Everywhere You Look is the Government


I am a mechanical engineer and receive a number of professional trade publications. Two recent articles caught my eye. The first was an editorial in Appliance Design. The second was a feature in article in Design News. These two articles highlighted how deeply embedded government intervention is in business decisions to bring new products to market.

The article in Appliance Design was by a Michael Petricone, the Senior Vice President of Government Affairs for the Consumer Electronics Association (CEA). The CEA is an industry group that has training, standard-setting activities, and a government-lobbying branch. The quote that caught my eye is

We must embrace the transition to digital television and educate consumers. February 17, 2009, begins a new era in TV (when all TV broadcasts will digital). We have fought for a hard deadline to provide certainty and we will continue to rally behind this transition. By providing education for consumers and retailers, CEA will work to help make this transition seamless. We are also excited about the enormous potential for the returned spectrum. It is an opportunity to develop exciting wireless technologies and capabilities including fast ubiquitous wireless broadband connectivity.

He is referring to the enforced transition to digital television. After February 17, 2009 your analog television set will cease to function. Unlike previous transitions in the electronic industry this one is government mandated. Similar transitions such as from AM radio to FM radio, black and white to color television, records to CD’s, or from CP/M to DOS to Windows operating systems all occurred voluntarily. Consumers decided the new technology was compelling enough to purchase and it became a success in the market place. One can also think of examples where an arguably better technology failed in the market place. An example here is beta versus VHS tape formats.

The government has decided for you that you will upgrade by that date and what the winning products will look like. If you, like me, only watch television occasionally, and left to your own devices would not upgrade you no longer have that choice.

I recall reading in a trade publication some years ago that the decision to mandate digital television was pushed as a protectionist measure for U.S. manufacturers. At the time the decision was made U.S. manufacturers had what was thought to be a permanent lead in the design and manufacture of high-speed digital chips.

A possibly unintended consequence of the mandating of digital television broadcasting is the maintaining of a technology that might die out if left to the open market. Consider that almost 80% homes now receive television through either satellite or cable. Conventional over-the-air broadcasting is a declining portion of the market. In an open market it might just fade away the same way that telegrams have.

Another more interesting situation was recently described in Design News. An article described the efforts to bring to market a new technology. Stephen Gass, physicist, attorney, and inventor developed a table saw that automatically stops if the blade comes in contact with a part of the body. I can attest to the value of this as I know several people who have lost parts of their fingers and hands to table saws. The Design News web link has a dramatic video of a hot dog being driven into the path of a spinning saw blade on a table saw equipped with the SawStop technology. As soon as the hot dog contacts the saw blade, the blade is retracted leaving only a tiny nick on the hot dog.

The quote of interest is this:

Acting on a petition from Gass, engineers at the U.S. Consumer Product Safety Commission recommended that the government begin a "rulemaking process" that could result in mandatory safety standards for table saws. Days later, the agency's commissioners shocked the power tool industry by concurring with the recommendation.

At this point you might be outraged. Why is Gass not introducing his product to the marketplace? Let the consumer decide whether he values his safety enough to pay extra for this safety feature. This is the point where this case gets interesting.

The currently accepted legal doctrine is “saws are sharp, use at your own risk.” Continuing on in the article we read

Most of the time, legal cases are dismissed before they get to a jury because the judge agrees with the saw maker that this is an activity entered into by adults who have a general knowledge of the propensity of sharp edges to cut," notes James T. O'Reilly, a professor of law and product liability expert at the University of Cincinnati College of Law.

Gass believes that the "use it at your risk" legal structure steals the motivation of saw manufacturers to adopt new safety technology. "What you have here is an economic disconnect," Gass says. "The power tool companies are not paying for the injuries. You and I are paying in terms of medical premiums and workers' comp. If the (power tool) industry had to pay, this technology would have been on those saws a long time ago”

The accepted legal doctrine has protected the power tool industry and dissuaded innovation to enhance safety.

So here we have an entrenched industry protected by an accepted legal doctrine and a newcomer trying to muscle his way into the industry with a U.S. government ruling. Neither side is interested in an open fight in the marketplace for dominance; they are rather trying to maneuver to seek legal protection. Who decides?

In a free market, SawStop would find investors to bring the product to full scale manufacture and market it. If it is truly cost-effective the cost savings from avoided accidents would be a compelling reason for purchase. Insurance companies would start pressuring their insureds, businesses using table saws, to purchase it.

What we have seen in these examples is that a good product, desired by consumers, is not what is now necessary for success. In the case of digital television, consumers will be forced to upgrade by government mandate to a product that they may or may not want. In the case of SawStop the legal maneuvering has just begun. My suspicion is that the outcome will not be decided on the relative merits of the saws.

October 25, 2006