Regulatory Glamour--and Its Casualties

by Virginia Postrel  •  Feb 11, 2009 at 1:48 pm

http://www.dynamist.com/2276/regulatory-glamour-and-its-casualties

Regulation is having a glamorous moment. Unlike the messy marketplace, with its alleged propensity for producing financial catastrophe, regulation promises to make life orderly and comfortable. Not since the early 1970s, has "regulation"--the general idea, not a specific proposal--seemed so alluring. Like carrying last year's It bag or wearing too much bling, it is currently declasse to say anything bad about a regulation.

That probably explains why, the TV news video above notwithstanding, it is so hard to get conventional reporters to give a damn about the devastating effects of the Consumer Product Safety Improvement Act, signed into law last August amid hysteria about lead in kids' toys. Who, after all, could be against improving safety? Who doesn't want to keep lead out of the mouths of babes? (The CPSIA passed the House with a single dissenting vote, from Ron Paul.)

Under the law it is now illegal, as of yesterday, to sell or distribute any product--toy, book, clothes, electronic gadget, you name it--aimed primarily at children 12 and under without first having every accessible element in that product--fabric, appliques, ink, zippers, buttons, switches, doll hair, you name it--certified by a third-party lab (not, for instance, the zipper maker) as having less than 600 parts per million of lead. The law includes substantial criminal penalties and allows state attorneys general, as well as the Consumer Product Safety Commission, to enforce its provisions.

Third-party testing and certification is the sort of thing that sounds wonderful to good-government types. It's information! It's "transparency"!

It's completely nuts. To take one minor problem, existing third-party labs don't have the capacity to suddenly start testing every component of every kid's product. Reputable manufacturers like YKK Group, which sells most of the world's zippers, already do their own testing. But those tests don't qualify under the law. The CPSIA assumes a huge independent testing industry that doesn't yet exist. (I see spin-off opportunities.) And, of course, it assumes that non-existent industry will offer testing at prices operations smaller than Mattel can afford.

The law completely ignores the complex and fragmented nature of the retailers and manufacturers it regulates. It is putting one-person craft operations out of business, forcing thrift shops to sweep children's clothes and toys into the trash, and panicking apparel makers. Even in the best economic circumstances, the cost of compliance would drive small, low-margin operations out of business. And these aren't the best economic circumstances.

Yesterday's date is in the statute, but the CPSC has promised not to enforce the testing provisions for another year. Instead, it has told businesses just not to sell anything with illegal levels of lead.

The stay of enforcement provides some temporary, limited relief to the crafters, children's garment manufacturers and toy makers who had been subject to the testing and certification required under the CPSIA. These businesses will not need to issue certificates based on testing of their products until additional decisions are issued by the Commission. However, all businesses, including, but not limited to, handmade toy and apparel makers, crafters and home-based small businesses, must still be sure that their products conform to all safety standards and similar requirements, including the lead and phthalates provisions of the CPSIA.

Handmade garment makers are cautioned to know whether the zippers, buttons and other fasteners they are using contain lead. Likewise, handmade toy manufacturers need to know whether their products, if using plastic or soft flexible vinyl, contain phthalates.

The stay of enforcement on testing and certification does not address thrift and second hand stores and small retailers because they are not required to test and certify products under the CPSIA. The products they sell, including those in inventory on February 10, 2009, must not contain more than 600 ppm lead in any accessible part. The Commission is aware that it is difficult to know whether a product meets the lead standard without testing and has issued guidance for these companies that can be found on our web site.

The Commission trusts that State Attorneys General will respect the Commission's judgment that it is necessary to stay certain testing and certification requirements and will focus their own enforcement efforts on other provisions of the law, e.g. the sale of recalled products.

In a press release issued last Friday, the CPSC elaborated that it will:

• Not impose penalties against anyone for making, importing, distributing, or selling
  • a children's product to the extent that it is made of certain natural materials (pdf), such as wood, cotton, wool, or certain metals and alloys which the Commission has recognized rarely, if ever, contain lead;
  • an ordinary children's book printed after 1985; or
  • dyed or undyed textiles (not including leather, vinyl or PVC) and non-metallic thread and trim used in children's apparel and other fabric products, such as baby blankets.

    (The Commission generally will not prosecute someone for making, selling or distributing items in these categories even if it turns out that such an item actually contains more than 600 ppm lead.)

Essentially, government policy is to encourage small businesses to ignore the law and take their chances. (But it is clear that you'd better shred any books published before 1985.)

As one of its members, I'm not a big basher of the "mainstream media," but on this story the failure to pay attention--or to dismiss concerns as too boring and uncool to cover--is egregious. If nothing else, the CPSIA makes the recession even worse.

I'm guilty myself for not blogging about a story I've followed for months. The sad truth is that I found it so depressing I couldn't muster the energy.

For more information, check out Walter Olson's exemplary coverage. I first heard about the CPSIA from Kathleen Fasanella's Fashion-Incubator blog, which has covered the law in detail, with an emphasis on what apparel makers need to do to comply.

Don't miss Kathleen's response to the pro-regulation interest groups. Opposition to the law has come almost entirely from panicked small-scale operations with little political clout. But the Naderite ideologues behind the law blame the "big toy companies" for any suggestions that its sweeping provisions might be a bit too much.

Senator Jim DeMint (R-S.C.) has a bill to revise the law. But he's a Republican, and I'm a pessimist. Nobody cares what happens to people no one has ever heard of. And my indifferent colleagues in the media will make sure no one ever hears about these regulatory casualties.

UPDATE: An alert reader notes that the MSM isn't the only problem: "Most conservative bloggers can't be bothered with the story because it has no dirt on Obama or any other top ten hate. Even Reason has done nothing at all."

UPDATE II: From Semicolon Blog:

My daughter works in a used bookstore. TODAY they pulled all the books from the children's section that had any kind of metal or plastic or toy-like attachment, spiral bindings, balls or things attached, board books, anything that might be targeted under this law, and they very quietly trashed them all. I say "very quietly" because the bookstore had a meeting with employees and told them to be careful not to start a panic. If anyone asked what they were doing they were told to say that they were "rearranging their inventory." No one was allowed to tell anyone about the new law, and no one was allowed to take any of the doomed-for-destruction books home or give them away.

UPDATE III: Welcome Instapundit and Andrew Sullivan readers. Check out the main blog page for more on this topic.