CPSIA – Jockeying for Position over the Database

The Washington Post published the latest whitewash on the CPSC public database yesterday entitled “Publicly accessible product safety database hits House roadblock“. In this article, the Post allowed consumer group favorite Rachel Weintraub to publish her own spin of matters: “‘There’s a lot of support for the database, but we don’t know how the dynamic is ultimately going to play out,’ said Rachel Weintraub, director of product safety and senior counsel for Consumer Federation of America. ‘This is really a last-ditch effort by manufacturers to hold on to this great situation they have right now, where information is not getting out to the public.’” [Emphasis added]

Of course, Rachel was simply borrowing a phrase from last week’s New York Times (“Emboldened by a Republican majority in the House of Representatives, manufacturers of toys and other children’s products are making a last-ditch effort to quash new safety regulations that they say are unfair or too onerous”). [Emphasis added] When you have a great phrase, why not use it over and over?!

What’s the truth? Does it even matter anymore? Jennifer Kerr of the Associated Press questions the purported (asserted) value of the database, noting:

“Anyone can submit a “report of harm” to the SaferProducts.gov database. They aren’t required to have first-hand knowledge of the alleged injury or potential defect that could lead to injury. . . . The U.S. government has a similar auto safety database, also available to consumers online, that describes people’s safety complaints in extraordinary detail. It is the government’s principal early warning system intended to alert federal investigators to signs of looming safety problems. Yet despite efforts by the National Highway Traffic Safety Administration to review consumer complaints before they’re memorialized in the government’s database, an AP review of 750,000 records last year found that the data included complaints about slick pavement during snow, inconsiderate mechanics, paint chips, sloshing gasoline during fill-ups, potholes, dim headlights, bright headlights, inaccurate dashboard clocks and windshield wipers that streak.” [Emphasis added]

This is just what we in the small business community need – a government-sponsored, funded and promoted accumulation of unqualified miscellaneous gripes about our products. Do you think the media will ever take an interest in this stuff? Nah . . . .

And lest we forget, a familiar criticism of the database is that accusations can take a long time to resolve . . . but once posted to the Internet, can never be truly expunged from the permanent record. The year-long DryMax diapers controversy, not to mention the trashing of Toyota braking systems, demonstrate the severe risk U.S. manufacturers and importers face under the database. Imagine the long term damage to those brands if the accusations (subsequently proven false) never died . . . . Notably, Wayne Morris of the Association of Home Appliance Manufacturers called the new database nothing better than a “blog” because of these design defects.

The Washington Post failed to mention this nuance. Rachel must have forgotten to point it out.

I think it’s also worth considering the gap in how the CPSC describes the purpose and function of the database. Thanks be to Congress, is it clear WHY we have this database? Cheryl Falvey, General Counsel of the CPSC, says it’s a “complaints” database, NOT a “causation” database. She is pinning her interpretation on the disclaimers all over the website that the information on the site has not been proven and may be wrong. In other words, the postings can’t be relied upon. They are only “complaints” under this view. Ms. Falvey used this reasoning to dismiss complaints about process raised by pesky last-ditch manufacturers at last week’s ICPHSO.

Of course, if the postings are really just “complaints”, why did the CPSC name the site “SaferProducts.gov”? Doesn’t sound like a complaint website, does it? A long time ago, I complained about the website name to the person who claims to have coined it. I did not win that one, obviously. The URL includes the media-friendly term “safer” and makes an inescapble connection to Ms. Tenenbaum’s famous remark on website trustworthiness: “Well, to all of you here today, I say don’t believe everything you read on the Internet, except what you read on Web sites that end in dot gov.”

I may not be the only one who thinks this, despite the website’s disclaimers.

This impression is reinforced by Chairman Tenenbaum’s own description of the ideal workings of the database in her keynote speech at last week’s ICPHSO: “I also envision the site empowering consumers to make independent decisions that further their own safety and the safety of their family. If a mom uses the search function on the site, sees a series of reports of harm about a product she bought for her child, and decides to take the product away from her child, while behind the scenes we are working to finalize a recall—that is a good thing in my opinion.“

That sounds like a “causation” database, doesn’t it? The implication is that the mom can rely on the information (it must be true) and besides, doesn’t an injury “incident” mean that a recall is coming soon? My immediate concern is that Ms. Tenenbaum is right – unqualified and unverified complaints on SaferProducts.gov WILL induce consumers to take our products away from children – whether or not a recall is forthcoming. We also know that Ms. Falvey is right – no one knows if the complaints are true – but who will reimburse our losses when the government convinces our customers that the safest course of action is to stop using our product pending a decision that may never be forthcoming . . . because nothing’s wrong.

The Chairman is encouraging consumers to rely on this information – to draw conclusions on the likelihood of future injury. This is even more alarming, given that Ms. Tenenbaum said in Congressional testimony last week that the agency will likely post unverified or inaccurate information to the database. She knows that this information will be faulty. As she said in testimony, “that’s what the rub is”.

That’s the rub, indeed.

I am tired of the rub, indeed.

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CPSIA – Jockeying for Position over the Database

CPSIA – Appropriate Recall Points Out The Real Problem

795 days have passed since ANY Democrat in Congress did ANYTHING to help us on the CPSIA. There are only 15 days left until Election Day.

The CPSC today announced a recall of a product called “Bathtub Subs”. The battery-operated bathtub submarine toy is “yellow, has a smiling face, turquoise windows, an orange propeller and an orange periscope that turns the toy on and off. The intake valve has a water pump that sucks in water to propel the submarine.” The cringe-worthy problem: “The intake valve on the bottom of the submarine toy can suck up loose skin, posing laceration hazard to children. . . . CPSC and the company are aware of 19 incidents of lacerations to boys’ genital area. One of the incidents required medical attention.”

This product has a real safety issue, and it has nothing to do with lead. We can understand the problem because the issues can be described accurately and the injuries can be measured. This is how we can measure the right response. The product was aimed at very young children (toddlers) in bath-time play. It seems foreseeable that the toy might rest against “sensitive” areas. The product was not apparently designed with this risk in mind. Please contrast your ability to assess the issue here with, say, rocks, fossils, pens, ATVs, bicycles, musical instruments, children’s underwear, shoes, books and other products that have famously run afoul of the CPSIA’s restrictions on lead without demonstrating any apparent safety issues.

As a toy maker, I hate when this kind of problem happens. It makes all of us look bad, even we had nothing to do with the issue. We all get blamed for problems caused by other companies. This is how CPSIA’s are born.

There were 19 incidents in the last year with this product. Makes you wonder what it takes to get someone to do something about the issue. Do you think this was a “mystery”? Here’s what you find on the Amazon.com review page today (before it gets taken down):

“Dangerous toy, May 25, 2010
By Tyler Warren

I bought this toy for my 12 month old son. He was playing with it in the bath one evening and put it down in his lap. It sucked up some skin on his penis and cut it. I called and put in a complaint to Munchkin and I am very disappointed that this toy is still on the market a month later. This toy is dangerous and should not be given to children.

Comment Initial post: June 15, 2010 8:37 PM PDT

Julie Everett says:

The same thing happened to my 19 month old son tonight. I reported it to the CPSP [sic]. You should do the same since the company didn’t take you seriously. My son has injuries to his penis and testicles. Here is the link if you like. https://www.cpsc.gov/cgibin/incident.aspx

Very Dangerous, June 15, 2010
By Julie Everett (Florida)

My son loves this toy. Tonight he was playing with it in the tub and also set it in his lap and it sucked some of the skin from his penis and his testicles and cut both of them. I will be filing a complaint with the company as well. Do not buy this for your child!

I agree it is a dangerous toy…, August 8, 2010
By Pamela Beightol (Falconer, NY United States)

I had the same thing happen to my 15 month old when he was playing with the toy. His skin from his penis got cut after about 3 minutes play with the toy. I would not let my 5 year old play with it either.

I would have given it no stars if possible, August 26, 2010
By Kendall Tupker

The same thing happened to my 13 month old son. We had just given him this toy to play with in the bathtub and within a few minutes he was screaming in pain. While he was holding it in the water near his lap it caught his foreskin and cut him. Needless to say the sub ended up in the garbage and I made a complaint to the company. Never, ever buy this toy.”

This was publicly available on Amazon for months before either the company or the agency did anything about it. By all appearances, neither did Amazon.

Let’s face it, this item is not exactly a dire threat to our way of life. That being said, this kind of insensitivity to consumer needs and expectations is how unjust laws like the CPSIA get written, passed and revered. It is also raw, red meat for a headline-mad CPSC anxious to justify its existence and its budget. Do I hear massive penalties?! Manufacturers have to think ahead and consider whether they want stories like this told about them. This is a compliance issue, a duty of care issue. It is NOT an issue that requires legislation. Unfortunately, nothing is routine at our regulator these days. Who knows what the implications will be flowing from this recall.

One last thought: among the many reasons that I truly HATE the CPSIA, it is the rising spectrum of a liability feeding frenzy over children’s product safety. This can ruin what we are doing, and in any event, I don’t relish planning my business around protecting myself from ravaging trial attorneys. Paranoid? Well, I received notice of this recall at 5:40 PM CST and in the next 15 minutes found these two sites devoted to this very recall:

Lawsuit Settlement Funding and Lawyers-and-Settlements.com. The latter website invites: “If your child has suffered an injury related to the use of this product, please click the link below and your complaint will be sent to a lawyer who may evaluate your claim at no cost or obligation.” Remember, this was up within 15 minutes of the announcement of the recall.

Think of the chaos that will follow the much-anticipated public database. We can only pray that a Republican Congress will de-fund the database before it gets off the ground. Or else we’ll all be in the ground . . . .

Vote on November 2nd. It’s your duty!

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CPSIA – Appropriate Recall Points Out The Real Problem

CPSIA – Recall the CPSC

778 days have passed since ANY Democrat in Congress did ANYTHING to help us on the CPSIA. There are only 32 days left until Election Day.

In a remarkable demonstration of the anti-business bias of the current CPSC, Chairman Inez Tenenbaum took to the air today to bash toys and to take our old friend Mattel to task for four recalls of more than eleven million units.

Uh-oh, Mattel’s at it again. Hope this doesn’t mean it’s time for another CPSIA. It is Election time, after all.

Some background:

The CPSC Commission hosed us on Wednesday with its decision on the definition of “Children’s Products”. [Here is the approved definition (link to follow).] I will write about this in the next few days. In typical Tenenbaum fashion, rather than face intense and negative media attention on the bungled decision in which the agency knowingly effectively banned hands-on science education in the United States (see The New York Times and Associated Press on this issue), announced several high profile recalls and a scary “warning” about popular but apparently deadly infant products to distract the media and possibly you, too.

The four recalls and the warning are each prominently displayed on the CPSC website. Each was announced by press release so as to garner maximum attention. The new definition of “Children’s Products” was not announced, although there are two Commissioner’s Statements currently up on the website (Adler and Nord; Northup’s is done but the link isn’t up yet – here is her blog on the topic). The draft of the new rule is nowhere to be found on the CPSC website. There was no press release for the decision and no reference to the decision on the website other than the buried statements of the two (warring) Commissioners. Hmmm.

Probably just a little oversight, right Scott??? More on this later.

The five matters released to distract you were:

a. A warning to stop using Infant positioners in cribs. Twelve babies died in 13 years.

b. Fisher-Price recall of 2.925 million inflatables for choking hazard. Sold over NINE YEARS, 14 small parts found in kids’ mouths, three kids were “beginning to choke”, no injuries.

c. Fisher-Price recall of 1.075 million high chairs for laceration risk. Sold over NINE YEARS, seven injuries requiring stitches and one “tooth injury”.

d. Fisher-Price recall of 120,000 “Wheelies” for choking hazard. Each set includes four cars, so the universe of affected “Wheelies” is actually 480,000. Two broken toys discovered among the half million out in the marketplace (wheels fell off). No injuries.

e. Fisher-Price recall of 7.15 million Children’s Tricycles for risk of “serious injury”. Sold over FOURTEEN YEARS, ten injuries with six requiring medical attention (cuts).

Interestingly, when these recalls were brought to my attention this morning, the CPSC website simply listed the four Fisher-Price recalls as it normally does for recalls. However, by midday the marketing of the “crisis” had begun with a screaming headline in large print on the home page reading “Fisher-Price Recalls More than 10 Million Products“. No doubt the presentation was changed as a public service (these products are sooooo dangerous) . . . . The link under the headline leads to a blogpost about the four “grisly” recalls noting the following “information”:

“Fisher-Price did the right thing in agreeing to provide consumers with free remedies for these products. But all companies must do better. They must give more attention to building safety into their products. They must work to ensure that they are adhering to safety standards. And if any company finds itself with a defective product or one that is causing injuries, it must report the problem to CPSC immediately. Meanwhile, as moms, dads and caregivers, you, too, have a role. We thank the dozens of you who reported these incidents. Thanks to you, CPSC was able to investigate, work with Fisher-Price on a remedy and recall these products. If a toy breaks in your child’s hands or if your child suffers an injury from a product, tell us so that we can investigate. And if you own one of these recalled products, stop using it and contact Fisher-Price for free repair kits and replacement products.” [Emphasis added]

Is this about Fisher-Price (Mattel) or about you and me? Did we do something wrong? Apparently we must have. We were spanked in this blogpost. Was it a “teachable moment” for you? Was it as good for you as it was for me?

There is so much more to say about this:

1. I find it shocking that the CPSC would so shamelessly try to cover its tracks on the approval of the final “Children’s Product” definition. It’s not only an embarrassment to the agency, but it’s an insult to your intelligence. How this reflects the agency’s view of the media, I will leave it to you to divine. It ain’t a compliment.

2. Inez Tenenbaum went on TV today to stoke fear of toys. She did this on what is essentially the kick-off day for the Xmas toy season, September 30. Yes, our government sent its top official on national TV to scare the crap out of consumers and to warn them not to trust the companies making toys right as they were going out to the store to buy Xmas presents. This is a Barack Obama stimulus plan in action! Thanks for ALL the help, guys. Doin’ the Lord’s work every day . . . .

Here are a few quotes from Tenenbaum’s ABC News interview:

ABC: “It’s a major recall involving four different products.”
ABC: [Re High Chairs] “The problem with the high chair, I understand, is these pegs. What’s the problem there?”
Tenenbaum: “There pegs stick out and children have fallen on these pegs. Several have been injured and seven have required stitches.”

[Tenenbaum smirks as she neglects to advise that the seven injuries requiring stitches took place over NINE YEARS and were all minor injuries.]

ABC: [Re Trikes] “The hazard is a fake key that protrudes from the bike frame.”
Tenenbaum: “These tricycles have this key which sticks up and little girls have jumped on this key and have had serious cuts.”
ABC: “Serious injuries.”
Tenenbaum: “Serious injuries.”

[Another minor omission - Tenenbaum neglects to mention that the six injuries requiring medical attention affected six children among more than seven million users, took place over 14 years and involved toddlers that were supposed to be under parental supervision. Do you think she was helpful enough to the ambitious reporter who wanted a scary story? At least she took the hint and characterized the injuries as "serious injuries".]

. . . .

ABC: “There’s a message in this for all manufacturers.”
Tenenbaum: “Manufacturers need to build safety into the product from the very beginning so that we don’t have to recall on the back end.” [Emphasis added]

[This is my Xmas gift from Tenenbaum. Mattel is the cause of this, and it's Mattel that screwed up if ANYONE screwed up. Still, Ms. Tenenbaum can't miss the opportunity to use TV to tell MY customers to not trust ME. Thanks so much. And this Administration is MYSTIFIED about why we can't get our job market going again. I'm stumped, too. . . .]

ABC: “In a statement this morning, Fisher-Price said it wanted to reassure parents that its products are ‘overwhelmingly safe’. But if you have any of THESE products, you SHOULD call the company. They will offer a fix for some of them . . . others will be replaced outright.” [Emphasis added]

[Lest anyone mistake this for yet another idiotic and reactive series of recalls, ABC tries to portray Mattel as untrustworthy with the quote about the overwhelming safety of the 11 million recalled toys . . . then tells you to get them out of your house pronto.]

3. The Wall Street Journal was able to put a happy face on this sorry episode. Mattel’s 2010 earnings will only shrink by a penny a share because of the massive recalls. Anyone want to organize a telethon to help out a buddy in distress? How will Mattel make up that penny? Oh, the horror of it. . . .

4. I would be remiss if I didn’t remind you that Mattel has succeeded in certifying about ten of its corporate labs to test its products. I call on the CPSC to release the Mattel test reports behind these recalled items. I can’t wait to see the first recall of a Mattel item tested in a CPSC-certified Mattel lab. You’ll never know about it, because the CPSC and Mattel will move heaven and earth to keep you from finding out.

5. The recall of the Mattel “Wheelies” will be known as the original “broken toy standard” recall. Please consider the ominous nature of this development. The Mattel toy cars were reported by eager and enthusiastic consumers because they found a broken toy. The CPSC is calling for this kind of “help” so you can expect a LOT more of this in the future. To be precise, two broken toys were found in this case. No one was hurt. No allegation has been made public that any child was even possibly in danger. No disclosure was made about how the toys broke.

The CPSC apparently intervened to “investigate”. These investigations often begin with a warning to the manufactuerer – you can participate in the CPSC’s Fast Track Voluntary Recall program and avoid a formal investigation and possible penalty, or you can take your chances on what determination we will make months or years later. This kind “offer” is generally a short-lived one, possibly allowing only a few hours to decide. [This dirty secret is certainly true - ask around . . . or wait for the call.] The facts may be just like this one – a broken toy has been discovered (horrors), do you want to recall (today)? Mattel decided to recall in the case of the “Wheelies”, based on two broken toys and perhaps on a conversation with the kind folks at the CPSC.

Do you get this one? If a consumer reports a single broken toy to the CPSC, the agency may investigate you and you may be forced to recall the item immediately. No injuries are required, just the POSSIBILITY of injury. Do you see ANY problems with that standard? Do you think the possibility of injury is the same as the certainty of injury??? Are your products indestructible? Is this a standard for recalls you are prepared to meet? And how do you plan to blunt this regulatory attack?

Having fun yet?

You heard it here first. The “broken toy” standard – that’s the rule now. I’m not kidding.

For those of us idiots who persist in making children’s products, these recalls are chilling, particularly in light of the decision on “Children’s Products”. The CPSC is busily engaged in shrinking our market through scare tactics and reactive regulation of the markets. They are also building barriers to entry that protect mass market companies and ensure the demise of small business. How many of you can withstand the cost, damage and disruption of a 11 million piece recall? None of you. This will cost Mattel ONE PENNY. Aw, poor Mattel. Who will be left to compete with them? Hasbro. And you? You’re screwed. The CPSC doesn’t even bother with lip service on this one anymore.

The new definition of what constitutes a ” substantial product hazard” under the CPSA is now . . . everything. Anything that might possibly cause injuries is implicitly an “imminent threat” and must be recalled. There is no defense to the possibility of injury. Heaven forbid that there may have been injuries of any kind. Then you are dead. You’ll find out your penalties in a few years but right now, the recalls must proceed. Doesn’t matter what percentage of the items cause injury. Doesn’t matter how many years it took to accumulate the injuries. Doesn’t matter if the consumer was at fault or if there was dereliction of duty on the part of adults. The company is always at fault.

We are aiming for a Utopian society now, guys. Do you doubt this? Read this article carefully from the top a second time. The message is clear: Manufacturers, get out of Dodge, unless you are Mattel.

RECALL THE CPSC! This madness will kill us all. This is all about a mania and political leadership hired to foment this change in approach. There is little reason to believe these people will change – it’s time to start over.

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CPSIA – Recall the CPSC

CPSIA – Wolfson Fans Fear on Shrek Glasses (Was it a Slow Week at the CPSC?)

It seems that the feeding frenzy over the McDonald’s Shrek glasses just won’t die. No matter that there are zero reported injuries from cadmium in consumer products – EVER – or that the medical community is basically unaware of any material risk to children from cadmium in consumer products. Yet another news report on McDonald’s perpetuated the myth that the presence of cadmium on the outside of the glasses is a danger.

Let’s start with a basic FACT – CPSC spokesman Scott Wolfson put in WRITING that the Shrek glasses were NOT TOXIC. I have previously analyzed this remark and concluded that “not toxic” is the equivalent of “SAFE” (based on the plain English language meaning of the words). Wolfson has conceded in writing that the glasses are safe.

Now the Philadelphia Inquirer quotes Scott Wolfson raising doubts about McDonald’s Shrek glasses:

“‘CPSC is doing additional follow-up work in the aftermath of the recall,’ Wolfson said. ‘The case is not closed.’”

The CPSC is apparently investigating glasses that Wolfson himself called safe. Don’t worry, Wolfson is just trying to keep everybody calm.

Apparently not content with this mess, Wolfson goes on to suggest that some parents (the really neurotic ones) may want to take special precautions with the safe glasses:

“Wolfson, the CPSC spokesman, said risk-conscious parents might want to consider using a souvenir glass simply as a souvenir. ‘If a parent wanted to be as cautious as possible, they should consider not allowing their child to use it as a drinking glass — to keep it as a collectable or just allow it for adult use only,’ Wolfson said.”

The message here, of course, is that the glasses are NOT safe. But they are. So who are you to believe, Wolfson Number One or Wolfson Number Two? Or not believe any of the Wolfsons because they are playing some sort of game with us that none of us can understand?

The Shrek glasses manufacturer certainly seems puzzled. But he seems to be reliant on knowledge of the manufacturing process and perhaps even knows something about science, seemingly a liability these days when dealing with a know-nothing government:

“‘There is nothing wrong with the manufacturing process,’ Jose-Maria Aulotte, Arc’s senior vice president, said last week . . . . Aulotte said the cadmium-based pigments are made in Germany — not France, as a McDonald’s spokeswoman previously stated — and are legal ‘in all countries we do business in.’ He said the pigments are used in red and yellow enamels, and in combinations such as oranges and greens. Once decorated, the glasses are fired at 1,100 degrees Fahrenheit, in a process called vitrification that Aulotte said locks the enamels to the glassware. ‘We’re confident all Arc International products are safe for use by children and adults, and are unaware of harmful exposure related to these pigments,’ he said via email . . . . Aulotte said he was puzzled why the CPSC tests suggested that routine handling could lead to cadmium exposure. ‘It depends on what you do with it. But if you just carry the glass, it should not come off,’ Aulotte said.”

Were the CPSC a logical place with regulators who are concerned about public safety, not public neuroses or headlines, this matter would be long dead. Why couldn’t Wolfson tell the Philadelphia Inquirer that the matter is closed, that he has already informed it that the glasses were safe and that the recall was voluntary at the request of McDonald’s to reassure the public about its cautious approach to safety? Well, of course, that’s not entirely true, as it has been widely reported that the CPSC urged this recall of safe product. What SHOULD the CPSC say? Maybe that they screwed up?

I should live so long.

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CPSIA – Wolfson Fans Fear on Shrek Glasses (Was it a Slow Week at the CPSC?)

CPSIA – Has Congress Ever Done This Before? Ha!

The CPSIA was crafted as a response to a then-shocking but rather inconsequential series of toy recalls in 2007/8 (very few injuries or deaths). After years of intentionally starving the CPSC of budgetary resources, Congress blamed the agency for the large scale toy recalls, leaped to the conclusion that children’s products (not just toys) weren’t “safe” anymore and proceeded to gut the law governing safety and the CPSC (the CPSA). The resulting law (the CPSIA) upended regulation of children’s product safety across an unprecedented array of industries. “Unintended consequences” popped up everywhere almost immediately. Many people claimed to be “surprised”. Given the low injury statistics across the category, the law seems like a vast overreaction.

It’s easy to overlook historical precedent during a crisis. Has Congress ever missed the boat like this before?

Okay, dumb question. But well put!

Consider the response to the Titanic tragedy in 1912. In that famous collision with an iceberg, 829 passengers and 694 crew died when the Titanic sank in the Atlantic. Perhaps you recall the movie . . . . Anyhow, it turns out that the Titanic did not carry enough lifeboats to save everyone. There were 2,228 people on board but the lifeboats only held 1,178. Don’t doubt my math but 705 survived.

Congress couldn’t stand still after the Titanic. Pinning the blame for the loss of life on the lifeboats, rather than the iceberg, Congress passed the La Follette Seamen’s Act of 1915 mandating boats and life rafts for all persons on board seafaring ships. The thinking goes that if every ship had a life boat seat for every passenger, no one would ever die in such a tragedy in the future. The public furor over the loss of the Titanic prevented consideration of the fact that most ships have no risk of colliding with icebergs because of their routes. Likewise, lifeboats are an ineffective remedy in many marine disasters because they would not be able to be launched. No matter, Congress “solved” the problem.

Notably, some members of the maritime industry resisted. In Congressional testimony, A. A. Schantz of the Detroit & Cleveland Navigation Co. noted that the rules intended for the high seas would backfire on the Great Lakes. Schantz pointed out that the light draft and ship design would make Great Lakes ships top-heavy and unseaworthy under the new law. He went so far as to predict that some Great Lakes ships would “turn turtle” if forced to operate with the heavy and useless lifeboats. His argument wasn’t just that the expense was pointless – he also noted that it was counter-productive and even dangerous.

Let’s pause for a second here. Congress rushes onto the field to “solve” a problem it doesn’t really understand. Why doesn’t Congress understand the problem despite hearings and so on? Well, among other things, Congress lacked industry-specific know-how and expertise. It is better at identifying “effect” than “cause”, and therein lies the problem. Consequently, Congress was looking for a particular answer, and tended to reject discordant data (like Mr. Schantz). When industry tried to advise Congress of the inadequacy of its solution, Congress knew better and brushed them off. After all, who has more integrity, Congress or the industry that “caused” the problem in the first place?

Can anyone guess where this is going?

On July 15, 1915, while at dock in the Chicago River, the S.S. Eastland capsized, killing 844 passengers and crew waiting to cruise on holiday to Michigan City, Indiana. The reason? The Eastland was already top-heavy and became unstable under the federally-mandated safety equipment. The ship, when it listed and sank, was described as rolling over “as though it were a whale going to take a nap”. Quite an image. Quite a tragedy. Thanks for all the help, Congress!

Not only is this story creepily similar to the CPSIA saga, it is also a reminder of the risks in the broad financial reforms currently being contemplated by this Congress. Senator Judd Gregg warned: “We shouldn’t put in place a regulatory regime that overly reacts and, as a result, significantly dampens our capacity to have the most vibrant capital and credit markets in the world.” He might as well be speaking of our friend, the CPSIA. As Jim Grant notes: “The intended consequences of government regulations are frequently less potent than the unintended ones.“

As obvious as Mr. Grant’s point has become in the case of the CPSIA, the Democrats if anything have hardened their position and remain resolute that they are doing “everything they can” for us. Put another way, everything else that we want (and which has been denied us) in a CPSIA amendment is NOT forthcoming. No reason supplied except the intellectual pap that everyone wants kids to be safe – America demands it. Apparently, the Dems think they have a much better idea on how to keep kids safe than the industry.

So the Democrats are willing to risk another S.S. Eastland in the children’s product industry rather than admit they went (way) too far. The Republicans, to their undying credit, admit that the CPSIA needs severe restructuring and are working hard to bring about real change. Sadly, Waxman and his Dem co-horts are able to block the Republican effort at reform, and that’s why we are in a stalemate. Who will be the S.S. Eastland of the children’s product industry? It could be my company, could be your company, could be your school or even your child. The unintended consequences keep coming to light, and as the evidence mounts, the Democrats in Congress and their counterparts at the CPSC will held to account for the damage they have wrought. History will not forget.

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CPSIA – Has Congress Ever Done This Before? Ha!

CPSIA – The Incoherent Theory of the "Common Toy Box"

Rachel Weintraub, fear monger extraordinaire, gave a vigorous defense of certain popular urban myths about lead in this week’s CPSIA hearing. Among her most cherished distortions is that old standard, the “common toy box”. I have discussed this in the past (here and here) and with your indulgence, will again take on Ms. Weintraub and her assertion of this idea.

To remind you, the “common toy box” is the principal justification for the age limit in the definition of “Children’s Product”, namely 12 years old and younger. This definition means that the lead limits apply to ALL products intended for children up to 12 years of age. The justification for this super conservative posture? We hear it all the time from the Waxmanis – the common toy box, of course.

Ms. Weintraub asserts that a common toy box is present in every house, and therefore a young child might gain unfortunate access to an older child’s toys. Given her assertion (that she says “everyone” would agree with) that there is “no safe level for lead”, the possible exposure of young children to the toys of their older brethren is an intolerable risk. Or as she puts it, “could be deadly”.

Rachel explains her method of solving this problem in her house, which she seems to think is reasonable:

“Children play with products that are in the household. As I mentioned, I have three children. I have [an] almost six, almost four and one year old. My children are very aware of what choking hazards are. They have toys that stay in their room. But there’s an important difference between a choking hazard and lead, and that is not only can I not identify whether the product has lead, they certainly can’t either. So we need to have laws that protect children in concrete reasonable ways that reflect how children actually interact with toys.”

Case closed?

I must defer here. Ms. Weintraub’s argument is incoherent and particularly inapplicable here.

First, the risk from lead stems from ingestion. Rachel’s focus here is on mouthing, and for simplicity, I will ignore ingestion by breathing (relevant only to lead-in-paint). Ms. Weintraub correctly notes that young children will mouth toys and other children’s products inappropriately. Children under 36 months of age are so prone to inappropriate mouthing that small parts are illegal in products suitable for them. The CPSC has long had guidelines for manufacturers to help them objectively determine which toys are suitable for children under three years of age.

By carefully controlling access to these possibly dangerous toys, Rachel is being a good parent. She is to be commended. Interestingly, Rachel’s argument also concedes that parenting has a role in safety with children’s products. It would not be responsible parenting for anyone, including Rachel, to rely on the government for making these judgments. She still has to monitor and supervise her children.

Interestingly, Congress is also on record on this topic. Small parts are a known hazard, and as noted, have long been illegal for kids under three years of age. That is not in dispute and in fact, became law (rather than simply the voluntary F963 standard) under the CPSIA. The Child Safety Protection Act of 1994 instituted mandatory safety labels for products suitable for kids aged four to six years of age (they were previously voluntary) for (among other things) small parts. Why? Congress recognized that items most likely to be in the “common toy box” and most attractive to children under 36 months of age are those toys intended for kids in the 4-6 age range. The mandatory safety labels were intended to put parents on notice to handle these products with special care. Congress did not make these products illegal notwithstanding the slight risk of inappropriate mouthing.

Congress took another swipe at this issue in the CPSIA itself. In adopting the “primarily intended for” standard in the definition of :Children’s Product”, Congress acknowledged that while other items in the household might contain lead and might be used by children, those products did not pose the same risk as products that would be attractive to young kids possibly prone to inappropriate mouthing. Put another way, Congress recognized that the level of risk did not justify regulating these other items. [This is the source of the tortured reasoning of the pen exemption decision.]

Human factors experts at the CPSC have never developed evidence that items for older children (six and over) are any more attractive than adult products to the younger children who because of their mouthing behavior and developmental state are most at risk. Hence, there has never previously been a perceived need for such restrictive rules to protect against mouthing.

Either mouthing is a big issue, or it is not. Rachel’s good parenting on small parts is simply an anti-mouthing strategy. There is no other reason to restrict small parts in her household. Having recognized the risk of inappropriate mouthing, Rachel and parents like her can fully be expected to closely monitor the mouthing behavior of their kids. To claim otherwise is disingenuous. When their kids suck on zippers, moms like Rachel will take it out of their mouths before “poisoning” can occur. [You would have to suck on a brass zipper for years before your blood lead levels would change measurably.] Likewise, if the kids start eating out of the dog’s bowl or licking doorknobs or whatever absurd childhood activity is posited, moms with Rachel’s philosophy of parenting will swoop down. Either they are attentive or they are not. Thus, Rachel’s kids are just as secure against lead as against small parts.

Even more interesting to me is the notion that Rachel is holding up her behavior as the “standard”. I think this is an interesting (but rational) concession on her part. Rachel is apparently a thoughtful parent and interested in her kids’ welfare. She acknowledges her personal responsibility to maintain a safe household for the kids’ benefit. So apparently in Rachel’s model, parents can think and can be held to a standard of exercising good judgment and individual responsibility. The government is not responsible for everything, it appears.

If we are to be sent down the river because of Rachel and the fantastic “common toy box”, I think the incoherence of her argument deserves careful exploration. Either common toy boxes causes tinjuries, or they don’t. Her parenting model does not leave much room for risk. Where’s the actual injury data to support her assertion of this dreaded risk? I think her words alone should NOT suffice. After all, of the 14 common toy box recalls in the history of the CPSC, none related to the CONTENTS of a common toy box.

Urban myths should not be the basis of law.

Read more here:
CPSIA – The Incoherent Theory of the "Common Toy Box"

CPSIA – "Low Volume Manufacturers" under Waxman Amendment

The proposed Waxman Amendment adds a new term to our CPSIA lexicon: “Low Volume Manufacturers” (LVMs). This term is introduced in the ironically-named Section 4: “RELIEF FOR SMALL MANUFACTURERS AND OTHER BUSINESSES”.

How small is “small”? The definition of a LVM is a manufacturer that

“(A) manufactured or imported no more than 2,000 units of all products manufactured by the manufacturer during the most recent calendar year; and (B) had gross receipts totaling not more than $200,000 during such year.”

To clarify, the definition intones:

“the products and gross receipts of a manufacturer shall be considered to include all products and gross receipts of each entity that controls, is controlled by, or is under common control with such manufacturer.“

Yep, THAT’S small alright. In other words, if you made or imported 2000+ units of anything regardless of value (all products added together) OR had gross receipts of $200,001 last year, you get nothing here. So, if you sold 3,000 Popsicle sticks for $50, you are out. If you sold 201 cabinets for $1,000 each, you are out. Only the true small fry are included here. Happy?

Hey, isn’t there some sort of federal definition of a “Small Business”? Yessir, the SBA publishes size standards to define Small Business. These federal standards are found in myriad federal legislation (shocking, right?). They are widely used – so why not include them here? That question was posed directly to the Dems – especially since earlier drafts of this amendment featured a higher dollar limit (also inadequate). Why did the Dems tighten the standard so much? Why not incorporate the SBA standards, like every other federal agency?

The best explanation I can give is that the Dems don’t really have any interest in providing relief to small businesses. They also may want to appear to give relief, principally to fool members of Congress who have expressed concern for the fate of crafters under the CPSIA.

Do you think I’m being too cynical? Let’s not forget the words of Senator Durbin’s associate a year ago: “I think you are right that the CPSIA imposes costs on businesses, and because of economies of scale it’s the smaller businesses that will feel these costs more acutely. This is part of a larger calculation that it’s worth the costs to shift from the old system of post-market correction (once a dangerous product is out in the market and leads to sick kids, recalls, lawsuits, etc.) to a new system of pre-market testing and certification (instead of just assuming products are safe and paying the price for false assumptions).“

She said it – small business problems induced by the CPSIA were part of a “larger calculation”. With this amendment, the Dems again test our gullibility.

The provisions relating to LVMs provide the following “relief”:

a. This provision is designed to provide modified requirements for LVMs under Section 14(d) of the CPSA, in other words, the long-delayed and never drafted “15 Month Rule”. For those of you scoring at home, the “15 Month Rule” is now four months late – call it the “19 Month (and counting) Rule”.

b. The “relief” that the CPSC can offer LVMs is “alternative testing requirements” that “provide for reasonable testing methodologies to assure certification based on compliance with the relevant consumer product safety standards”. The alternative methods must ASSURE COMPLIANCE. Can you picture what such “assured compliance” might look like? If these words have their normal English language meaning, the “relief” should be nil if compliance must be assured.

c. The CPSC has the right to implement such alternative testing requirements for LVMs on a product, product class or even for a specific safety standard or part of a standard.

d. NO relief is allowed for lead-in-paint, cribs, pacifiers, small parts, children’s metal jewelry, baby bouncers, walkers and jumpers and durable infant or toddler products (as defined somewhere). All of you LVMs, make a note!

Have you ever heard the expression “trap for the unwary”?

e. This provision also calls for the creation of an “Office for Business Education, Outreach, and Advocacy”. Since I called for such education resources in my first speech at the CPSC back in November 2008, I shouldn’t make fun of this. I just like the legislative goal of this organization: “assist the Commission in informing and educating manufacturers and retailers about requirements under this Act or any other Act enforced by the Commission”. This is much needed. Of course, given that you must master literally thousands of pages of gobbledygook to fully understand the CPSIA as implemented, I would DEFINITELY not want this job. If anyone calls about this opening, tell them I am at the dentist.

f. The provision adds an idyllic sounding provision (Section 4) to the CPSIA which states the pleasant intention to “cooperate” with LVMs “in enforcing the lead limits and third-party testing requirements”. Of course, all cooperation must be “consistent with [he] goals of statute”. In other words, you must be able to prove you comply. There are soothing words about assessing the practicability of tracking labels for these micro-businesses. [Remember that "practicable" incorporates concepts of economics .]

Shame that you and I won’t be eligible for tracking labels relief, too . . . .

This charade purports to provide relief to small businesses but in fact, will benefit virtually no one. Even the Handmade Toy Alliance, a CPSIA advocacy group created by crafters, has few members that would benefit. Notably, there are many more small businesses affected by this law beyond the HTA, so the failure to impact HTA members is just an indicator of how lame the proposed relief actually is.

The SBA sets a high bar in its definition of small business for several reasons (as high as 500 employees or $500 million in revenue). Among them is a fear that legal benefits for small businesses may be unfairly distributed if the definition is too narrow. Many small businesses could miss out on needed protections. Furthermore, the complexity of the U.S. economy makes it difficult to describe a small business. The high bar in the SBA definition leaves room for small businesses in every industry from airplanes to pencils to baby clothing.

The SBA certainly doesn’t want to disincentivize growth or prosperity among small businesses. They recognize that the small business community is a huge jobs creator, so maintaining its financial health is a public policy imperative. The SBA wouldn’t want small businesses to lose special legal benefits because of an immaterial event, like a small incremental sale. So a law that TAKES EVERYTHING AWAY when you sell one more unit of ANYTHING or take in one incremental revenue dollar (all at a very low level of sales that would not coincide with a fundamental change in the nature of your business) would never fly. Never fly with the SBA, that is. Mr. Waxman apparently thinks this is fine – but actually, it’s UN-AMERICAN. Our laws are supposed to encourage us to grow. At least they used to.

If there is one basic reason to be critical of this provision, it’s the very conceit of granting relief by business size. This misses the point of SAFETY entirely. Size of business only became an issue under the CPSIA because the law is too broad. Let’s not forget that the prior law had standards for products, not for companies by size. Why do we need size exceptions now?

Think about it – if your child is harmed by a product, will it matter how much revenue the manufacturer earned in the previous year? Do you think the CPSC wants to modify “safety rules” for little businesses only to find out that one of these businesses hurt your kid? Uh, no. So why take this legislative approach? It’s simple -the Dems have constrained the way we can fix the law. They have fixed, absolutely FIXED, the definition of “safety”. The original standards and the original age limits MAY NOT BE REVISITED. These rules are too broad and invite many negative consequences – but since the Dems will not agree to modify them, we must apparently devise ever more complex rules to circumvent (or apparently circumvent) the problems they cause. In this case, the Dems offer relief for tiny companies. Those of us who have enjoyed enough success to hire a few employees and stop working out of our bedrooms are ineligible for this “relief” although our problems are just as troubling.

I do not accept that there is no solution here, however any durable solution requires that the definition of safety be modified to something sensible. The Dems won’t allow it. This is their “legacy” and they are bound and determined to ensure that it survives, ridiculous or not.

That’s your small business relief. Enjoy!

I intend to publish one more post analyzing the rest of the Waxman Amendment. It will cover an exception to the phthalates ban for inaccessible components. It will also document the sneakiness of the remaining language in the amendment. You aren’t meant to understand it – but I will do my best to shed some light.

Sorry, Henry! Let the sun shine in.

Read more here:
CPSIA – "Low Volume Manufacturers" under Waxman Amendment

CPSIA – Treatment of Section 101(b)(2) in the New Waxman Amendment

i have attached a conformed version of Section 101(b) reflecting the new Waxman amendment’s proposed changes for your reference.

The dilemma posed by the current Section 101(b)(2) is that exclusions to the lead standard are basically impossible to obtain. There have been several rejected exemption requests and much pleading by Nancy Nord and Anne Northup for changes providing flexibility.

Last December, Mr. Waxman (supposedly with input from Chairman Tenenbaum) launched a sneak effort to implement something called the “functional purpose” exemption to “solve” these issues. The original construct of this exemption applied to situations where the manufacturer could demonstrate that the lead served a “functional” purpose and could not be removed without consequences (not including economic loss). This provision would have permitted ATV manufacturers to assert the need to put lead in certain parts to strengthen the steel, for instance. The functional purpose concept derives from a similar procedure under the EU’s ROHS-WEEE and is also present in the treatment of electronics under the CPSIA.

Waxman’s functional purpose language generated howls of protest as the “solution” solved nothing for anyone. Later, the Commission could not agree on a functional purpose recommendation for its January 15h report, and the idea “died”.

In the new Waxman Amendment which emerged last week, a new version of the functional purpose exemption was introduced to modify Section 101(b)(2). You may find the conformed version of Section 101(b)(2) helpful in understanding how the new provision works.

My thoughts on the new language:

a. The limitations of the exemption process in Section 101(b)(1) are UNCHANGED. In other words, the problematic “any” language is still effective. The new functional purpose exception will be an exception to the exception. Get it?

b. The Section 101(b) structure which limits exceptions to specific products, materials (or component part, in the case of the functional purpose section) remains in place. The language does NOT permit exceptions by product class. You must apply product by product, material by material. The rule even specifies that each component must be individually considered. How many parts are in an ATV . . . .

c. The Commission is now allowed to act “on its own initiative” to exempt “a specific product, material, or component part”. A petitioner may also seek the same relief.

It is hard to imagine how this would take place – will a Commission of five people pick lucky companies or industries for random acts of kindness? Of course, the first products likely to be accorded this “on its own initiative” treatment would be books, ATVs and bikes because of political pressure. [Let's not call that "influence peddling".] More complex product categories, like school supplies (my industry), would be stuck without an effective means to seek exemption.

d. The process, regardless of who initiates it, will be subject to a notice and comment period. This is new and presumably is designed to enable consumer groups to “participate in” (read, slow down or obstruct) the exception process. You have to hand it to the authors of this provision – they found a way to make a slow, expensive and tedious process even worse.

e. The standard for obtaining a functional purpose exception has several parts (all of which must be satisfied) -

“(i) the product, material, or component part requires the inclusion of lead because it is not practicable or not technologically feasible to manufacture such product, component part, or material in accordance with subsection (a) by removing the excessive lead or by making the lead inaccessible.”

This clause has several tricky parts in it. First, the word “practicable” was supposedly chosen because of a Supreme Court decision holding that “practicable” implies consideration of economic factors. So bickering over what “practicable” means is almost certain under this provision. The legal standard will need to be developed to make this provision workable – another nice project for Cheryl Falvey and her CPSC legal department. No guidance has been provided on how much economic pain needs to be incurred before lead removal is deemed not “practicable”. Consider for instance the use of recycled metal for bike frames. When is removal of lead from bike frames not “practicable”? Each frame is presumably different. Virgin metal is available without lead. You figure it out, I can’t.

Let’s not forget that the amendment also uses the term “technologically feasible” as defined in CPSIA Section 101(d). The CPSIA definition omits any reference to economics – intentionally. So the phrase “is not practicable or not technologically feasible” means that it is either too expensive or impossible to remove lead. This makes no sense to me, as the term “practicable” with its advertised meaning incorporates technologically feasibility and makes inclusion of the latter term duplicative. If there is a reason to use both terms, I can’t figure it out. Readers?

In addition to the problematic standard of “practicable”, the petitioners must also demonstrate that it is both too expensive to remove the lead to levels below the standard AND also too expensive to make the part inaccessible. Since the standard for “too expensive” (not “practicable”) is not specified, this language means we must invite the CPSC, the Commission and (due to the notice and comment period) the general public and our competitors into our business processes. That rag-tag lot will get to decide whether the expense of money on the removal of lead from the subject product, material or component is “practicable”. Yes, that’s what it means – you must publicly expose your judgments and economic choices to the Commission for their feedback and approval. Presumably, this would require you to publicly disclose your costs to obtain the “not practicable” decision.

That really sounds like FUN! I can’t see a deterrent to submitting a petition . . . can you?

“(ii) the product, material, or component part is not likely to be placed in the mouth or ingested, taking into account normal and foreseeable use and abuse of such product, material, or component part by a child; and”

Two years ago, I might have thought this was reasonable language. In a world where logic prevails, this language is something that most companies could fairly easily (and probably already do) consider. However, after Ms. Tenenbaum’s testimony about rhinestones on September 10, 2009 in which she speculated about the ingestion of 50 rhinestones by a child, it is hard to predict which imaginary risk the CPSC will fixate on. Recent events suggest that “foreseeable” is now in the eyes of the beholder.

“(iii) an exception for the product, component part, or material will have no measurable adverse effect on public health or safety.”

This third plank in the exception standard is supposedly meant to connote that contact with a subject product which produces less than 1 micro-gram per deciliter change in blood lead levels (the smallest increment for measuring blood lead levels today) is okay. It does not say so explicitly but wink-wink-nudge-nudge, that’s what it means.

Unfortunately, the precision of this “standard” promises more than it delivers. There are few identifiable lead threats in children’s products that could foreseeably cause this kind of change in blood lead levels other than lead-in-paint (probably above 90 ppm, too) and lead in jewelry. So if each case must be argued and decided, isn’t the standard and the process some sort of sham? I think the difficulty and expense of proving the negative in this case is a strategy by the Dems to keep their ridiculous standard in place while appearing to be magnanimous in offering an exception process. Few companies will get exceptions.

Sadly, fear does not allow for the use of science. There’s a lot of hypocrisy here, too. Apparently, the risk from lead in handlebars of a bike is far more worrisome than lead in our air, water or food supply. Likewise, it must be far more serious than, say, lead-in-paint on cars and boats (both of which are perfectly legal). And for those cases which this law obsesses over, lead-in-substrate in children’s products, the zealots cannot agree on how to measure what’s safe – mainly because they don’t know. Let’s not forget that Commissioner Bob Adler wrote a lengthy paper )with 89 footnotes) on how there is NO safe level for lead. The non-scientists who now control this issue have even drafted a MOVING target for safety – it is dependent on what we can measure. If we can measure lead blood levels more precisely in the future, the exception standard will automatically tighten. Like a noose.

f. The Commission can require a warning label for those items afforded an exception under this strict standard. What? Are they going to warn us that the product is safe? No, it’s Proposition 65 creeping into federal law – apparently, the Dems think that the Commission may decide to warn the public that they weren’t able to rid these items of lead, even though they have determined in an investigation that the products are safe. Again, since the zealots think “there is no safe level for lead”, it is very scary for them to concede that anything could be safe if it contains lead. This is a belief system, stop trying to figure it out.

Btw, have any of you ever tried selling a children’s product with such a warning label? At our company, we would drop such an item rather than try to sell it. No one will buy such a product for their child or for use in their classroom. The imposition of a Prop. 65-style lead warning on a children’s product is a tacit ban.

g. The petitioner has the burden of proof in applying for an exception under this provision. That means a small business has to make the same case as a Big Business. Why not simply say that small businesses can’t have an exception under this provision?

The petitioner may utilize data submitted by other petitioners in making its case, but there is no requirement that such data be made publicly available. In recent cases, the submission of the petitioners has not always been made public.

h. The language allows a sunset date to be imposed for the exceptions, even though the very terms of the exception requires that the CPSC conclude that public health and safety will not be imperiled by sale of the product. I am made to understand that the motivation behind this illogical provision is that exceptions should not last forever. Why not? I think it’s the belief system again, or it could be some sense of unjust enrichment. In any event, the CPSC would be empowered to force the continued gratuitous erosion of a company’s cost structure for no particular reason other to remedy the offense of an exception to the rule.

i. The exception will have retroactive effect unless otherwise specified by the Commission. This sounds good . . . other than the fact that we have been shooting our businesses in the foot since August 2008. The ability to give retroactive effect to exceptions might have been valuable two years ago. To put it in an amendment now, two years too late, is an insult to the regulated community. Alternatively, it is yet more evidence of the absolute inability of Democratic legislators to even SIMULATE understanding of business issues under this law.

Next up – discussion of the Resale Shop Exception under Section 101(b)(3).

Read more here:
CPSIA – Treatment of Section 101(b)(2) in the New Waxman Amendment

CPSIA – Are Toys Supposed To Be Fun Anymore?

In a wonderful Op-Ed last week, Windsor Mann lampoons the ridiculous CPSIA by announcing his intent to not give any presents this year. His plan is as simple as the subtitle of his essay: “Giving children what they need most – nothing”. Mr. Mann expands: “As someone who loves to be a wonderful person for a brief period of time, I enjoy this season of temporary giving. I am obsessed with helping people, especially children, and the best way to help children is by not giving them Christmas presents.”

Sadly, Mr. Mann observes that “toys are not something to play around with”, noting the recent recall of toy darts because an 8-year-old almost choked on a dart that he was chewing. This is a real case. [This recall is eerily similar to a life-imitates-art spoof on The Onion entitled "Fun Toy Banned Because Of Three Stupid Dead Kids".]

Mr. Mann recounts in hilarious fashion various recent recalls illustrating the fact that we seem to have lost sight of what constitutes safety. [He even mentions the unfortunate Timberland ankle-high boots recalled for the lead-in-paint logo on their insoles.] To make his point, Mr. Mann notes the useful instructions provided by the CPSC in its “The Super Sitter” manual for babysitters. Here’s some tips the government felt the need to give babysitters:

• “Keep the youngsters safe by preventing accidents.”
• “Running or horseplay on [stairs] can lead to falls.”
• “In the event of accidental choking, apply first aid measures to clear the child’s airway.”

He quips: “(In the event of intentional choking, do not apply first aid measures.)”

The fear of everything, railed at in this essay, is the philosophical underpinning of the misconceived CPSIA. There is no solution to this disease short of changing the law. In a world dominated by the fear of everything, nothing is safe and everything must be feared. Mr. Mann’s strategy of not giving gifts seems to be an appropriate response in this environment.

It’s a funny article, but it’s not a funny problem for those of us stubborn enough to remain in the children’s product market. I don’t know how it comes as a surprise to anyone that misuse of products or the absence of individual responsibility may result in injuries, but that plague has descended on our industries. The issues inherent in this shift away from common sense are many:

• Fear of liability creates a perception of COST that deters investment in products and markets. Random costs feed the fear.
• Unjustified fear of injury by consumers translates into lower sales or higher costs in making sales. Markets shrink. Consumer needs become difficult to meet.
• An atmosphere of fear affects regulators, who tend to recall more often and to assess more penalties (even if non-monetary) because it’s politically-expedient or follows the trend. In other words, it’s “safer” for regulators to err on the side of caution – but that cost is borne by somebody . . . businesspeople.
• Rules tighten illogically, diverting attention from real issues, increasing the cost of participating in the market. All parties suffer from the consequences of complexity, including regulators.
• Misallocation of resources (expending too much energy on unimportant things) leads eventually to true crisis, fueling the fire of the original proponents of the legislation. The obvious solution – even MORE government.

And the joke will be on you and on us, if we don’t do something about it. Mr. Mann takes a lighthearted swipe at the silliness of your Congress, but it’s really no laughing matter.

Read more here:
CPSIA – Are Toys Supposed To Be Fun Anymore?

CPSIA – How Much Should We Pay to Prevent "Cheating"?

I was contacted today by an ex-CPSC’r who read my blog on Section 102(d)(2)(B) and wanted to point out that sometimes people lie and cheat when it comes to disclosure to the agency. So the question is: if people might pull the “switcheroo” or otherwise commit intentional fraud, wouldn’t the right solution be to make everyone test under much more controlled and regulated circumstances? This might make things much harder for cheaters. Isn’t that good? My response is NO . First of all, I hope it is no surprise to you or anyone that some people cheat. I believe this was discussed in the Bible and frequently thereafter. This MIGHT be the reason we have a criminal code and JAILS. Some people are also incompetent. They don’t cheat, they just fail repeatedly but goodnaturedly. The rest of us work hard and get our jobs done. As for me, although some people might cheat, I do NOT. If all the honest people must pay a high certain price in order to squeeze out the bad guys, we will all be crushed. This is akin to being treated like a murderer – just because there have been murders in your town. The CPSIA punishes the many for the sins of the few. The dispiriting idea underlying the lunkheaded Section 102(d)(2)(B) is that no one can be trusted, and that unless the government gets involved in regulating the minutia of safety testing, we cannot be sure that everything will be okay. [Did you ever think about why the CPSC must now accredit testing labs? We never needed it before - what precipitated the change? I am not aware of a single recall that was blamed on an incompetent or fraudulent lab. This is all the more troubling when you consider how much money has been wasted on this pointless and growing devotion of CPSC resources.] The economics of over-regulation are poor. Investment incentive is crushed by excessive regulatory costs as a profit motivation is rendered moot. In this case, we are CERTAIN to bear excessive costs for needless and pointless testing, all because a panicked Congress’ felt an urgent need to “do something” about recalls. What costs will be eliminated as a result? If our company has to pay 2-5% of our revenue for compliance with this new law (my estimate), can we save that much or more in avoided costs? Not based on our 25-year track record (recalled 130 pieces out of a billion in 25 years, or 0.000013% per annum). We now must trade an annual cost increase of 2-5% for an annual savings of 0.000013%. What about the costs to society? Well, in our case, all 130 pieces were recovered and there were no known injuries. Cost to society: zero. This is not so crazy, as less than 0.01% of all children’s products are ever recalled. Consider the famous lead-in-paint recalls of 2007-8: 125 recalls, no deaths and only one claimed injury (from a crib). So, who will pay for this folly? You. Some myths need to be dispelled: a. America pays the costs of the CPSIA. This is simple economics. The law of land regulates us a community. We pay for all recalls and we incur the costs of all injuries. Although costs may be shifted (reallocated) among us by law (some winners, some losers), ideal laws lower our net societal costs by incentivizing the most efficient allocation of resources. Thus, a law might assign one party to bear a responsibility because they can manage it at the lowest overall cost, thus avoiding significant and greater costs by a less efficient party. Common examples of this are torts (the law places strict burden for product liability on manufacturers) and railroad crossings (railroads must pay for safety of the crossings). Manufacturers and railroads are in the best position to protect against safety dangers, as opposed to consumers acting individually. If manufacturers and railroads weren’t allocated this responsibility, consumers would bear too much cost (inefficiently) in the form of injuries or losses. This is nothing more than a law-and-economics explanation of how legal systems work. See “The Problem of Social Cost” by Ronald Coase (Coase received the Nobel Prize for this theory). In the bargaining world hypothesized by Mr. Coase, costs would be borne by the party best able to bear them efficienlty, which might be manufacturers . . . or might be consumers. [It also is clear that no matter what happens to the CPSIA (be still, my heart!), manufacturers will still have a strong incentive (by law) to make their products as safe as possible. Tort law provides this economic incentive quite well.] b. NOT all recalled items are “deadly”. Some recalls have the potential to kill, but most do not. Of the simple “risk of injury” recalls, many are technical violations (immaterial threats of injury), theoretical risks, or worst of all, self-imposed (sometimes companies insist on recalls over the objection of the CPSC). It is plainly WRONG to contend that recalled items are “deadly” (Ahem, Ms. Tenenbaum). c. We cannot simply “raise” our prices to cover the new costs. Products have a strong “perceived value” which cannot be overcome with marketing. Some items are quite price sensitive. How much would you pay for your Starbucks latte? If the price went over $5, would you change coffee shops? $6? $8? No one is indifferent to price. How much would you pay for napkins at McDonalds, given that you probably think you are entitled to free napkins? Most people would cut their napkin use by 90%+ if the cost was as little as 1 cent each. This reasoning applies to ALL products and ALL services, no exceptions (even medical care). In the case of toys, many toys are commodities and have essentially a known “market value”. If you price them too high, you will lose business. “Perceived value” is set or heavily influenced by the mass market, precisely the part of the children’s market most able to absorb new CPSIA costs. Those of us in the specialty markets are toast as a consequence. d. The right way to measure recall effectiveness is in their economics. As noted above, we Americans will bear the net cost of this law. Is it worth it? We know that some items subject to recall present “unacceptable” risks of injury and others do not. It has always been the common sense practice of the CPSC (until recently) to exercise judgment when imposing a recall. They used to recognize that recalls come at a cost. There are many factors to assess in determining that a recall is merited. Having never been a CPSC manager or a legislator (heaven forbid!), please take my amateur’s list of factors with a grain of salt: (i) nature and severity of the risk of injury, (ii) number of units in circulation, (iii) age of the child subject to the risk, (iv) public policy [Is there a reason to justify strict liability? This would presumably be infrequent.] and (v) durability and value of the recalled item. Common sense dictates that you must weigh the benefits of a recall against the economic damage wrought by the recall. Since we finance both sides of the ledger, we Americans have an incentive to behave rationally and take the lowest cost route. [ The Coase Theorem again.] If you think about the case where one “dangerous” children’s product (say, a pair of shoes) is in circulation somewhere in the United States, it probably wouldn’t be worth the significant expense of recovering that special pair of shoes unless we knew that one or more lives were DEFINITELY at risk, a very high cost. [Exploding shoes, perhaps.] Thus, if some situations present low grade risk of injury and a high expense for a recall, it may sense to NOT expend the money on a recall, but perhaps to engage in other activities to keep costs down (like education or a “running” change in product design). Let’s also not forget that manufacturers that go through a CPSC process incur meaningful “transaction” costs even if there is NO recall (i.e., legal expenses, possible inventory loss, embarrassment, etc.). Thus, even without penalties, there is an incentive to do better next time – a recall is not needed to get most companies to straighten up. Given my estimate that we will expend 2-5% of revenues to comply with this awful law, could the economics ever justify that expense to save “injuries”? You already know that we incur an anticipated annual expense for recalls of 0.000013% of revenue, all to avoid a 25-year injury rate of zero. This annual “CPSIA tax” of 2-5% is entirely “inefficient” in a Coase sense, as the imposition (and allocation) of costs is irrational. This completely explains why the law is misconceived. Since the CPSC is not allowed to exercise judgment under the CPSIA, and since economics are not allowed to be considered either, it is by definition an irrational and shamefully inefficient law. Mr. Coase would be outraged. I happen to be outraged, too. Cheaters frustrate me but that’s no justification for treating everyone like they are cheaters. It’s time to rewrite the law to permit the cheaters to be treated like cheaters, and leave the rest of us ALONE.

See the original post here:
CPSIA – How Much Should We Pay to Prevent "Cheating"?

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