03 May 2011

Kumbayah

ProfessorBainbridge.com | Stephen Bainbridge | Dodd-Frank's Combat Mineral Disclosure Mandate Slams US Business

Congress seems to love what I call Kumbayah laws. Everybody on the Hill gets around in a circle, holds hands, condemns some (often admittedly heinous) abuse, sings a couple of choruses of Kumbayah, and then dumps the problem in somebody else's lap. Congress gets to feel good, NGOs pat them on the back, and it costs Congress nothing.

But somebody pays. Consider, for example, the mandate in Dodd-Frank that companies "certify that their products contain no conflict minerals from the Democratic Republic of the Congo (D.R.C.) and adjoining countries." BNA reports that this mandate is going to prove hugely expensive for companies--especially tech companies--and amount to a de facto embargo on such minerals:
Rick Goss, vice president for environment and sustainability at the Information Technology Industry Council, said that the Dodd-Frank reporting requirements could end up becoming a de facto embargo on mineral imports from the D.R.C. because it is extremely difficult if not impossible to know if someone in a long supply chain is contributing directly or indirectly to illegal armed groups in that country. ...
(1) "Kumbayah Law" is a great name. I will need to be using that.

(2) If we want to bar firms from buying assets whose sale contributes to funding for "conflicts," shouldn't we ban them from holding US Treasuries?  (Just kidding.  But not really.)

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