Crony Capitalism – the Mattel story

In 2007 Mattel had to recall a bunch of toys, manufactured in China, due to lead paint issues. Seeing a crisis, the government responded in its typical fashion by casting a net of stifling regulation over everyone from toy manufacturers to small businesses (more here) and yard sales (more here). The Consumer Product Safety Improvement Act (CPSIA) requires independent testing of all products sold (or resold) for children. Yet the company which actually triggered this onerous regulation has been given a pass, again, on the independent testing requirements. (story here from the AP)

The nation’s biggest toy maker, Mattel Inc., is getting another exemption on federal safety rules even as smaller companies struggle with testing costs imposed after a rash of Mattel toy recalls in 2007.Under the law passed after the recalls, the makers of children’s products must perform independent third-party tests for lead, lead paint and other potential dangers.

On Friday, however, the Consumer Product Safety Commission voted unanimously to approve Mattel’s request to use two more of its own company laboratories for the third-party checks on its toys.

Again, the government picks winners and losers – like this small manufacturer:

For Jill Chuckas, owner of a small business called Crafty Baby, the exemption is going to the wrong company.

“It’s extremely frustrating and not fair,” Chuckas said of Mattel. “Their labs were the ones that didn’t catch the problems to begin with.”

Mattel says the 2007 recalls were not the result of a failure in a company lab, but rather problems with outside vendors.

The real reason Mattel gets a pass while the others don’t is more than likely because Mattel can afford to buy government protection:

The agency gave seven Mattel labs, mostly overseas, the firewalled designation last summer — the first such action on the issue for the commission. Two more Mattel labs in China and Thailand were approved Friday along with a Chinese-owned company, Dongguan Zensee Printing, in China and an Ohio-based lab for MeadWestvaco, which produces notebooks and packages products.

Mattel pushed hard for the firewalled labs provision when Congress was considering the legislation. The company spent about $1.5 million on lobbying, according to federal records.

Yep – that’s how Crony Capitalism works…


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