Now that the Senate and House have both passed their own, substantively different, consumer product safety bills, the real fun begins. Will the bill that emerges from conference discussions look more like the tougher Senate version, or will it resemble the House version, which is preferred by industry and President Bush? It’s no secret that the manufacturing industry worked hard to weaken the Senate bill, succeeding, for example, in getting the maximum fine that the U.S. Consumer Product Safety Commission can levy knocked down from $100 million to $20 million.
Sure, $20 million still sounds like a hefty amount until you consider that the cost of many recalls can far exceed $20 million (and consider that $20 million is just for the companies that blatantly violate the law; most fines under the Senate bill will be capped at $10 million). Do the math. Or remember Ed Norton’s character in Fight Club explaining how the car company he worked for made recall decisions:
A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don’t do one.
Manufacturers don’t like recalls. Remember those Sony/Dell laptop batteries that got recalled a couple years ago because there was a chance they could start a fire? That humdinger recall cost Sony as much as $340 million.
So when the White House responds to the Senate bill’s passage by saying: “These provisions threaten to burden American consumers and industry in unproductive ways, and may actually harm a well-functioning product safety system,” take it with a heavy dose of skepticism.
Can the Bush Administration actually expect anyone to believe this gibberish? Which “well-functioning product safety system” are they referring to? The one that oversaw a record 473 product recalls last year?
What the White House is actually saying is, “These provisions threaten to burden billion-dollar multi-national corporations that have increasingly shifted their production to third-world countries, where they can exploit and underpay workers and produce goods with little or no government interference or regulation.”
For some good background on the issue, read the report “Santa’s Sweatshop” put out by Public Citizen’s Global Trade Watch Division in December.