offline and showed how legislation has the real potential to not only stunt the growth of the Internet (a huge job creator) but also to give a federally-sanctioned monopoly to large businesses over the availability and use of consumer data.

It is worth noting that Michelle's testimony provides evidence that considerable infrastructure exists now - widely-adopted voluntary standards designed to protect consumer privacy and to make visible the practices of direct marketers. Michelle argues that the empowerment of consumers online makes these good practices a market necessity.

In fact, consumer data is rarely if ever sold (to my knowledge, we have never purchased it). Consumer data is RENTED for one-time uses typically and is not disclosed to the company renting the data. For instance, if we mail a catalog, we define the kind of names we want to rent, but never SEE them - they go directly to the mailing house and do not become our property. This makes perfect sense because the compiled lists are the intellectual property of the company that rents them out - and if they SOLD the names once, they could never sell them again. They would be out of business after one sale. Thus, we never get to see the names we rent. In fact, it is highly likely that we have rented many of the same names over and over for different mailings or email blasts. Privacy cannot be violated by uses that do not involve disclosure!

Michelle's statement is found below (sorry, the audio is a bit tinny). Media coverage of the hearing highlighted Michelle's testimony.