A Time for Anger: Fisking the Times

By Mark Thompson | Related entries in Consumer Safety, Legislation, Memes, Partisan Nonsense

After months of pleas from the small business community, the New York Times (the so-called paper of record) finally decided to cover some of the central elements of the legislation. Except that it was not an article discussing the potential costs of the legislation; nor was it even an article discussing the debate over the legislation at all. No. It was an unsigned editorial. Alleging that CPSIA hasn’t been enforced aggressively enough, and that therefore the commissioner of the CPSC must go. Any reading of the editorial makes clear that the Times did not bother to research what the law actually says or how it is supposed to be implemented. Instead, it appears that they merely regurgitated the talking points of the handful of Dem politicians and interest groups who continue to support the law in the face of overwhelming evidence that it is an abject lesson in the problem of unintended consequences.

Not surprisingly, Walter Olson is angry. He zones in on one particularly offensive paragraph of the editorial and destroys it.

Well, I’m pretty angry myself. So I think it’s worth doing a full fisking of this stinking heap of ignorance. The editorial starts:

The American International Toy Fair in New York City this week has offered the newest and most tantalizing playthings in the world: walking plastic bugs, 3-D coloring sets, even Barbie, now 50 and wearing a golden outfit for the occasion. Yet one question hovered over the fair and its glittering new gizmos. Can the federal government assure consumers that the toys are safe?

Knowing a little bit about the Toy Fair, I can assure you, loyal readers, that the actual question hanging over the Fair was “Does anyone have any idea how you are going to comply with this law when it goes completely into effect without going out of business?”

As many parents, and ultimately manufacturers, learned the hard way, the Bush administration did not make the safety of toys and other products a priority. That led to the recall of millions of toys — some because of lead paint, others because of hazards such as small and powerful magnets that children swallowed. The Obama administration now has an opportunity to fill that regulatory gap by appointing new leadership for the Consumer Product Safety Commission.

So the problem here is that the Bush Administration failed to enforce existing safety laws, thereby leading to the recall of millions of toys? Now, I’m no fan of the Bush Administration, but this seems a little silly. How does the Times think that these toys were recalled? Isn’t the remedy for a prohibited product getting on the market to recall it and to penalize the importer? And isn’t that precisely what happened? And how many injuries were reported as a result of these products getting recalled? The answer is one (sadly it was a death) – except that the product that caused that death was perfectly legal under the then-existing standards, and is actually still legal under the new CPSIA standards since it was made for an adult.

Perhaps the Times is saying that the CPSC should have caught the products before they entered the stream of commerce, if only it had different priorities. This most likely is unrealistic to expect a tiny government agency to accomplish. But one thing is for certain, passing a law that creates unprecedented levels of paperwork for that tiny agency to review is a pretty good way to ensure that the agency will spend an even greater percentage of its resources looking for paperwork errors rather than actual safety hazards.

Last year, Congress passed the Consumer Product Safety Improvement Act, giving new authority and resources to a shockingly understaffed agency. The law has been described, accurately, as providing the safety net that consumers assumed they already had.

Unfortunately, the commission has yet to implement important aspects of the new law.

Really? So, Congress passes a law that provides unprecedented authority – and responsibility – to a “shockingly understaffed agency” and expects them to implement the entire law within six months – and the Times is shocked, SHOCKED, when the agency is unable to do so within that time frame. But perhaps I’m being unfair to the Times – after all, the law provides the agency with “new resources” as well. One problem – the agency didn’t actually get new resources until several months later, and the “new resources” are added incrementally over the course of six years. So the idea that CPSIA’s problems are merely a result of a lazy CPSC is patently false…..and that all says nothing about the fact that CPSC regulations, like all regulations, are subject to a sixty day notice and comment period before they can be implemented.

The delay has caused confusion and allowed opponents to foment needless fears that the law could injure smaller enterprises like libraries, resale shops and handmade toy businesses.

This is the most offensive paragraph. For a full explanation of why, see Walter Olson’s post. But simply put, the idea that any business would threaten to close and/or actually throw out thousands of dollars of inventory upon which they rely to make a living merely because of “needless fears” fomented by shadowy opponents is utterly absurd. Indeed, the guidance that the CPSC has issued on this point, far from being overly soft on product safety, specifically recommends that businesses owners discard many of these products.

The law provides ways to address such concerns without undercutting its new and vitally important protections against lead or other toxic substances in children’s products. Even so, the commission decided last month to delay for a year any real enforcement of the law, which was supposed to have taken effect on Feb. 10.

First of all, the law DID take effect on February 10 – what was stayed for a year was the enforcement of two or three specific elements of the law, including the certification and testing requirements. The lower lead limits and ban on phthalates – even for products intended for use by children with no realistic chance of ingesting the substances – still apply, with extremely stiff penalties for violations. Also – the new law deputizes State Attorneys General; while the CPSC has requested the states hold off on enforcement of the testing and certification requirements, there’s no guarantee they will do so.

As for the alleged “ways of address[ing] such concerns,” proponents of the law never seem to specify what, exactly, these ways are. To be sure, the law allows the CPSC to exempt some products from the lower lead requirements – but this allowance only applies, so far as I’m aware, to the lower lead requirements (and certification thereof). In addition, the CPSC may only exempt “specific product[s] or material[s]” “after notice and a hearing….on the basis of the best available, objective, peer-reviewed, scientific evidence….” In other words, it’s not as if the CPSC is allowed to just categorically exempt any products for which this law would be an undue and unnecessary burden.

President Obama must quickly replace the commission’s acting chairwoman, Nancy Nord, who opposed adding new resources and authority to her agency. He should then choose the kind of enlightened leadership that every parent and toy lover needs and that will give consumer safety the priority it deserves.

Because the idea that Congress may have just put forward a poorly drafted law with no consideration of how it would affect small business is just too simple.

Cross-posted at The League of Ordinary Gentlemen


This entry was posted on Wednesday, February 18th, 2009 and is filed under Consumer Safety, Legislation, Memes, Partisan Nonsense. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

9 Responses to “A Time for Anger: Fisking the Times”

  1. A Time for Anger: Fisking the Times | The League of Ordinary Gentlemen Says:

    [...] Cross-posted. This entry is part 19 of 19 in the series Minutiae, Ephemera and Various RamblingsSeries Navigation«tongue-twisterisms Tags | congress, CPSIA, media [...]

  2. New York Times on CPSIA: “needless fears that the law could injure smaller enterprises” Says:

    [...] and Run”, Jonathan Adler @ Volokh Conspiracy, Memeorandum, Above the Law, Tim Sandefur, Mark Thompson/Donklephant [...]

  3. Mike A. Says:

    I don’t necessarily agree with the bulk of this post, but have one major complaint about the following:

    “Does anyone have any idea how you are going to comply with this law when it goes completely into effect without going out of business?”

    I don’t have familiarity with the Toy Fair, but I am very familiar of the electronics industry. In July 2006 the electronics industry adopted RoHS (Restriction of Hazardous Substances) act out of the EU. This act put limits (1000 ppm) of 6 known hazardous materials in electronic components: lead, mercury, cadmium, hexavalent chromium (Cr6+), polybrominated biphenyls (PBB), polybrominated diphenyl ether (PBDE). Although the law was passed for EU, as it related to both domestic and imported electronics, the industry as a whole adopted the law. Needless to say the industry cried foul with this new requirement and claims of financial ruin were common.

    Methods of testing were targeted (ICP-MS, ICP-OES, GC-MS, GC-ECD, FTIR), labs certified and, due to the size of the market, competition flourished to satisfy this new requirement. The industry successfully made the transition at NO HIGHER COSTS to the products. These same methods and labs can be used for any industry.

    Now, given that the electronic business model relies on always being smaller, faster and cheaper with each successive (very short) generation, AND the razor-thin margins of electronic components I have no sympathy for the toy industry dragging it’s feet and crying about the financial ruin.

    And if the complaint is the law is unclear, this is the risk when an industry does not self-regulate. If you don’t lead, you may be forced to follow.

    As Oscar Rogers on SNL states – “Take it one step at a time. Identify a problem – FIX IT! Identify another and FIX IT! Repeat as necessary!”

  4. Mark Thompson Says:

    Mike:
    You don’t seem to understand the problem here. First, this law applies not just to large toy manufacturers, who violated the standards that existed in the first place, but to every single company or library who manufactures or distributes and products whatsover that are intended for use by children under the age of 12, even though children over the age of 3 have virtually no risk of ingesting any of the substances subject to these changes. It also applies to libraries, second hand thrift stores, etc. As a result of the law, in the last week thrift stores and second hand book stores have been forced to destroy any children’s clothing with metallic parts (think buttons) and any children’s books dating before 1985, even though there is no evidence to suggest that either type of product presents an actual safety hazard. Similarly, numerous European companies, whose products are obviously subject to the supposedly effective EU regulations, have stopped exporting to the US because the costs of compliance with this law are simply too high – and that’s even after the CPSC stayed enforcement of the certification and testing requirements.

    You use the example of testing for electronics, but that’s not really relevant here. So far as I’m aware, that regulation did not impose the certification requirements imposed by this law. So far as I’m aware, that regulation did not apply retroactively to items manufactured before the enactment of the law. So far as I’m aware, electronics companies are generally larger and have greater economies of scale and do not need to sell dozens of varieties of a given type of product. So far as I’m aware, electronics testing requirements did not mandate the kind of frequency of testing that is required by this law. Nor did it mandate the vastly different types of testing required by this law; if you look around, you will find that not one business has been able to get a quote for compliance testing that is less than a few hundred dollars per batch; you will also find that in many, many instances, depending on the complexity of the product, testing quotes amount to between $3000 and $30,000 per batch. When your batch consists of a few hundred items with a retail value of only $50 or $60, well, you’re not going to be able to sell that product anymore.

    Look, the bottom line is that no one is really opposed to lowering the lead limit or banning phthalates. To be sure, there are many who think it unnecessary, but even they don’t consider such restrictions to be problematic in and of themselves. But what is problematic is the way this law is written, which both imposes enormous burdens on small and medium-sized businesses (and my line of work gives me a first-hand look at just how high those burdens actually are) and probably hurts rather than helps safety.

    Basically, the law is written as if it assumed that the only businesses who would be affected by it would be massive multi-national corporations with huge economies of scale; for those companies, this law is somewhat burdensome, but completely tolerable. Indeed, the proponents of this law effectively admit this when they say that the law is not intended to affect most of the small and medium sized businesses, and that the CPSC should grant exemptions to a lot of these businesses. The problem is that the proponents don’t understand just how little flexibility this law provides the CPSC to grant those exemptions.

    And that’s the reason proponents of the law so frequently focus on CPSC Commissioner Nord as the villain – they say that all the bad effects that this law is having are because she has dragged her feet on creating rules that would exempt most of the smaller businesses. But if they actually read the law, they would realize just how limited the supposed exemption authority actually is.

  5. Mike A. Says:

    Mark,

    Your points on the requiring these tests on existing products is well taken and I agree with you. The requirements should only apply to products moving forward, with a reasonable timeframe allotted to allow implementation.

    As for the point of batch testing small production lots, the testing could be done at the manufacturer’s raw material and the product can be certified by use of certified materials and processes. Manufacturer’s could define and test standardized bill of materials, which would certify the end product. Of course I assume the law allows for this option. If it does not, then I agree with you on that point also.

    As for costs, once the law is defined appropriately and the industry is forced to comply, the costs for tests will drop dramatically. Although more often than not, there are larger economies of scale in electronics companies than toy companies, as a whole the toy industry is very large. Once the industry moves, so will the costs.

    But as a final point….it would have been better if the industry had a precedent of policing itself before some of these unfortunate incidents occurred. There is a good chance that lawmakers would have used that testing procedure as a baseline, rather than trying to invent one from scratch – which is never a good thing when it comes to lawmakers….

  6. Mark Thompson Says:

    Mike:

    First off, I have to remind you – we are not just talking about the toy industry here. We are talking about anyone who makes or distributes anything that “is primarily designed for use by a child under the age of 12.” That fact simply cannot be emphasized enough. The law hits literally dozens of industries that have never been accused of any kind of wrongdoing.

    Second, the issue of component testing is very much up in the air; for the most part, the view is that component testing is probably not going to be acceptable because of the way that the law defines a manufacturer.

    You say that costs will eventually drop dramatically; this is entirely possible (although remember that the testing companies have to be certified by an understaffed agency…given the huge swath of the economy that the requirements cover, I’m very skeptical that enough labs will get approved to drive costs down significantly within less than four or five years). But this ignores a major problem – initial costs are going to be sky-high no matter what; small and medium-sized businesses are going to have to bear those costs for some unknown period of time before prices can come down. How many of those small businesses will be able to last that period of time, and how many will fail?

    As for the issue of self-policing, I have a big problem with the assumption underlying that argument. This was not the sort of thing where there were frequent problems that kept recurring over the course of years across the entire toy industry (much less across all of the dozens of industries covered by this law). It was a result of one series of scares involving one particularly large company (and, IIRC, involving only one factory of that company, located in China). As a result of those scares, the products involved were recalled and the company was punished. Not one actual injury has ever been alleged as a result of that scare (although there was one death due to a child’s swallowing of a piece of jewelry designed for adults, and therefore not something that this act even attempts to prevent). In other words, the system actually worked in that scare.

    No one has ever once alleged that products made by smaller companies or made in the US or Europe were unsafe in a manner that this law seeks to prevent. So it’s difficult to see how a lack of self-policing was really at issue here. And even if there were a lack of self-policing specific to the toy industry, that doesn’t justify going after the apparel industry, the children’s publishing industry, thrift stores, secondhand book dealers, school supply manufacturers, or even toy manufacturers who sell to children who are too old to “mouth” a product.

    One more thing that bears emphasizing (and this is one reason why its unclear whether component testing is permissible): the testing and certification requirements apply to ALL “applicable” consumer safety standards, not just lead limits. Of course, no guidance is provided as to when a safety standard is sufficiently “applicable” as to require testing. This means that the products will often have to be lab-tested for things like flammability and a whole host of other potential standards that have long existed without testing requirements and without any complaints about inadequate enforcement. Since the results of those tests can theoretically vary depending on the combination of components used, you probably have to test the end product rather than just the components. But moreover, there’s really no simple way of doing those tests, which is why testing quotes have been so high. And, of course, in the process of running a lot of those tests, the tested inventory will of necessity get destroyed, which adds a little more cost to the test.

  7. CPSIA chronicles, February 19 Says:

    [...] a good way!)”), Jonathan Adler @ Volokh Conspiracy, Memeorandum, Above the Law, Tim Sandefur, Mark Thompson/Donklephant (extensively “fisking” the Times editorial; related, Deputy Headmistress), Alison [...]

  8. Mike A. Says:

    Mark,

    Not much disagreement with the above except two points:

    1. “As for the issue of self-policing……involving only one factory of that company, located in China..”

    I understand manufacturing in Asia and I travel there frequently. I’ve been in dozens of factories and been responsible for production in them. All manufacturer’s, not just toy manufacturer’s, have a responsibility to ensure product safety. When toy manufacturer’s transferred their production to China for cost savings, without doing their homework and verifying product safety, they were irresponsible. Assuming the industrial fledgling China has the same safety concerns or safety systems in place as either the US or EU (both of which have over 100 years of industrial experience) is irresponsible. Cost reduction (money) was the motivation without regard to quality (safety).

    This bill may be flawed, but the toy manufacturer’s chased pennies down the rabbit hole and are now paying the price.

    2. “Since the results of those tests can theoretically vary depending on the combination of components used, you probably have to test the end product rather than just the components.”

    Certify the raw materials and process flow used. Control the product process flow with basic control plans and basic change control methods. These are not cost drivers and it is not rocket science. It is done all the time for products with lower profit margin than toys.

  9. Mark Thompson Says:

    But Mike – this bill doesn’t just apply to Chinese imports. It applies to domestic manufacturers, European manufacturers, etc. Many, many of these businesses, probably even most of them, have never done a lick of business with China.

    As for your second point, the law provides no basis for certifying process flows, at least not so far as I can tell.

    And again, you seem to keep ignoring the fact that this bill applies to dozens and dozens of industries that have little or nothing to do with the manufacture of toys. Do these industries deserve to “pay the price” for Mattel’s actions as well?

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