Dynamist Blog

Margins of Adjustment

Following a conversation with Arnold Kling and Seth Ditchik, Tyler Cowen suggests that this may be a "Great Depression for Rich People, because it's driven largely by huge cutbacks in luxuries. The bigger story, which Tyler hints at, isn't about rich people but about pretty much everyone in our very rich economy. We have lots of margins of adjustment--places we can cut back on spending without suffering serious hardship. For most people, cutting back doesn't mean deciding between food and rent but between manicures and lattes.

Consider this USA Today report on "small luxuries."

Think small, like Casey Elliott.

She's here picking up a tin of gourmet hot chocolate mix for her kids, a small but welcome treat at a time when her husband is out of work. "We're trying to do simple things, like going for family walks and playing games," she says.

She's buying gourmet hot chocolate mix. Did that margin of adjustment even exist 20 years ago (much less during the Depression)?

Toy Wars: Regulatory Defense

As the effects of the CPSIA finally begin to attract public attention, the NYT plays sock puppet to the law's increasingly panicky supporters.

UPDATE: Alison Moore at Publisher's Weekly reports on her industry's mood, with little love for the NYT's position:

We booksellers are feeling both besieged and stymied by the complicated mess of unclear rules and uncertain expectations the CPSIA places on all of us. As are librarians. As are book publishers. As are toy makers and crafters and artisans. As is everyone who sells used books or used toys or used clothing for kids. Everyone who manufactures or sells products for children, it would seem, rightly regards the CPSIA as the source of innumerable headaches and huge potential profit losses....

Since I first began learning about it, the over-reaching and harmfully inclusive regulations of the CPSIA have reminded me of one particular book: Little Brother by Cory Doctorow. Among the many points Doctorow makes in this entertaining novel is the fact that sometimes in its efforts to enact laws aimed at increasing the public's safety, a government makes its citizens less safe, or at least a lot more inconvenienced that should ever have been necessary. I was thinking maybe I ought to be sending copies of this book to members of Congress, but I'm now thinking I should start by sending a copy to the New York Times

Meanwhile, at Ordinary Gentlemen, Mark Thompson gives the Times editorial a thorough fisking and Freddie makes the seemingly obvious argument that saying the CPSIA is a terrible law doesn't indict all regulation:

Every piece of stupid, ham-handed, counterproductive regulation makes it harder to pass effective and smart regulation, if for no other reason than that it erodes public trust in regulation as an institution. Regulate where prudent and necessary, but regulate intelligently, for goodness sakes.

Crazed right wingers all.

"They Don't Suck Their Socks"

A priceless Headmistress post on the CPSIA's insanity:

One concern is that the age limits themselves are unreasonable. It is ridiculous and completely unreasonable to treat bikes ridden by 8-12 year olds as though they pose the same risks as teething rings owned by 1 year olds. The CPSC cannot change that, as it would require commonsense changes at the foundational level of the law.

As we see more and more products pushed out of the market by the CPSIA, products which have never caused lead poisoning, it becomes clear that the law itself, which requires that all components of all products intended for the use of children 12 and under have the same lead limits, is unreasonable. 10 year olds do not chew their bike tires, lick their brakes, or suck on their tire valves.

They don't suck their socks.

They do not eat their books, not even books published before 1989. No book has ever been associated with elevated lead levels in the blood, yet as this law is written, those who do not wish to see books banned must first prove a negative- something that can only be fixed by the law.

Banning zippers and snaps is unreasonable, there is no evidence a child has ever been harmed by sucking his zipper pulls and snaps (no evidence that this is even something tiny babies are interested in doing, either), yet, the zipper company must first prove a negative, and this can only be fixed within the law itself, not by the Commission.

Read the whole thing.

If they're really concerned about zipper-licking 10-year-olds, they might consider all those kids (like me) who wore adult sizes when they were 10. Why stop with products "primarily" for kids? Why not test everything a kid might encounter, from sofa cushions to bathroom mirrors?

But maybe I shouldn't say that. Public Citizen might get ideas.

Liberals, Libertarians, and the CPSIA

At Brink Lindsey's invitation, I've recently participated in a couple of events--an informal, private dinner in DC and a formal, public panel at Stanford--designed to foster alliances between liberals and libertarians (or classical liberals), or to see whether such alliances are possible. Does our shared philosophical liberalism mean we can work together on more than a tactical basis?

When you get political theorists together, they assume the big divide is over the relative weights given to equality and liberty--the old Rawls vs. Nosick split. But given the right flavor of liberals and libertarians, that's bridgeable. The real division, I believe, is over regulation. Contemporary liberals will say, as someone did at dinner in DC, that they are against stupid regulations like the controls on trucking abolished in the late 1970s. And I'm glad for that.

But finding liberals who oppose any new regulation is almost impossible--no matter what the perverse consequences. My particular bugaboo is housing.

But the CPSIA is another good example. John Holbo at Crooked Timber is wondering why the law's defenders--his fellow liberals, in other words--aren't addressing the criticisms head-on: "Maybe thrift store shopping for children should become a thing of the past, because it's too hazardous to life and limb. But, to repeat, I haven't actually seen anyone 1) argue that the law shouldn't, as written, have these really very sweeping effects; 2) argue that, even if it does, on balance it's still a good law." The comments do not encourage optimism about a liberal-libertarian/dynamist coalition.

Unfortunately, once you are ideologically committed to the idea of regulation, you can't say that a given regulation is bad--or, worse, that maybe doing nothing new would have been the best course.

Maybe, as I argued to a skeptical editor, the system worked in the case of lead in children's toys. Recalls, lawsuits, and reputational damage solved the real problem, and the CPSIA is just an extraordinarily costly way of demonstrating after-the-fact concern. But you simply cannot say such things in polite company.

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.

Ayn Rand on Video

Ayn Rand's 1959 interview with Mike Wallace is now online, in three parts, at the very interesting DotSub.com, a site that allows anyone to caption a video in any language. It's a grand experiment in crowd-sourcing and the technology underlying TED's new subtitled TED Talks.

TED Roundup: Random Notes

Bill Gates in response to a question about whether improving health in poor countries will lead to a population explosion: When the Gates Foundation started out, it emphasized "reproductive health," a.k.a. population control. (Someone once noted that you can always convince poor people that rich people have too much money and rich people that poor people have too many children.) But they soon discovered that there's a direct relationship between improving health and slowing population growth. The most effective way to get people to have fewer children is to rapidly improve the health prospects of those kids. Speed is important, because it gives parents a chance to react and have smaller families.

MORE at TheAtlantic.com's Business Channel (edited by Megan McArdle).

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