CPSIA – Countdown to Crisis, Nine Days To Go

I know of no indication of a CPSC decision on the testing and certification stay scheduled for January 31, yesterday. You and I and your business and my business can wait to see the puff of white smoke from the CPSC chimney when they are good and ready for you to see it.

I am tempted to speculate on how this persistent state of indecision arose. After all, some of the Democrats on the Commission were adamant in the last go-round that this stay would not be extended. As I recall, Bob Adler expressed deep dislike for stays and promised that this was “it”. One wonders if someone has blocked action on this issue. After all, the Commission is so collegial.

Inaction in the next nine days means that the stay will lift of its own accord.

I suggest that you go into crisis mode. With the law governing your business and your market possibly going to change unfairly and dramatically in the next few days despite the incomplete state of regulations governing mandatory testing, exposing you to possible jail time, you better get working. Or praying.

Hope you aren’t in Chicago, like me – we are expecting the worst snow storm in 44 years today. I guess we’ll begin our panic attack in a day or two.

When will the CPSC take action? Who knows. Take your time, guys! After all, they must really be under the gun. Who could have seen this coming? In December 2009, they gave themselves 14 months to resolve the component testing rule and the absurdly nicknamed “15 Month Rule”, and couldn’t get it done. They couldn’t even respond to the comments they solicited on those shocking and uncomprehending rules. So busy! The last time the stay was about to expire, knowing that they couldn’t or wouldn’t get their work done, they at least had the decency to give ten weeks notice of the stay extension. Not this time.

Maybe they are punishing us because we’ve been bad. Maybe this is the way the CPSC sends us to our rooms. When can we come out of our rooms, CPSC Commission? We promise to be good!

The sick game that the Dems are playing is that the law is fine, and that there is just some sort of hang-up. A snafu. Darn those hang-ups! In fact, the law was misconceived from the start, was never workable, could not be “fixed” by regulatory action – and the Democrats on the Commission were appointed to never admit it. This is Henry Waxman’s signature legislation – Dems are not allowed to criticize it. So today we continue to suffer at their hands. They don’t care about you, your market or even the kids that your business serves. This is all politics – they are just looking up the line, and protecting their political overlords who insisted on this defective law.

Enjoy! As long as the Dems are in control in Bethesda, expect more of the same.

When’s the next election, anyhow?

Read more here:
CPSIA – Countdown to Crisis, Nine Days To Go

CPSIA – Reasons to be Optimistic

With just a couple days left in 2010, a desolate year of long frustration, the new Congress is already stirring on the CPSIA front. On Thursday, January 6th, the Republican staff of the House Committee on Energy and Commerce is hosting a bipartisan working group session on proposed fixes to the CPSIA. I will be attending, as will representatives of many interested stakeholder groups. It is my understanding that the Democrats have been invited as have some of their consumer advocate group allies.

It is worth noting that this meeting will be held in broad daylight with both sides at the same table. It appears that the Republicans are making a statement about changes in legislative process as well as changes in law. I think it’s high time that the legislative process emerge from the shadows and commend them for their approach.

It is also quite noteworthy that this meeting will take place on the FIRST day of the new Congress. The swearing-in ceremonies will take place on Jan. 5th in the afternoon. The next day the Energy and Commerce committee staff begin work on the CPSIA. You have to be impressed at the speed and seriousness that the Republicans are attempting to address this issue. Who says our government is broken?

The politics in Washington changed a lot at the midterm elections. Not only has the House changed hands, so the Waxman era ended, but elsewhere things are changing, too. In the Senate, perhaps a dozen Democratic Senators are facing reelection in this cycle and the Tea Party is still a major force. What will the likes of Mark Pryor think about their chances when their compadres (like Blanche Lincoln) have been so recently vanquished? Perhaps that will motivate a shift in approach. Will the Senate stiffen if a Republican House sends in a fair amendment of the CPSIA? The winds may finally be at our backs.

And then there’s the White House. It’s anybody’s guess what’s going on there, but there is reason to believe Mr. Obama is tacking toward the center. This is Clintonesque, a la 1994, and may be a trend that holds up. He has some tough choices to make, but the center may be a better place for him now. That suggests a greater willingness to cooperate with a bipartisan retooling of this law.

If Obama hugs the center line and if the Senate is feeling less unrelentingly liberal facing reelection in the Tea Party era, a serious amendment of this law is possible. It is even possible that these wave lengths will penetrate the CSPC Commission and all sorts of behaviors could change. O to dream . . . .

And we need the help, guys. The 15 Month Rule is a crisis waiting to happen, the testing and certification stay is due to expire on February 10 (in the middle of the Chinese New Year) and of course, there’s the 100 ppm lead standard looming in August. There’s a lot to address. Let’s hope this can move along quickly and put an end to this sorry chapter in our regulatory history.

Read more here:
CPSIA – Reasons to be Optimistic

CPSIA – Last Ditch and Pointless Comments on Public Database

The CPSC Commission will be voting on a final rule governing the new public database for product safety complaints on Wednesday. The final rule tips the scales at 248 pages.

I know I am a public utility. . . but it’s confession time – I didn’t read it. I know what’s in there and the Powers-That-Be don’t care what I think anyhow.

Commissioners Nord and Northup have published their own alternate rule. It must be worse than the CPSC’s proposed final rule because it’s much shorter, only 27 pages long. I read the Nord/Northup rule – they asked for comments and I believe they will actually listen. It won’t matter because the Commission now votes on party lines, so our comments are irrelevant. The Dems already know what they intend to do. Adler, Tenenbaum and the out-of-office Moore vote as a pack and do as they collectively please. Perhaps this time they won’t even bother to make a pretense of listening to Nord or Northup. I picture the meeting going quickly as the Dems all put on their iPods and ear buds while Nord and Northup have their say. Might as well bop to iTunes, Commissioner communication is at a standstill anyhow.

Relax and enjoy it, kids! You’ll love it. What could possibly go wrong???

Before I tell you all the reasons why I detest the public database, I want to give you my comments on the Nord/Northup draft:

1. I greatly appreciate the effort and the gesture. They didn’t have to do this, and made a game effort to help out. Their rule has as much of a future as the 2010 Cubs but nonetheless, I admire their commitment to their job responsibilities and to the market the CPSC regulates. Nord and Northup recognize the many risks implicit in the database idea and attempt to fix as much as they can within the context of the deeply-flawed CPSIA, the law of the land. Thank you for trying.
2. The proposal commendably attempts to limit who can post in the database by narrowly interpreting the CPSIA. This is an appropriate regulatory agency response to an excessive law, something a well-run federal agency would do to keep the trains moving on time. Naturally, the agency has not opted for that courageous route over the past two years.
3. Much of the proposed rule involves what can be disclosed, how to protest inaccurate information and the disclosure of confidential information. It is highly technical – your eyes will glaze over. It’s all necessary to make the best of a bad situation.

The basic concept of the database is that the government must set up coercive rules to make “bad” companies do the right thing. Apparently, the geniuses behind the database assumed that we cartoonish corporate bad guys would never exercise good judgment without the pressure of the public database. Many steps backward resulted. For instance, the Nord/Northup proposal says that manufacturers will not be provided the name or contact information of the submitter of the complaint or the injured party. We also won’t receive photographs of the injury. And this is for what purpose? Apparently by withholding this information, the CPSC enhances the ability of manufacturers to do their job. I believe this is a reversal of current practice.

There are many consumer “advocates” out there who are telling misleading stories about the database. A good example is “Wallet Pop” who provided an update on the database on November 12th. Here’s how he portrays the situation:

a. “Trying to keep your family safe from dangerous products is extraordinarily challenging.”

RW – Is that really true? What is the evidence that we are all “in danger”? This is not an exaggeration – this is a LIE.

b. “As much energy as the U.S. Consumer Product Safety Commission spends trying to alert consumers to hazardous products, an alarming amount of the information it possesses is kept secret.”

RW – Enforcement investigations and enforcements themselves are very closely associated with litigation. Confidentiality is absolutely ESSENTIAL for any semblance of due process, a Constitutionally-guaranteed right, even for corporations. The Rule of Law protects us all, even if we must tolerate some sacrifices, such as the sanctity of confidential investigations.

That DARNED Constitution, so inconvenient.

c. “Releasing all this information is a frightening and annoying prospect to many companies, who fear tarnished reputations.”

RW – There’s a lot more to fear in the database than just tarnished reputations. Let’s not overlook that the Internet exists. We manufacturers live in a world where the consumer is KING – our reputations are on the line every day already. There are already many websites ready and willing to let you bash away at us, as long as you let them sell ads. So it MUST be something more than “tarnished reputations” that is causing all that fear. Could it be . . . heightened litigation and liability risk???

d. “Nancy Nord and Anne Northup want further restrictions on such things as whose reports can be included in the database (no lawyers acting on a victim’s behalf, thank you) . . . . Traditionally, Nord and Northup are on the losing side of 3-2 votes, but they’re not going down quietly.”

RW – Safety is now PARTISAN at the CPSC. In other words, in their spin machine, Democrats CARE deeply about kids and Republicans are heartless money-grubbers. These days the caring Dems run the show and money-grubbers are always outvoted.

I know you like a good story at bedtime! Bad Republicans, good Democrats. Sweet dreams.

e. “Companies will still make huge profits after this database is made public. Is it wrong for a handful of large and powerful corporations to perhaps take complaints a bit more seriously when they come in instead of choosing to dismiss them until hundreds are hurt or innocent children lose their lives?” [Emphasis added]

RW – The CLASSIC mischaracterization of our market that it’s all about big companies. This guy has Mattel and Graco on the mind. The irony is that the mass market companies could care less. The ones who will be CRUSHED are the small businesses. Let’s not forget that Mattel gets to test its own products – and when it LATER had a recall of 11 million units of its merchandise, no one asked any questions about testing. The rules are hardly even a blip to those guys. The cost to Mattel from that massive recall: ONE PENNY PER SHARE. The database is just anothe sidelight to those guys. The story is rather different for small businesses, however.

Not that the CPSC cares . . . .

So why do I hate the database?

1. There is a big difference between restaurant reviews and “United Breaks Guitars”, and product liability. The database is all about litigation and liability risk. Reputational reviews are about goodwill, but the database has to do with systemic risk for our businesses. It is a pro-plaintiff distortion in an already out-of-control tort system. Fundamentally, reputation is about consumer as king. Liability is about bloodsucking lawyers as king. This database is not designed to inform consumers well – the information is not certified. So why have a garbage in-garbage out database. It’s intended to foster more vexatious litigation. Read the WalletPop article again – it’s clear that the database is intended to be coercive. How do you suppose it will be coercive?

2. The government has no business lending a hand to tort lawyers. The tort system which provides the “little guy” with a way to seek redress functions just fine. The New York Times just published a study on hedge fund investing in tort lawsuits. Must be quite the cash cow if those guys are getting into it. The database gives them a new target – you. Why is it appropriate for the CPSC to oversee the disbursement of this information?

Do you think this will raise our standard of living? Create jobs? Increase capital available for investment?

It is worth noting that the database will create an expansion of the role of government in our markets. This is classic government bureaucratic creep where the government attempts to compete with the open market. Yes, there is that Internet thing. All those new tedious jobs, those eyes-glaze-over procedures must be administered by freshly-minted bureaucrats. The database must be built and maintained on government servers. Decisions will need to be made, filings and “transmittals” processed, deadlines watched, complaints followed up. This is PURE overhead. [And there is also the even larger devotion of resources that will need to be deployed by manufacturers.] Read the rules and ask yourself – will the world be better with all the new rules? With this expansion of our government? Isn’t this what you read about in the papers every day?

I am so, so sick of it. When will it end?

3. There is no economic justification for the excessive risk that the government is forcing on the market. The children’s market has not been killing or maiming kids in large numbers. Let’s not forget that we are a country of 300 million and it is not a utopia – some injuries will happen. [My apologies, I don't mean to burst your bubble.] Far more kids are killed or maimed in swimming pools than in any other children’s product activity. Apparently those kinds of deaths and injuries are not as troubling as other kinds of childhood deaths and injuries – there is no database on swimming pools.

4. The database is definitely subject to manipulation by competitors and other agents of corporate extortion and destruction (like bloodsucking lawyers). That is, under the proposal that Tenenbaum and Co. will pass when they take off their ear buds on Wednesday. For myself, I am particularly apprehensive about the stress that the database will place on our company. We will get notice in five days and have ten days to reply. Since the agency is going to launch a publicity campaign to convince the public to report every nit in the database, I expect MANY such postings. Now every broken toy will be a potential liability for our company, and trivial incidents will become our top priority. Forget about growing out business – it’s catering to the exigencies of the database that will matter. Still, I cannot imagine making the database the centerpiece of my business life. I also don’t know how we are supposed to answer a lawyer who asks how we monitor this database if we ignore it. Damned if you do and damned if don’t.

Not that the CPSC cares.

I can hear the advocates now – “This is what we want companies to do. They need to be ‘responsible’ and pay attention to their products and their customers.” Well, that presumes that we weren’t doing that already. In any event, we choose what we do every day. If you make us miserable enough, we’ll get out of this market fast. And that’s what the CPSC seems committed to do.

I think the database will quickly supplant the old way of finding out that there was a problem with our products – namely that our customers would call or write us. So they will place this information anonymously in a database and we will not be able to interview them or see their product. This puts us more in the dark and makes our job much harder. Or impossible. Brave new world . . . .

The whole subject depresses me. Be prepared for more fireworks and then the expected outcome on Wednesday. Our opinions will not sway the Majority (remember, Adler told us that anecdotes aren’t evidence, so they are free to ignore us and our amusing anecdotes).

And after this ugly business is concluded, you know what’s next . . . the 15 Month Rule. Then we’re goners, once and for all. Eric Cantor, where are you???

Read more here:
CPSIA – Last Ditch and Pointless Comments on Public Database

CPSIA – Report Abusive Database Rule to Eric Cantor!

Today, Republican CPSC Commissioners Nancy Nord and Anne Northup, noting the stifled debate orchestrated by Democratic CPSC Commissioners on the final public database rule (up for a vote on November 17th) and the toxic impact of that rule on the business community, have proposed their own alternative rule on the database.

I will provide a link HERE as soon as it is available. I believe the CPSC is currently mud wrestling over whether the Nord/Northup alternative proposal can be shown to you . . . the public. I think the Dems don’t think you are mature enough to be able to read it. Perhaps when you’re older . . . .

Here is Nancy Nord’s blogpost and Anne Northup’s blogpost relating to their proposed new rule. I also want to commend Ms. Northup’s three other blogposts on this topic, beginning on October 27. It is gratifying to see Commissioners taking political risk to do the right thing. Both Ms. Nord and Ms. Northup are taking a stand here. Let’s hope that fighting breaks out on other issues, too. We need the help.

This proposal by two Republican Commissioners is yet more shocking evidence that at today’s CPSC, safety and market integrity is an entirely partisan issue. Frankly, I don’t understand this and find it all so outrageous. In my view, this cartoonish standoff is ENTIRELY the fault of the Democrats who are stone deaf to the legitimate concerns of the business community. The hollow words of Inez Tenenbaum committing to “dialogue” with stakeholders makes me want to scream.

Consider, for instance, that I testified at the hearing on the database on November 10, 2009 at the personal request of Matt Howsare, Tenenbaum’s then counsel (now her Chief of Staff). Ms. Tenenbaum purportedly wanted my feedback on this critical proposal, and as it was related to me, the agency needed more comments from the business community. Naively, I spent our company’s money to fly to Washington to accommodate this seemingly reasonable request. I am accepting Fool of the Year nominations at this time. . . .

This hearing took place almost exactly ONE YEAR AGO – plenty of time for Ms. Tenenbaum to absorb my testimony. Listen to my testimony – did the majority take ANY of my points seriously? According to Nancy Nord, she was not allowed to ask at the October 20th Commission meeting about CPSC Staff’s conclusion that the rule would have an insignificant impact on small business – the ENTIRE focus of my testimony in November 2009. Don’t kid yourself, staff conclusions like this are are driven from ABOVE – from Ms. Tenenbaum and her political patrons. Ms. Nord was gaveled silent by the majority party – they had heard enough, I guess. Other issues impacting business interests from a fairness standpoint were also ignored or blunted.

This kind of treatment is completely outrageous. This example of government-out-of-control explains why the public spoke so profoundly last Tuesday. Nevertheless, the people running the shop at the CPSC didn’t hear you on Election Day. We MUST stop the Dem’s plan – unless you want to be eaten alive by trial lawyers. Listen to my testimony – it’s a road map to litigation doom.

Eric Cantor has called for substantially increasing Congressional oversight of the activities of federal agencies which he says are “now actively working to enact [President Obama's] agenda through agency regulations”. Could Tenenbaum, Adler and Co. be doing JUST THAT at the CPSC right now? Hmmm.

Please WRITE ERIC CANTOR to tell him what you think. His fax number is 202-225-0011. Please post your letter as a comment to this blog.

Read more here:
CPSIA – Report Abusive Database Rule to Eric Cantor!

CPSIA – Dear President Obama

An Open Letter to President Obama:

Dear President Obama,

Tuesday’s election results were a message to your administration. The “shellacking” you experienced was a referendum on your economic policies as well as a passionate call for smaller government.

Readers of my blog have heard all about these issues for two years. It is frustrating to me that you and your administration remain in the dark. You weren’t listening.

My industry, children’s products, suffered mightily at the hands of your administration. Admittedly the problem began on Mr. Bush’s watch but it was your Democrats who refused to relent or admit their errors. Since passage of the Consumer Product Safety “Improvement” Act in 2008, your party has refused to consider our industry’s increasingly pathetic pleas for mercy. The result has been utter market chaos and dramatic financial loss. This regulatory “railroad job” has driven many of us into politics against you and your party out of desperation and profound anger over this undeserved and insensitive treatment.

If you take the midterm election results seriously, you must reexamine the impact of this law on our industry and promptly offer sensible relief.

The problems with the CPSIA can be divided into four categories – Cost, Complexity, Risk and Intrusion. Please give up the idea that these problems can be overcome with tax relief or some sort of economic incentive. If you break my leg, I won’t be able to get up and run like an Olympic champion no matter how many carrots you dangle in front of my nose. It’s time to be accountable for the damage that the CPSIA wrought – and then directly address it.

Cost: The many ridiculous new rules in the CPSIA dramatically raise the cost of operating our businesses. It goes far beyond the asphyxiating testing costs that the CPSIA imposes. Wasteful administrative costs are skyrocketing in every direction. For instance, tracking labels do not magically appear on our products – we must hire people to redesign each of our products and our manufacturing processes, and we must hire yet more people to make sure we don’t screw up these tasks. We sell or manufacture literally thousands of skus (items) – but have had only one tiny recall in the last 26 years. This is PURE UNADULTERATED WASTE. We nevertheless must incur these costs to keep the CPSC happy.

These well-documented costs come from somewhere. You may wonder why we’re not hiring. [In fact, I have previously disclosed in this space that our head count continues to decline, an uninterrupted trend since 2007 to this very day.] Well, we must fund these unproductive costs from productive activities – sales, marketing, product development – you know, activities that produce new revenue. [Please note: your proposed tax increases will be paid from the same kitty.] Unlike you, we can’t solve our money problems by printing more dollar bills – we have to EARN them. If you make us waste our money, we must shrink our business to pay these new costs. WE GIVE UP GROWTH TO PAY THESE WASTEFUL COSTS.

I find it exasperating to have to explain this to you.

Complexity: We now face perhaps 3,000 pages of new safety rules and laws applicable to our business. I have never included rules on childcare or infant items in this total. For those miserable companies who stubbornly persist in making this kind of item, their total is probably well in excess of 3,000 pages. Each word of those pages is a possible felony.

The pre-CPSIA total was about 100 pages of rules, most of which were inapplicable to our business. There was very little to remember – which made it easy for us to administer our business. We could teach the rules, we could remember the rules, we could follow the rules, we could set up sensible priorities oriented around safety (not merely compliance). This is no longer the case.

Face it, President Obama, NO ONE understands these new rules. I include the CPSC on that list. There are just too many rules, and they are riddled with inconsistencies, flaws and head scratchers. The rules are also a mess, existing in many forms, in many places, never correlated or conformed, and are certainly not indexed. The rules have no underlying logic, so it is not possible to anticipate how any rule should work or does work – you have to find the rule and study it, preferably with an expensive lawyer helping you. Even finding a particular rule is quite a treasure hunt.

We are pretty busy – this does not enhance our productivity.

I believe that unless one is a rabbinic scholar or some kind of savant, it is not possible to master 3,000 pages of dense and inconsistent rules. The CPSC has done little to make sense of these rules.

Consider the paradox of musical instruments – full-sized musical instruments are not considered “Children’s Products” even if marketed EXCLUSIVELY to children. Does that make ANY sense to you? Remember, these are SAFETY rules so if musical instruments are unsafe for some reason, wouldn’t logic suggest that we should not let children interact with them? And if they’re safe, then they shouldn’t be regulated at all. Right? Interestingly, the CPSC says that if you shrink the same instruments down for children, they WOULD BE considered “Children’s Products” and subject to the CPSIA, even if marketed side-by-side with slightly larger, full-sized instruments which are not regulated. This makes absolutely no sense, is completely indefensible as public policy and creates a terrible quandary for any business attempting to interpret and apply these rules.

The complexity and opacity of the rules outstrips EVERYBODY’S abilities. We are completely stymied – and it’s your fault. You and your team refused our advice on how to resolve these issues.

Risk: The CPSIA is a tort lawyers’ dream. With the coming public database, our industry will be a feeding trough for these vipers. To say the least, you have permitted the government to set up a system DESIGNED to be gamed by lawyers and litigants.

How do you think business people will react to this massive expansion of the tort system? Please note that NO ONE contends that there are more injuries to address – it is absolutely clear that the effect of the CPSIA is to create many more claims of action. More cost, more risk – and as a result, there WILL be less economic activity.

Good job, guys!

Add to this misery the current practice of this CPSC to press for recalls that do not meet the CPSA’s legal standards for recalls (substantial risk of injury or death) and to impose huge vindictive penalties. The agency is on the war path, trying with all its might to scare us to death. This is an especially powerful economic depressant for small businesses which typically lack the resources to resist these pressures. Small businesses are more conservative and tolerate risk less comfortably as they manage their own money and see themselves as having more to lose than mass market companies or public companies.

The aggression of the new CPSC is out of control. The current Chairman likes to BRAG about her big penalties. Trust has been utterly destroyed in the manufacturing community. In two short years, the CPSC squandered its reputation as a partner in safety, someone to be trusted. Who in their right mind would trust this CPSC? If you doubt me, ask McDonald’s how they feel about being pressured to recall 12 million acknowledged safe Shrek glasses (and the ensuing media frenzy over cadmium – all without ANY documented injuries from cadmium in children’s products EVER). Or ask Schylling Associates or Daiso how they feel about penalties imposed on them for rule violations without any injuries. By all appearances, those penalties reflected regulatory anger, not endangered public safety.

[While you're at it, ask the CSPC why they never completed their FOIA disclosure to me on the Schylling penalty.]

Seemingly, almost any violation of these rules can be twisted into a felony charge now. We joke in our office about visiting each other in jail – but it’s not really funny at all. I simply cannot fathom conducting my affairs in a way that risks being charged with a felony. As a lawyer, the criminal risk imposed by the CPSIA is completely unacceptable to me and highly offensive. I often say that felonies cannot be committed accidentally – except in the Children’s Product industry. The unavoidable accumulation of trivial infractions with heavy penalty risk gives the CPSC winning leverage in any negotiation. The game is FIXED. Everyone knows it, too.

This is no stimulus plan, by the way.

Intrusion: It’s this simple – we have a new partner who showed up two years ago – the U.S. government. They don’t know anything about our business and have never run any operation similar to ours but they now reserve the right to check all our work and to second-guess us. Mother May I? That’s the new game in our business.

Could we live without ANY of this? Yes, most definitely. While the zealots behind this self-destructive law like to emphasize the POSSIBILITY of injury from lead and love to repeat the simple-minded chestnut that there is “no safe level of lead”, they FAIL utterly to tie these claims of POSSIBLE injury to data of ACTUAL injury. There is no “nexus”. Lead may be “bad” but it has no history of causing injury in children’s products. Leaded gasoline, house paint and industrial pollution are the culprits that caused blood lead levels to rise materially – that’s undeniably true. Congress missed the boat entirely with the CPSIA – it’s all cost, no benefit.

Lead injuries from children’s products are virtually unknown. My study of CPSC recalls in 1999-2010 totals one death (from a piece of jewelry) and three unverified injuries from lead in 11 years. Given the truly massive size of our industry and the children’s marketplace, and the literally trillions of interactions with our industry’s products each year, this injury total is statistically equivalent to ZERO. Instead of punishing our industry, you should give us a good citizenship award. We have earned the trust of U.S. consumers.

The path forward is clear but frankly, I Still don’t think you get it. Trust has been broken. Until you and your administration DEMONSTRATE that you are taking a DIFFERENT path, we will continue to conduct a war against the CPSC and Congress. This defective law deserves a FULL repeal. It is misconceived and has cost countless jobs. I hope you and your associates will not continue to deny the obvious, to fly in the face of data and reason. The voters are on to this scam. They voted many Democrats out of work in midterm elections. If you and your team don’t wise up quickly, in the over-regulation of our industry and other industries, they’ll vote the rest of you out in two years.

The problem was never the law. Before Congress “improved” it, the CPSA was a powerful law that enabled the CPSC to closely supervise children’s markets. Let’s not forget that the recalls in 2007/8 were conducted under PRIOR law – the unamended CPSA had plenty of teeth. The recalls in 2007/8 were clearly a COMPLIANCE problem, not a problem with the rules themselves. For various reasons, some people weren’t following the law closely enough. As objectionable as that may be, it is also important to remember that the 2007/8 recalls were associated with virtually NO injuries. So what should we have done, in lieu of all the tough new standards and venal penalty provisions in the CPSIA?

The agency should have been reorganized to work on compliance more effectively. The agency needed to invest in education, outreach to industry and more effective partnership with industry. This idea that we in the business community can’t be trusted is revolting and completely untrue – it is a populist idea you and your allies flogged to get elected. If you want to keep your jobs for much longer, you need to drop this caustic idea. We are not bad people or incompetent people – we can be trusted and can be good partners (as our record proves). No, not everyone will be good or conscientious. Bad people and incompetent organizations cannot be legislated away (at a reasonable cost). Still, the data indicates that a lower cost approach of partnership and education will produce very good results.

Fixing this law will be a stimulus plan that creates JOBS. Please give us back control of our financial statements and we will find a good way to spend our own money to grow our businesses. We don’t need your help – we need you to GET OUT OF THE WAY.

Yours sincerely,

Richard Woldenberg
Chairman
Learning Resources, Inc.
Vernon Hills, Illinois

Read more here:
CPSIA – Dear President Obama

CPSIA – Governmental Biases On Display at CPSC

802 days have passed since ANY Democrat in Congress did ANYTHING to help us on the CPSIA. There are only 8 days left until Election Day.

The WSJ published a short article about the psychology of governments called Studying the Biases of Bureaucrats (subtitled “Five Ways Regulators Think Wrong”). The application of psychology to economic decisions has produced a few Nobel Prizes – the implications of psychology on decision-making is well-known and generally accepted.

See if you recognize the Democrats who run the CPSC in some of these bureaucratic decision-making foibles:

“. . . [P]sychologists have shown that we systematically overestimate how much we understand about the causes and mechanisms of things we half understand. The Swedish health economist Hans Rosling once gave students a list of five pairs of countries and asked which nation in each pair had the higher infant-mortality rate. The students got 1.8 right out of 5. Mr. Rosling noted that if he gave the test to chimpanzees they would get 2.5 right. So his students’ problem was not ignorance, but that they knew with confidence things that were false.” [Emphasis added]

My comment: Is the author suggesting the election of chimpanzees to the CPSC Commission? Hmmm, you must admit it’s a creative suggestion. . . .

“The issue of action bias is better known in England as the “dangerous dogs act,” after a previous government, confronted with a couple of cases in which dogs injured or killed people, felt the need to bring in a major piece of clumsy and bureaucratic legislation that worked poorly. . . . It takes unusual courage for a regulator to stand up and say ‘something must not be done,’ lest ‘something’ makes the problem worse.” [Emphasis added]

My comment: This hypothetical regulator does not work at the CPSC. The aversion of the current Democratic CPSC leadership to not regulating is continually reinforced. Consider for instance, the CPSC’s willingness to make a mockery of protecting the public against harm in the definition of “Children’s Products”. In that recent master stroke, the Commission approved a rule that says that the musical instruments marketed to schools (even exclusively) will be unregulated (even if made entirely of “dangerous” brass) if the instruments are full-sized (a so-called general use item) BUT will fully regulate kid-sized instruments. Big instruments made of brass apparently do not deserve their regulatory attention but little ones do, even if BOTH are used exclusively by kids. Big instruments won’t poison kids but little ones will, apparently.

Spineless or just plain stupid – you make the call!

“Motivated reasoning means that we tend to believe what it is convenient for us to believe. If you run an organization called, say, the Asteroid Retargeting Group for Humanity (ARGH) and you are worried about potential cuts to your budget, we should not be surprised to find you overreacting to every space rock that passes by. Regulators rarely argue for deregulation.“

My comment: Ho-hum, has anyone EVER seen this at the CPSC? Since the WSJ metaphor relates to rocks, I would note that we must warn consumers that the rocks in our rock kits may contain lead which might be harmful if swallowed. We do NOT have to warn people that our rocks ALSO contain rocks – yet another reason to not to eat them. We also don’t warn consumers to not eat our fossils because it destroys the fossil record – but we do warn them about lead in fossils. Nice!

It’s so fun to contribute to making a mockery of safety! I find it gratifying (not).

“The focusing illusion partly stems from the fact that people tend to see the benefits of a policy but not the hidden costs. As French theorist Frédéric Bastiat argued, it’s a fallacy to think that breaking a window creates work, because while the glazier’s gain of work is visible, the tailor’s loss of work caused by the window-owner’s loss of money—and consequent decision to delay purchase of a coat—is not. Recent history is full of government interventions with this characteristic.”

My comment: Invisible costs are the true cancer of the CPSIA. I recently voted NO on a market expansion of our company into a product class that I felt would attract WAY too much regulatory attention at the maniacal CPSC these days. Why take a chance? With the government almost promoting the destruction of our industry and its supply chain (see today’s WSJ for yet another scare tactic by Inez Tenenbaum), there is just no reward for moving into certain markets. And how will the regulators measure this effect? There is no evidence of our choice to NOT enter a market. That must mean it never happened . . . right??? Perhaps that’s what they think. They only believe bodies (that are still warm and only if they are stacked high – and even then, we know that “anecdotes are not evidence”). No bodies are evident when you opt out.

Case closed?

“‘Affect heuristic’ is a fancy name for a pretty obvious concept, namely that we discount the drawbacks of things we are emotionally in favor of. For example, the Deepwater Horizon oil spill certainly killed about 1,300 birds, maybe a few more. Wind turbines in America kill between 75,000 and 275,000 birds every year, generally of rarer species, such as eagles. Yet wind companies receive neither the enforcement, nor the opprobrium, that oil companies do.”

My comment: Or here’s an example from the CPSIA world: deaths from lead number just one, and injuries number just three (all alleged, none verified) over ll years (CPSC data) but deaths and injuries from swimming pools are greater on an average DAY. So what’s our national obsession, at least of the Democrats? Lead. Makes a lot of sense. Not.

The CPSC – it’s a psychologist’s dream . . . but it’s our nightmare.

Read more here:
CPSIA – Governmental Biases On Display at CPSC

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.

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.

Read more here:
CPSIA – Do We Need More Government? [No!]

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.

Read more here:
CPSIA – Obama Doesn’t Get It . . . .

GUEST BLOG – Congressional Office of Compliance Confirms: Congress is Dangerous to Your Health

Okay conspiracy theorists. Do you think the Capitol Hill newspaper Politico held this story until Rick was out of town? In a front page story today “Dangers on the Hill” Politico reported that Congress’ Office of Compliance have found an estimated 6,300 safety hazards that are “potentially fatal or could leave victims with serious injuries.”

That’s right, Congress is dangerous to your health.

Here are some of the juiciest excerpts from the story. In Rick’s honor, we provide commentary after each excerpt, Woldenberg style:

“Workplace safety experts say that if Congress were a private-sector business, it would be at risk for massive fines from government regulators.” (oh, the irony!)

“But Congress has exempted itself from key parts of federal workplace law.” (Without even proving it was impracticatable for Mr. Waxman to comply?)

“…the latest study offers arresting detail. Investigators estimate there are 1,742 electrical hazards, 1,058 fire-safety hazards, 102 storage shelving issues, 61 first-aid emergency-care lapses and 70 machine-guarding problems, to name a few found so far.” (Hey, no lead violations?)


The report divides the hazards into categories, with some more routine and others potentially life threatening. (Wait a minute, that sounds like risk assessment!)

“Furthermore, the report makes clear that the hazards may prove dangerous to Capitol Hill visitors, including constituents and lobbyists.” (in other words, visiting Congress is hazardous to….people)

“This measure was inspired by that year’s new Republican majority and some Democrats who were aggrieved by what they saw as supreme hypocrisy: Congress and regulatory agencies imposed all manner of rules on the private sector and the states through laws such as the Family and Medical Leave Act and the Americans With Disabilities Act, but lawmakers themselves did not have to obey those rules.” (Can anyone think of another law that they could have included – hint –it rhymes with SHEE SHPEE SHESH SHI SHAY)

The compliance office cannot issue investigative subpoenas to Congress and its entities, even to seek information that could solve a workplace hazard. (Call in the AGs!)

Whistleblower protections for staffers who report hazards are essentially nonexistent, leaving aides responsible for their own litigation costs if they are fired or an office retaliates against them. (C’mon, the Onion couldn’t write a better article – oh the hypocrisy!)

“It’s hard to defend Congress when things are this bad,” said Center for Progressive Reform board member Sidney Shapiro, … But if Congress is going to insist on running its own safety regime, then it ought to do it the right way.” (Are we sure they’re not talking about CPSIA?)

“Congress faces a major challenge in trying to fund fire- and life-safety projects, historical preservation and deferred maintenance campuswide, all within very limited resources,” said a congressional aide familiar with the blue-ribbon panel. (Hey, they told us safety at any cost – even if the costs don’t improve safety)

“On the upside, a number of offices have become more proactive about protecting safety by voluntarily requesting inspections ahead of the compliance office’s regular schedule; 154 offices in the 111th Congress achieved hazard-free status. “Over the years, we’ve found that working cooperatively with employing offices to reduce hazardous conditions in the Capitol complex can be more effective than a confrontational approach. The statistics bear this out by showing remarkable progress in reducing hazards.” [Working cooperatively? What a novel idea! Nah, we say use the CPSIA model – enforce, enforce, enforce, treat every risk equally, discourage cooperation and levy huge fines!]

We couldn’t make this stuff up. To read the entire article for yourself, click here. (warning it’s about 1800 words).

Posted by the Alliance for Children’s Product Safety Staff

Read more here:
GUEST BLOG – Congressional Office of Compliance Confirms: Congress is Dangerous to Your Health

CPSIA – Deaf Congress Makes Up Its Own Justifications for New Law

The recently approved H.R. 4678 Foreign Manufacturers Legal Accountability Act of 2010 is based on testimony given by several of the usual suspects. Consumer groups filed testimony portraying the need for this law as rather “obvious”:

Consumers Union (June 16, 2010): “While [the CPSIA] has made great strides in improving product safety, and will continue to do so as its implementation continues, the CPSIA focuses on improving safety by requiring that children’s products subject to mandatory standards be tested to ensure compliance with the standard. The law does not address bringing foreign manufacturers into our civil justice system. However, to fully protect consumers from unsafe products, wherever they are made, American consumers must be able to hold manufacturers accountable when they are harmed – no matter where the products are made.”

Consumers Union goes on to assert: “If a foreign manufacturer knows that they cannot be held responsible in U.S. courts for the products they sell, this knowledge has a likely significant impact upon their manufacturing decisions. Do they use the stronger, more expensive component? Do they ensure that the product meets the safety standards? Do they prioritize safety if they know they are not accountable to U.S. consumers in U.S. courts? Holding manufacturing entities accountable in our civil justice system acts as an important deterrent to unethical and potentially harmful business conduct.”

The Briefing Memo for the mark-up (prepared by the Dems) takes up the anti-business, leftist consumer group cause, namely that we need to change the rules to allow consumers to sue foreign manufacturers to protect our way of life. The new law is intended to overcome a little legal wrinkle preventing true consumer justice – the U.S. Constitution:

“In addition, even if a victim successfully serves process on a foreign manufacturer, the manufacturer will likely challenge the exercise of personal jurisdiction over it by a U.S. court. Under well-established constitutional due process principles, before a U.S. court can exercise personal jurisdiction over a defendant it must consider: (1) the defendant’s purposeful minimum contacts with the state in which the court sits, and (2) fairness to the defendant of being subjected to jurisdiction in that state’s courts. . . . H.R. 4678 requires foreign manufacturers and producers that import products into the United States to designate a registered agent who is authorized to accept service of process here in the United States. . . . Registering an agent consistent with the Act constitutes acceptance by the manufacturer of personal jurisdiction of the state and federal courts of the state in which the agent is located.”

Problem solved! Congress found a way to circumvent the framers’ intent. That darned Constitution gets in the way of good government, you know.

Notably, the “urgent” need to go around the Constitution was not echoed in the CPSC’s own testimony:

“Additional authority allowing the CPSC to require foreign manufacturers designate a U.S. registered agent for service of process could be helpful in some cases – particularly those involving administrative requests for documents or information.”

“In a few cases, however, the lack of a registered agent for service of process has hindered the Commission’s ability to develop information that would help us to provide relief to consumers.”

“The lack of a registered agent for service of process has also been recognized by Chinese industry groups, and some local lawyers in China have provided legal advice seeking to exploit this situation . . . . This type of sentiment appears rare.” [Emphasis added]

Opponents to the bill made arguments similar to those previously highlighted in this space (see above and here): American Association of Importers and Exporters and National Customs Brokers & Forwarders Association of America.

I estimate that our business will lose 25-50% of our foreign suppliers and untold numbers of component factories if they are required to have a registered agent under this new law. Most of these sources are irreplaceable in our business (for a variety of reasons). That means that the products we make at these factories will have to be discontinued. Too bad for us, I guess. This could happen quickly, too.

I wish that were the only problem. The lame-brained notion that foreign countries will allow U.S. citizens to cross borders to take domestic assets to settle foreign disputes will prove to be delustional. U.S. companies will soon be greeted by reciprocal registration requirements or even harsher laws exposing them to onerous trade barriers and significant new legal risks. Again, our business is squarely in the bullseye of this maelstrom. We have worked tirelessly for more than 20 years to build an international network of dealers for our products. That creates JOBS here. Anyhow, it is inevitable that a law like this will spawn a need to register our company in dozens of countries abroad, meaning we would need to hire a law firm for each country, translate all the laws, decide if we want to bear the expense and risk of registration. Our foreign business would evaporate quickly and efficiently.

The basic idea that our country actually needs this law is hard to comprehend. Where are all the hungry plaintiffs’ attorneys who can’t put food on the table? Which rights aren’t being satisfied? For each product imported into this country, there must a U.S. importer. Why isn’t that pool of assets enough to satisfy this need, as it has been for years and years? Why doesn’t importers’ exposure under the U.S. tort system provide enough incentive to address Consumers Union’s parade of horribles above? I thought that’s why we have our crazy tort system in the first place. No answer has been provided by Congress to these questions. They just gave us a wonderful new law to worry about.

Thanks so much, Democrats in Congress. We love ya! And we can’t wait to vote AGAINST you! See you at the polls.

Read more here:
CPSIA – Deaf Congress Makes Up Its Own Justifications for New Law

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