Timothy P. Carney: Mattel exempted from toy safety law it helped write

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If you're looking for a sure bet, find a New York Times editorial praising some new federal regulation, and wager that this new law will yield harmful unintended consequences while protecting the biggest businesses in the effected industry.

This week's case-in-point is the Consumer Product Safety Improvement Act (CPSIA). Praised by the Times editorial page in 2008 as an "important bill" for "dramatically improv[ing] the way government protects consumers."

The law has since proven a scourge on small business, independent craftsmen, and second-hand stores, but also a boon to toy giant Mattel, whose leaded toys sparked the scare and whose lobbying push shaped the law.

Under CPSIA, every manufacturer of children's products whether a toy truck, a pacifier, a picture book, or a kid-sized stool must submit their products to independent tests for lead and other chemicals before selling them. Well, all manufacturers except for Mattel, the largest toymaker in America.

Recently, the Consumer Product Safety Commission (CPSC) voted unanimously to grant Mattel an exemption from the CPSIA's third-party testing requirement. The law provided for such exemptions if a company can demonstrate it has its own testing facilities that meet a certain standard.

Mattel in 2007 and 2008 lobbied for this provision, and lobbied for the overall bill, prompting the usual cries of "wow, even industry is on board!" Of course, Mattel was already completing its own in-house testing operation as a reaction to the bad publicity and litigation resulting from a handful of recalls of its toys containing unsafe levels of lead.

In light of the company's poor practices, the market and the courts forced Mattel to ramp up testing of its products. Then Mattel lobbied to force the same burdens on every competitor, even the man hand-carving toddler-sized chairs in his backyard workshop.

When regulation turns into a boon for the biggest businesses in an industry being regulated--which is often--commentators decry the "capture" of the regulatory body. Indeed, Mattel is much more likely to get the ear of toy-safety bureaucrats than is the independent artisan. But these regulations are often "captured" before they are even passed into law.

Remember, Mattel lobbied for this bill, and the Toy Industry Association said "we were early proponents of adopting mandatory laws to require toy testing." Hasbro, the second-biggest toy-maker behind Mattel, hired lobbyists for the first time in its history in order to back the CPSIA.

The regulation--even without the exemption for Mattel--imposes crushing burdens on smaller manufacturers and moderate burdens on the biggest manufacturers. If you have to test a sample from each "product line," but your "product line" is about 50 hand-sewn baby dolls, you might just close up shop. For Mattel, it's just a new expense.

Liberal Huffington Post writer Harry Moroz says libertarians are playing "gotcha" by finding a lesson in this Mattel exemption from a Mattel-supported law inspired by Mattel misdeeds. "The goal is better regulation, not less," Moroz wrote.

But CPSIA was celebrated by the New York Times as just that sort of "better" regulation. And where can he point to this "better" regulation--that doesn't crush smaller businesses and prop up the biggest players--existing in real life?

Philip Morris was the champion of the tobacco regulation Obama signed into law this spring. Kellogg is an enthusiastic supporter of the food safety regulation currently working across Capitol Hill, just as the big meatpackers supported the meat inspections Teddy Roosevelt retired.

The post-Enron Sarbanes-Oxley accounting regulations clearly didn't make our corporations' finances transparent, and they drove some publicly held businesses to sell out to private equity firms.

The late Teddy Kennedy helped kill airline regulation because it protected the incumbent carriers and smothered competition. In that instance, Kennedy favored less regulation, not "better regulation."

The toy-safety story can also inform the current health-care debate and the global warming debate. Obama touts both policy pushes as ways to tame the excesses and abuses of big business--and in both cases Big Business is on board. Expect higher costs, fewer choices, and more corporate profits.

We only get to be surprised so many times by Big Business turning Big Government to its own advantage. After the 16-year-old boy crashes our car three times, we're morally culpable when we hand him the keys again.

Congress should see the CPSIA as the calamity it is, and issue a recall of this misguided law.

Timothy P. Carney is The Washington Examiner's Lobbying Editor, His K Street column appears on Wednesdays.

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