Small Crafts vs. Big Government

Can artisanal goods survive federal legislation?

The Wall Street Journal, "Commerce & Culture" , January 29, 2011

This is a story about artisanal cheese and hand-polished wooden toys, organic spinach and exquisitely smocked baby dresses—the burgeoning small-scale economy so beloved by members of the "creative class." But it's also about another, much-discussed growth industry: the production of political cynicism among formerly idealistic Americans.

The story begins in 2007, an unusually good year for Peapods Natural Toys and Baby Care, in St. Paul, Minn., and many similar mom-and-pop businesses. Frightened by news that toys made in China contained unsafe levels of lead, customers were looking for alternatives to the usual big-box offerings. Just as organic farmers gain market share whenever there's a food-safety panic, the lead scare boosted sales of artisanal children's goods. "People wanted made-in-USA products, and we were the only place in town that had them," says Dan Marshall, the owner of Peapods.

Vendors offering organic materials and a personal touch seemed poised to prosper. But the short-term boon soon turned into a long-term disaster. In response to the lead panic, Congress passed the Consumer Product Safety Improvement Act, or CPSIA, by an overwhelming majority. The law mandates third-party testing and detailed labels not only for toys but for every single product aimed at children 12 and under.

"It's everything from shoes to hair bows, Boy Scout patches and bicycles—it's everything," says Mr. Marshall. But few people producing or selling artisanal kids' products even realized that the CPSIA applied to them until months after President George W. Bush had signed it. By then it was too late.

Although big companies like Mattel could spread the extra costs over millions of toys, Mr. Marshall's small-scale suppliers couldn't. Unable to afford thousands of dollars in testing per product, some went out of business. Others moved production to China to cut costs. Many slashed their product lines, reserving the expensive new tests for only their top sellers. The European companies that used to sell Peapods such specialty items as wooden swords and shields or beeswax-finished cherry-wood rattles simply abandoned the U.S. market. The survivors jacked up prices.

Mr. Marshall and other entrepreneurs formed the Handmade Toy Alliance to try to get the law changed, without success. "When Ron Paul's the only guy who votes against something it's really hard to go back and fix it," says Mr. Marshall, exaggerating only slightly. Neither political officials nor the mainstream media have been especially sympathetic.

"I'm a lot more cynical than I was," says Cecilia Leibovitz, who owns Craftsbury Kids, an online shop selling handmade toys and children's clothes, and also leads the CPSIA discussion group among Etsy.com's online sellers. Mostly individuals producing one-of-a-kind items, Etsy crafters find it especially hard to comply with, or even interpret, the law's requirements.

By contrast, consider the recently enacted Food and Drug Administration Food Safety Modernization Act. Like the CPSIA, it establishes expensive new labeling, record-keeping, inspection and reporting requirements. But, unlike the CPSIA, it carves out an exception for small operations.

The reason for the exemption is not that small farms are safer than big ones. It's that a vocal, established and well-connected interest group didn't want the law to put small farmers out of business.

Agriculture is a highly politicized industry, and proponents of small-scale farming are organized, ideological, and well represented in the elite media. Buying handmade toys may be nice, but eating produce from the farmer's market is a quasi-religious ritual of group identity. The exemption is what Michael Pollan, the best-selling author and leading locavore, calls "a very important signal—that this is a different economy and it's going to play by slightly different rules."

Other artisanal businesses have gotten a less supportive signal. It's not enough, they've learned, to light a single hand-poured beeswax candle rather than curse the mass-market darkness. Unless you have the right protection, Congress can easily snuff it out.