The Washington Toy Story

LewRockwell.com carried an excerpt over the weekend of Obamanomics, and my section that deals with the Consumer Product Safety Improvement Act:

And small craftsmen were threatened by the testing requirement. Every manufacturer, including grandpa in his woodshed, would need to submit its products to an accredited outside testing facility. This would be costly and burdensome. But written into the law was a provision that, while common sense, seriously favored mass-producers. Look at this guidance from the CPSIA:

If your products need to be tested, and they are materially identical and made in the same fashion with no change in assembly, equipment used, etc., then a single sample may be all that is necessary for testing purposes. A change in materials or design can be enough to alter testing results. [9]

So if you’re rolling 10,000 petroleum-based Barbies off an assembly line in Shanghai, you need test only one. If you’re making ten sets of children’s rosary beads to donate to the kids in your parish receiving their first communion, you also need to test one – unless these rosaries are unique, or if you made some at home, some at your office, and some while visiting your grandchildren. In those cases you need to get each one tested – not just each rosary, but each component: the little beads, the big beads, the crucifix, and the string.

Mattel was deploying the “Overhead Smash”: crowding out smaller competitors and potential start-ups by lobbying for stricter regulation.

Obamanomics Excerpt: Obamanomics: General Electric wins big with White House

Today, the Examiner carries an excerpt from Chapter 10 of Obamanomics:

Days after Obama's inauguration, Jeff Immelt, CEO of General Electric, wrote to shareholders: "[W]e are going through more than a cycle. The global economy, and capitalism, will be 'reset' in several important ways.

"The interaction between government and business will change forever. In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner."

General Electric is a sprawling, complex corporation with many diverse businesses. The company makes light bulbs and refrigerators, sure, but it also has a finance arm, a transportation arm, a health-care arm, a communications arm, and more. The above letter from Immelt reveals what these arms all have in common: They all reach out for government favors.

Obamanomics defined: Big Government in service of Big Business

Today, the Examiner runs an excerpt of Obamanomics, Chapter 1:

Underlying Obamanomics are some basic economic facts and political realities. These are the Four Laws of Obamanomics, paired below with some of the lobbying strategies that exploit these laws.

1) During a legislative debate, whichever business has the best lobbyists is most likely to win the most favorable small print. Similarly, once a bill has passed, the business with the best lawyers and lobbyists will best be able to craft the regulations and learn how to game them. A big business, counting on this fact while lobbying for more government spending or control, is employing The Inside Game.

2) Regulation adds to overhead, and higher overhead crowds out smaller competitors and prevents startups from entering the industry. When corporations, knowing this, lobby for more regulation of their industry, I call this the Overhead Smash.

3) Bigger companies are often saddled by inertia, meaning robust competition is a threat. Adopting regulations that stultify the economy is the equivalent of raising the basketball hoop to twenty feet at half-time: it protects the lead of whichever team is ahead. When Big Business seeks to stultify the economy to hold back smaller competitors, I call it Gumming the Works.

4) Government regulation grants an air of legitimacy to businesses, boosting consumer confidence, often beyond what is warranted. This is The Confidence Game.