Thursday, December 11, 2008

Bloggers of the World, Unite!

John draws attention to an issue that has escaped the notice of virtually the entire public and ought to be a nightmare issue for not only free-market libertarians and conservatives, but - perhaps more importantly - also for ascendant liberals and progressives. It is an issue that bespeaks the results of regulatory capture by powerful and/or well-organized interests. As Scott Payne of the excellent site Politics of Scrabble writes in the comments to John's post, it is thus an issue that is "ripe for a little grassroots blogospheric activism."

It seems that earlier this year our Congress passed - and President Bush signed - its official response to the Lou Dobbs Toy Scare of 2007. In the rush to pass this legislation (which sought to solve a problem that was linked to shockingly few actual injuries and/or deaths), Congress imposed with little debate a set of requirements that will be extremely costly for small manufacturers and importers of childrens' products to comply with. Specifically, these requirements include mandatory testing by government certified "third parties" of just about every conceivable product that is designed "primarily for children under the age of 12." They also impose new labeling requirements that will mandate each unit be labeled with a date and batch number. This is, by the way, without regard to where the product was manufactured - domestic products, products made in China, products made in Hong Kong, and product made in Europe must all comply. While one must always be careful in trusting the data provided by interest groups, one group of affected small businesses says that the testing alone will likely run in the neighborhood of $4000 per product. Importantly, as far as I can tell, this testing needs to be conducted on each separate shipment of a product, meaning the business needs to pay the testing fee every time they bring in (or, if they are a manufacturer, send out) a new shipment.*

The marginal costs of these requirements are considerably smaller for larger - and more politically organized and powerful - companies, who can bring in larger shipments, and thus distribute the testing fees amongst a far larger quantity of products.

If my reading of the per-shipment testing requirements is correct, the currently proposed rules would also encourage even more importation of mass-produced childrens' products overseas: imported mass-produced products can come in larger shipments and only need to be tested upon importation. Meanwhile, domestically manufactured products must have every shipment to a distributor tested, which is likely to be a relatively small quantity for a variety of reasons. Obviously, small-run imported products will also be disproportionately affect (again, assuming my reading of the testing requirements is accurate, which it might not be).

But even if there is no per-shipment testing requirement, the proposed rules would require virtually any version of a product to be separately tested. If, for instance, a business makes three products that are identical in every respect except their color, then each of those products will need to be tested.

It's probably safe to assume relatively few legislators actually read the contents of this legislation. It's also entirely possible that these effects were mere oversights, or at least simply the result of a lack of organization by the groups most affected. Then again, it's also possible that this legislation (and more likely the resulting regulations) was more or less drafted by the very groups it was meant to restrict. Whatever the cause, the fact is that this is a law and set of regulations that only serves to hurt small businesses while granting big business an even stronger control over the relevant market.

Fortunately, there is time to at the very least pass some form of remedial legislation or seek the scaling back of the proposed regulations. For that reason, and because this issue unites the common interests of principled liberals, conservatives, and libertarians, I can't think of many issues better suited for an non-partisan, non-ideological activist campaign. I'm not looking for terribly much here - I'm no Kos or Michelle Malkin. But a few phone calls and letters to Congress couldn't hurt.

For the record, an outstanding summary of the problems with the new law and rules is located here.

*I may be wrong about this assertion, though, as there is an awful lot of ambiguity in the legislation and in the rules that have been put forth so far.