Dependence

On listening to, oh, I don't remember -- Hannity? Limbaugh? Levin? -- just the other day, I heard yet another rant on the theme of "Obama is killing capitalism". The idea is that he is introducing all of these various programs, policies, and schemes with the intent of killing the "free enterprise" system and thereby force the citizens of this good country to become dependent on him and the machinery of government.

Far fetched, right? Well, not so fast. Sure, selectively handing out aid was FDR's strategy in the 1936 election, but health care dollars are simply not going to be doled out on the basis of your party affiliation the way that bridge projects can be funded only in battleground and friendly districts. And while Amity Shlaes repeatedly emphasizes the apparent harm FDR caused to the economy by repeatedly threatening the very people who he needed to restart the investing and hiring, that seemed to have been done more out of incompetence than grand design. But still, the idea that someone would scheme to actually do in the economy just as a show of power and to create dependence? No self-respecting Democrat would ever believe such a thing.

Then, after reading this interview with Michael Moore the other day, I got to thinking about how you might convince him to understand that "capitalism" in hands has become nearly meaningless because it now means everything? Can he understand the difference between a free market, merchant capitalism, industrial capitalism, finance capitalism, managerial capitalism, and state capitalism?

That last variety of capitalism is one in which the capitalists use the machinery of the state to further their own interests. I suppose his new movie shows how the titans of Wall Street threatened complete economic collapse, widespread joblessness, and panic in order to get the stimuli packages through. As a show of power, of demonstrating who depends on whom, it was brilliant. The Democratic Congress and both Presidents caved under the pressure. No self-respecting Republican would ever believe that their capitalist heroes would do such a thing.

So, who is playing whom here? The hierarchy apparently goes: Wall Street, Bush+Obama+Pelosi+Reid, then somewhere down near the bottom are We the People. But only if you believe in conspiracy theories.

And here's Kevin Carson with a different take on the same subject. Now that I look at it, he seems to have been on this topic for a while, roughly 27 August 2009 to 16 October 2009 as of this writing.

And, for a good laugh, check this Crooked Timber piece out and learn (1) that the difference between left and right wingers is that the left thinks for themselves [sic], defends constitutions, and balances budgets, and (2) that they both really, really care about and perhaps actually do think in terms of bumper stickers.

Gymboree

Incidentally, regarding Jon Stewart's point regarding the lack of any accountability in business reporting, anyone remember this video interview with Hitha Prakhabar a couple of months ago? Remember that she said that appliques and trinkets have been tested already? Or that she said, "even though this law is gonna be passed [sic] it's not going to affect the children's clothing industry that much"? Or that the interviewer said, "you mentioned The Children's Place, Gymboree, these retailers will be fine" and Hitha confirmed, "while Gymboree and The Children's Place have probably tested their stuff already and the pieces that are on the clothes, it's not going to have a major effect."

Well, Hitha, I'm sorry dear, but it seems to have had a major effect, if, by "major effect", we mean a 40% drop in Gymboree's stock:

BANGALORE, March 4 (Reuters) - Gymboree Corp (GYMB.O) forecast a bleak first quarter as regulatory changes related to product safety significantly weigh down on the children's clothing retailer, slamming its shares down 40 percent in aftermarket trading.

...

Gymboree said regulatory changes related the Consumer Product Safety Improvement Act (CPSIA) passed by the Congress in August 2008 will impact sales and gross margins in the first half of 2009.

The Act required the Consumer Product Safety Commission (CPSC) to begin enforcement of new lead and phthalate standards for children's products on Feb. 10, 2009.

In order to comply with the new laws, the company began an initiative to remove any styles in its 800-plus stores that did not meet the new limits prior to Feb. 10, Chief Executive Matthew Mccauley said on a conference call with analysts.

The company had already pulled out products and changed production lines even before a clarification to the law was issued on Feb. 6, Mccauley said.

Separately, the company said a change in safety requirements related to levels of phthalates, a chemical used to increase flexibility in plastics, rendered about 1.7 million of its inventory obsolete.

"This...caused us to pull sleepwear for ages three and under off all of our shelves," said Mccauley.

That seems to be in the neighborhood of roughly pi radians off of the claims made by Hitha.

May I suggest a strategy for all of those would-be industry experts and assorted talking heads out there? If Fox or Forbes asks your opinion on a subject about which you are completely ignorant, you can decline to comment, or you can do some investigation. Just "going with your gut" doesn't work any better for you than it does for any of the CNBC stock jobbers.

PIRG: Hanlon's razor meets its match

I don't know what you know about USPIRG and the rest of Ralph Nader's Empire of Opacity, but they make it difficult to tell whether they act out of planned malice or simple stupidity.

Before I go on about their latest contribution to the CPSIA saga, please consider some background. According to their annual report, their money comes largely from individuals and grants, with only a small portion of it from "State PIRGs". However, this is at least a little suspect. For one thing, you don't get an actual tally in dollars of what their revenues and expenses were; it's only in percentages. For another, since about 10% of each chapter's revenues go up to the USPIRG mother organization, and they are known to take in a fairly large haul (more in a minute), then these individual donors must really be forking it over by the wheelbarrow.

How do the chapters get their money? This is among the many questionable aspects of USPIRG. The chapters go out among the local universities and arrange to have a new fee attached to the rest of the "student activity fee" charge. This is the ubiquitous and inconsipcuous add-on that consists of $6 or $8, ostensibly to cover things like free concerts and the like. In this case, it is used to siphon money out of the pockets of students and their parents straight up to a very partisan 501(c)(3) lobbying machine. As Radley Balko notes in this very good article, Ralph Nader: Public Shakedown Artist,

Yes, the same man who rails against corporate welfare - because it coercively takes money from taxpayers and funnels it to corporations - has set up a rather ingenious, if underhanded and manipulative, way of coercively taking money from college kids - and funneling it to Ralph Nader.

...

The scams vary from campus to campus, but it basically works like this:

Each time your kid registers for classes, the local PIRG chapter has arranged with the school to tack a fee on to his/her tuition. On most every campus, the PIRG chapter has made attempts to make this "contribution" as secretive and misleading as possible. Just how secretive and manipulative the method depends on how much resistance each chapter has met in trying to get the scheme implemented. At most schools, they first attempt to make the fee both mandatory and nonrefundable. If that doesn't work, they lobby for as underhanded and sneaky a scheme as the school will allow.

...

On about 1/3 of the state college campuses in New York State, a student's PIRG contribution is mandatory and nonrefundable. The University of Wisconsin and University of Oregon also require mandatory, nonrefundable contributions to PIRG.

You want to go to one of these schools? You pony up to Ralph Nader.

At other schools, such as Trinity College in Connecticut, students not interested in supporting the local PIRG are required to go a Bursar's office or a student activities office, fill out a form, then take the paperwork to a campus PIRG officer to get a refund. That's quite a bit a work for three or five or eight dollars - and that's assuming the student ever notices the charge on his tuition statement to begin with. Not surprisingly, most PIRG chapters don't go to great effort to publicize the refund option. They rely on college student indolence, and they're making a killing.

...

And about 10% of campus-collected money goes to the national chapter, USPIRG.

...

Rucker estimates that PIRG chapters on at least 70 college campuses have some sort of funding scheme that's either mandatory, or puts the onus on the student to pursue a refund.

PIRG chapters are operational on at least 140 campuses nationwide, and if not funded by mandatory fees, most either employ deceptive sign-up campaigns similar to the one used at Indiana, or lobby usually left-leaning student government bodies to grant them disbursement from more general "activities funds."

Like most of Ralph Nader's puppet and satellite organizations, state PIRGS are notoriously reluctant to divulge financial information (more on that below), so an exact figure on just how much they're collecting is tough to compute. Nevertheless, Rucker estimates that PIRG chapters nationally manage to collect somewhere between $10 and $20 million dollars from college students to advocate for Ralph Nader's causes.

So, if the annual report is right in estimating 10% comes from state chapters, and the 10% and $10 million figures from Balko's article are correct, then USPIRG must rake in about $1 million from students, and another $9 million from their other sources, about half of which was "citizens". Eye-balling their donors list, I'd guess I could add up about with about $150,000 or so among the people who did not donate more than $1000, and guessing those above gave $10,000 (a very generous estimate), another $230,000. Where did the other $4.1 M come from? And what about these "grants"? And why are all annual reports prior to 2005 inaccessible? This scam has been going on for a long time, as this 1999 Reason article shows.

Anyhow, for an organization that demands accountability and transparency from everyone else, their own operation lacks those characteristics. The same is true of Ed Mierczinki's "consumer" blog, the blog that consistently shows "Comments (0)" despite the fact that Rick Woldenberg, Kathleen, and I have been submitting comments which are all then "held for approval". Unfortunately, the story about these astroturfing organizations gets worse: apparently, Ralph Nader does not tolerate unions in his front groups:

According to Nader, "Public interest groups are like crusades ... you can't have work rules, or 9 to 5." Shorrock, with his "union ploy," became an "adversary" according to Nader. "Anything that is commercial, is unionizable," but small public interest organizations "would go broke in a month," Nader says, if they paid union wages, offered union benefits and operated according to standard work rules, such as the eight-hour day.

Whew -- that's a page right out of the ACORN book!

Meet the new boss

The status quo ante, as they say, was as follows up until August 2008:

• You could not sell children's products with an excess of 600 ppm lead content.
  
• You did not have to test to determine that.

And that, as they also say, was the source of all of our problems in the past few years. In her prepared remarks before the Subcommittee on Commerce, Trade and Consumer Protection of the House Committee on Energy and Commerce (the Rush Committee), Rachel Weintraub said

To assure that products are safe when they enter the American and global stream-of-commerce, safety must be infused into the earliest stages of the supply chain. For this reason, independent third-party testing of final products, as well as components, must be required. Third-party testing entities must be independent from and have no financial relationship with the manufacturer producing the product. Testing must be conducted to identify design flaws as well as violations of existing regulations, such as those governing the use of lead paint. Components and final products must be tested at numerous stages of production and tests must be conducted randomly throughout the manufacturing process. Products should also be certified that they meet the appropriate standards and should bear a label indicating that they are certified.

Shorter Rachel: You must test. No, you must pay someone to test. They must test the components, the intermediate products, the final products. You must test and test and test. Then they should be certified that they are tested.

Shorter shorter Rachel: No test, no safety.

And she wasn't alone in this opinion.

This was all very alarming for resellers of children's products. Since every item was unique, or at least since they couldn't possibly tie them all to any reasonable lot number, they would have to test everything. That's prohibitive, to say the least. This was effectively a ban on selling used children's goods [1].

Fortunately for them, the CPSC stepped forward with the following clarification:

The new safety law does not require resellers to test children's products in inventory for compliance with the lead limit before they are sold.

Woohoo! Problem solved, right? Well, ...

However, resellers cannot sell children's products that exceed the lead limit and therefore should avoid products that are likely to have lead content, unless they have testing or other information to indicate the products being sold have less than the new limit.

Oh.

Those resellers that do sell products in violation of the new limits could face civil and/or criminal penalties.

Uh-oh.

Maybe the CPSC's former spokeswoman, Julie Vallese, can clarify? At 4:23 or so, "If they have a level of confidence that those things that they are selling is not in violation of the new lead limit, then they by all means can continue to sell those products." Simple, right? Because of your previous career as a chemical engineer, your "confidence" is an unusually accurate way of determining lead content. For the rest of us, does someone have a confidensometer? Later in the video (5:404ish), she says, "they could call the manufacturer and ask them whether or not there is any lead used in the manufacture of the product." Wow, even though manufacturers themselves cannot use this method? Or "they could use XRF technology"; well, until August, and if you have the $40,000 for a gun. Perhaps the Magic 8-ball would be as valid? "Does this product have lead ... 'Ask again later.' I guess this one goes back into the warehouse." Now that you have Vallese's non-test-based testing mastered, perhaps you would like to learn about missile guidance systems?

But many of the people who are claiming that there is no problem with this law are looking at this clarification as a triumph of the process. "See?" they are in effect saying, "You don't have to test. Just don't let us catch you selling anything illegal. All of the people talking about the expense and stupidity of this law are just exaggerating." Wow, they were so smart.

For resellers, here is the status quo post, or however you say, "from here on out" [2]:

• You can not sell children's products with an excess of 600 ppm lead content.
  
• You do not have to test to determine that.

Yes, this is much, much better than the way it used to be, way back in '07. This law is practically perfect in every way. Not absurd at all.

--------------------
[1] But not burning them. A law mandating an increased carbon footprint? Go figure.

[2] Until they drop the lead limits. And have we talked about bonding?

I am a Baptist [1]

Yes, it must be true. After all, people from Public Citizen and/or US Public Interest Research Group [2] would never lie, would they?

First, we had this unfounded and nebulous accusation from Director of Public Citizen's Congress Watch, David Arkush:

There is a lot of misinformation on the CPSIA floating around. It looks to me like a deliberate campaign by some large manufacturers who know better, but are whipping up fear and hysteria among smaller manufacturers for political purposes -- sounding alarms about high costs and bankruptcies as a way of using the current economic crisis to renew the fight they lost last summer against a good product safety law. Maybe I'm mistaken, but that's what it looks like. In any event, if there are real mistakes in the law, then they can be fixed. But I haven't heard a single legitimate concern yet. Just misunderstandings.

Can we have some names, please? Who are these large manufacturers? What is the misinformation, exactly? I've seen a lot myself, but most of it coming from scared and confused mom & pop operators who can't afford high-hat lawyers like yourself to explain this monstrosity to them.

And this business about real mistakes in the law: I wonder if you might elaborate? And perhaps describe how they can fixed? Because we have been trying and having little success.

Well, let's see. The only people I have dealt with as we have been running this campaign are

• Rick Woldenberg, Chairman of Learning Resources. Ever heard of them?
• Kathleen Fasanella, author and operator of www.fashion-incubator.com and www.NationalBankruptcyDay.com. One woman business.
• Several other designer-entrepreneurs (apparel business owner-operators)
• and dozens more coming into the fashion-incubator forums from Etsy.
  

Then, the conspiracy theorists at USPIRG, Public Citizen, Consumer Federation of America, Consumers Union, Kids in Danger, Union of Concerned Scientists, and National Research Center for Women & Families make essentially the same accusation in an open letter to CPSC Chairwoman Nord:

Our groups, representing consumer, scientific, and public health interests, write to urge the Commission to provide guidance and clarity and to immediately dispel misinformation now circulating among entities regulated under the Consumer Product Safety Improvement Act (CPSIA). ... The vacuum of implementation information, as well as the proliferation of misinformation regarding actual testing requirements and the cost of testing is leading to confusion and fear.

Wow! "immediately"! "misinformation"! They wouldn't be completely clueless upper middle class lawyer policy wonks without the slightest knowledge of what they are talking about, would they? No! They represent consumer, scientific, and public health interests. And therefore I must be part of the ... is it a cabal or a coven? We can't decide. And they finish with this crescendo:

While certain segments of industry are raising valid questions about the new safety testing requirements under the law, other industry statements and reports about the impact of the law overstate and/or misstate important aspects of the requirements of the new law. The CPSC can - and must - address valid concerns, and act to quell misinformation surrounding the new testing requirements. Congress has spoken clearly, and now the CPSC has the responsibility to use the tools already provided to it by the legislation and provide the necessary, accurate and important guidance to all interested parties to further the timely and effective implementation of the CPSIA.

Right. I have 2 dozen quotes from actual manufacturers who got them from actual, CPSC-approved test labs. Bureau Veritas (you oughtta see this, what did someone call it? "Museum of Bureaucratic Incompetence exhibit"), Intertek (some from China), Consumer Testing Labs, EMT, IMR Test Labs, CMA, Vartest, NSL Analytical, and various applications of XRF guns, including in-house testing with a rented gun, and of course TheSmartMama, Jennifer Taggart (oh, I forgot she was in the ... juncto? Another multibajillion dollar toy manufacturer). These prices range from $45 to test baby booties to one for over $18000. And we already knew about Rick's $24000 telescope and $6000 kindergarten project kit.

The baby booties are an interesting problem. She gets about three pair from a ball of yarn. Thus, every three pairs constitutes a batch. Thus, she must eventually track and tag each batch along with its $45 test results. Anyone want to buy a set of $25 booties? Because that's what they're going to have to cost by the time you throw in her time, the yarn, and the testing.

So, I have my information. It's time for you "representatives" to put up or shut up, or risk being called liars. Who are the Bootleggers for whom I am working? What is "mis" about this information?

Because I also have my theory. It is that the Hasbros, Mattels, and other real giants in the children's toy, apparel, and other industries stand to gain from CPSIA. If you make 100,000 Tickle Me Elmos, t-shirts with Mickey Mouse, or any other branded item, the testing costs can easily be folded in. The problem that you law school genii haven't figured out is that most apparel companies are small: 68% have fewer than 20 employees. And then there are the retailers who sell their stuff, the reps who shop it around, the vendors who supply the cloth and hardware, the contractors who supply the services. There are hundreds of thousands of people employed in small companies in this and related industries who are facing unemployment. And when they do find themselves unemployed, consumers will find their choices limited, and the prices for those branded, mass-produced products will go up. I will blame you.

I will blame you, Rachel Weintraub, not only for the mess this has already caused but for the parts of the mess to come that we haven't talked about, like bonding and the opportunities for Big Law to use this program to as a profit generator, all of which you applauded in your testimony. Were you also one of those who believed that the law needed to be expanded from 6 year old kids up to 12 year old kids?

I will blame you, Janell Duncan, Donald Mays, and Ami Ghadia, for supporting this law without considering its consequences; for accusing us of spreading misinformation in one forum (above) while your organization tells half-truths in another: "Consumers Union, along with a half dozen other public interest groups, has urged federal regulators to immediately provide additional guidance and clarity to help address those concerns." Right, blame the CPSC, not the law, and nevermind the FUD campaign?

I will blame you, Ed Mierzinski, who doesn't even have the courage to print my or Rick's comments on your blog, who first accuses the HTA of being a "grassroots effort of 'small' toy companies" without realizing that they are a grassroots effort of small (no scare quotes) companies, and then calling them responsible seekers of clarification (if, by clarification, you mean broad exemptions and/or repeal).

I will blame you, David Arkush, serial conspiracy theorist, arbiter of what's a legitimate concern when your livelihood isn't on the line, and you, Elizabeth Hitchcock, who spent most of the pre-Christmas runup telling everyone about the "dangerous toys" that CPSC is allowing to remain on the shelves without once (that I could find) explaining the difference between "being lead-free" and "being tested and certified as lead-free". Perhaps you are a little fuzzy on this yourself? Because I spent weeks going along behind your stories trying to clear up the confusion that consumers had on that point.

Celia Wexler and Diana Zuckerman? Except for being signatories to this rearguard action letter, I'm going to let you off the hook.

You are the real Baptists. The Bootleggers don't have to lift a finger with you people around.

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[1] As in "Baptists and Bootleggers".

[2] They're basically the same group, as you can find by looking up any of their signed public letters. It's basically the same dozen people climbing on board each other's bandwagon. There's even a term for it: astroturfing.

Almost great

This video:


Almost great because it'd be interesting to see it done with era-appropriate references for John Kerry, George W., Al Gore, George H. W., John Kennedy, FDR, etc.

In other words, ... yawn, another no-thought, one-sided, partisan rhetorical attack that, when applied with equal enthusiasm to both sides, is likely to backfire. "Out of touch" applies to everyone living inside the beltway. How 'bout if we also lampooned people who had never held a job in the private sector (Bill Clinton, Barrack Obama, Al Gore, George H. W., Eisenhower)? Or that required manual labor (probably everyone since Truman, and many before)?

Heh

Blame America First?

No!

Drain America First! (see the comments)