Consumerism: a View From the Hill

Citation:

Edward A. Merlis (1971) ,"Consumerism: a View From the Hill", in SV - Proceedings of the Second Annual Conference of the Association for Consumer Research, eds. David M. Gardner, College Park, MD : Association for Consumer Research, Pages: 10-14.

Proceedings of the Second Annual Conference of the Association for Consumer Research, 1971     Pages 10-14

CONSUMERISM: A VIEW FROM THE HILL

Edward A. Merlis, Professional Staff Member, U.S. Senate Commerce Committee

After your having listened to fellow academicians discuss the consumer movement for the past few days, and your hearing Commissioners and staffers from the executive branch of Government discuss their involvement with consumerism, you are now faced with the somewhat dubious opportunity to hear one Congressional staff member's attempt to interpret the Congress' sentiments about this phenomenon of the twentieth century.

I am particularly honored with this challenge.

Of all audiences, you are the one least interested in a rehashing of the history of consumerism. The old methods developed at a time when the buyer and seller were equals in the marketplace and the community are giving way to a new breed of consumer and marketer. And the public seems to be at the mercy of the sophisticated manufacturer or retailer. We are dazzled with new products, and we are the butt of a continuing barrage of commercial messages incessantly hammering home the message of instant gratification through swallowing, tasting, touching, hearing and even smelling a variety of consumer products.

Exactly how does the Congress view consumerism or environmentalism or whatever " ism" you want to call this growing political and economic force? I am sure you will find a number of elected officials who would disagree with my analysis of consumer consciousness if they were confronted with these ideas and asked to comment on a "not for attribution" basis. Certainly the type of questioning of hearing witnesses which daily occurs indicates that there are still a significant number of Congressmen and Senators who would rather not recognize what consumerism is all about. Consumerism is, as I implied a moment ago, a twentieth century citizens revolt against the unresponsiveness of both public and private institutions to human needs. And Government and industry find that they must increasingly pay more attention to this growing force. For it is here to stay.

Some date the dawning of the modern consumer movement from President John F. Kennedy's special consumer message nine years ago. In that message, the President reminded Congress that consumers are the largest economic group in the country, accounting for two-thirds of all spending. He urged that the Federal Government be alert to consumer needs and advance the consumer's interest. To fulfill our obligations to the consumer, the President proclaimed four basic consumer rights.

1) The Right to Safety -- to be protected against the marketing of goods which are hazardous to health or life.

2) The Right to be Informed -- to be protected against fraudulent, deceitful, or grossly misleading information, advertising, labeling, or other practices, and to be given the facts needed to make an informed choice.

3) The Right to Choose -- to be assured, wherever possible, access to a variety of products and services at competitive prices, and in those industries in which competition is not workable and in which Government regulations are substituted, an assurance of satisfactory quality and service at fair prices.

4) The Right to be Heard -- to be assured that consumer interests will receive full and sympathetic consideration in the formulation of Governmental policy and fair expeditious treatment in its administrative tribunals.

The Congressional response, albeit slow, was an attempt to fulfill that bill of rights. And although that was 1962, it took the Congress until 1966 to produce the first bits of consumer legislation. That was the year of the auto safety law, the truth-in-packaging legislation, and the year of the emergence of Ralph Nader.

In the intervening period the Senate Commerce Committee alone has produced not only the automobile and tire safety legislation and the packaging law, but flammable fabrics legislation, hazardous substances, and the toy safety legislation, natural gas pipeline and electronic product radiation legislation, the Act banning broadcast cigarette advertising, laws authorizing the creation of the National Commission on Product Safety, and laws requiring the investigation of flaws in our system of automobile insurance.

In active process today is legislation to strengthen the Federal Trade Commission, to provide access to the courts for consumers through class actions, automobile insurance reforms, omnibus product safety legislation, fish inspection, environmental class actions, toxic chemical, including pesticide regulation reforms, technology assessment, and the creation of a National Consumer Protection Agency.

To what does American industry owe this out-pouring of apparently punitive legislation? Is it simply political opportunism and demagoguery as some businessmen have suggested; is it less a genuine response to demonstrated consumer needs and more an exploitation by politicians of irrational consumer fears and prejudices?

The set-upon businessman is free, of course, to take refuge in that comforting belief, but in my judgment the forces unleashed in the pursuit of these legislative goals over the past half decade represent a rather fundamental change in public consciousness, in attitudes towards the basic private and public institutions serving our society.

There has been an undeniable loss of faith in both the competence and the social responsiveness of American business. That faith has been repeatedly jarred by revelations that have progressively tarnished the golden image of American technology and enterprise cherished by our historians and myth makers.

Take the automobile and the cigarette as case studies. The automobile, which had come to symbolize the brilliance of American manufacturing genius, has progressively been revealed as a surface styled, poorly engineered, unsafe, primary polluter of the environment. As one after another massive-recall campaign comes to light, even the Detroit miracle of automated mass production loses its glow. And cigarettes have been advertising's loss leaders in the last half decade. The marketing of cigarettes and other products such as over the counter drugs has lead to the public's loss of confidence in advertising generally. You can thank cigarettes for the following regulatory innovations of the '60's, and these will come into full bloom in the 70's.

1. The flowering of the concept that affirmative disclosure may be essential to avoid deception by omission of a material fact.

2. The Federal Communications Commission Fairness Doctrine can be appropriately applied to commercial broadcast advertising, a regulation strategy which has been expanded by the courts as we all expected.

3. The Federal Trade Commission's tar and nicotine laboratory and semi-annual reports are probably the first and certainly the purest instance of government testing solely for the purpose of providing relevant consumer information bearing upon product differentiation.

4. The disclosure of tar and nicotine contents in all cigarette advertising, while technically a voluntary act is potentially a response to the regulatory and legislative effort to require advertising to disclose material product information unrelated to deception.

5. The Congressional bar on broadcast advertising of cigarettes established the principle that Congress may bar the advertising of an otherwise legal product where that product is deemed to subvert public health and welfare.

Over the counter drugs have not yet reaped their harvest of regulation. But the dossier of complaints against their marketing practices is filling at an accelerating pace.

Proprietary drugs stand accused of

1. False and misleading claims of strength and effectiveness.

2. Unverified claims based upon alleged medical and hospital research which have been challenged as unsound and distorted.

3. Sperious product differentiation which subverts price competition and

4. Both drugs and techniques of drug advertising stand accused of serving at least a contributing factor in the growing incidence of drug abuse.

There are other examples, too. General Electric produced thousands of color television sets which emitted potentially harmful radiation; automobile insurance companies pursue a course of canceling for apparently arbitrary reasons policy holders who have dutifully paid premiums for decades. Cereal manufacturers, after promoting each Saturday morning the muscle-producing potential of breakfast cereals, sheepishly admit that the real source of nutrition in the average breakfast cereal is the milk added at the breakfast table.

The National Commission on Product Safety learned about gas heaters with surface temperatures that inflict countless burns on children annually. It was told by their manufacturers that no technology humanly available can make these heaters safer. Whereupon the Commission at a cost of $800 received from a design engineer five alternative hazard reducing design changes which the gas appliance manufacturers acknowledge have real merit.

The change of consumer consciousness has also unleashed consumer intolerance. Consumers can no longer accept their inability to make rationale comparisons and judgments in the supermarket and elsewhere. They can't find out how fresh their milk is. They can't compare the per ounce cost or the per pound cost of detergents or instant coffees. They figure out which tire is best for particular purposes and offers the best value. They don't understand the difference in the warranty offered with the toaster or television set or display in the store.

And these fires of discontent have been fueled by skilled advocates. The imagination of the American people has been captured by the spectacle of great corporate Goliaths being toppled by solitary Davids. In many ways the appeal of the consumer revolt to Americans lies as much in its reassertion of the traditional American quality of cantankerous individualism as in the communal loss of faith in the responsiveness of corporate institutions.

In a sports minded nation whose heart is invariably with the underdog, who can deny the appeal of a contest between Ralph Nader and General Motors, or Union Carbide? And who in the general public would root for the polluters against the solitary heroes of the Sierra Club?

In the last year or two both environmental and consumer advocates have made gigantic strides toward institutionalizing their concerns and broadening their base of support and organizational structure. Traditional groups, such as the Sierra Clubs, and Consumers Union have become more aggressive, more active, their appeal has become broader. There are now several public interest law firms and centers funded by foundations and citizen contributions. There is John Gardner's Common Cause, the Consumer Federation of America, a federation of new and old organizations sharing a common interest in consumer legislation. Each of these, while still relatively small and financially undernourished in comparison to industry, has begun to make their presence felt in Washington.

Increasingly, then, business is cast as the villains, the enemy to be harnessed, brought to justice, restrained from corporate greed. Unfair? Yes, it's unfair. For decades industry has done precisely what the country has asked it to do; Exploit in the fiercest and most efficient manner ever known to man, the abundant natural resources of this country. Create jobs; create the enormous benefits of technology. Yet, instead of being grateful, the American public seems hell-bent on making business a scapegoat for every evil, real or imagined, which plagues our country.

So the picture is one of anger, frustration, conflicting demands and a growing taste for confrontation in the courts.

And then there is the vague notion of corporate responsibility which is emerging.

Beyond laws and regulations, and often in conflict with the obligation to the stockholders, there is growing criticism of companies who fail to meet vague but persistent notions of corporate social responsibility.

Certain clear and powerful trends appear to be emerging:

First: Mindless product innovation and profitability will never again serve as the sole standards of corporate behavior.

Second: Corporate freedom will become increasingly circumscribed by governmental controls reflecting emerging concerns over the environment, over consumer rights, even over shifting social values.

Third: Citizen action through the courts by increasingly well organized and articulate public interest lobbies and through the politics of confrontation will snowball.

Government can prevent industry from doing things the way they have been done before but it does not have the capacity to develop socially acceptable, alternative methods.

Industry cannot stop the trends that I have described, but it does have the power to rationalize them. For example, there is a growing recognition both among industry and government scientists that we must soon develop the institutional framework for the process known as technology assessment. Much of the antagonism toward business in this country today stems from the sense that many of our ills are the direct result of a technology run wild without sufficient understanding of secondary and tertiary environmental and social effects.

Government, and by this clearly I mean the federal government -- and industry must develop together a system by which technology is evaluated in the light of conflicting or competing social goals so that, decisions can be made, based upon the total national fund of knowledge; cooly, deliberately, and rationally in furtherance of these goals.

This process clearly involves a surrender of a substantial degree of corporate sovereignty; but it does not mean a surrender of corporate sovereignty to irrational, ill-defined, emotional prejudices against technology and growth.

While today industry must submit annually to a fiscal audit; tomorrow it will undoubtedly be forced to submit, if it does not do so voluntarily, to a new kind of audit; a social audit.

Questions will be asked of industry; questions which five or ten years ago would have been considered a radical challenge to our economic system. Questions beyond the quantity of a firm's contributions to stockholders in the form of profits and augmented capital investment. There will be questioning of a firm's contribution to society, both qualitative and quantitative. Do your products contribute to significant human needs? What of your short and long-term impact on the environment? Are your products safe? What are their social consequences? Are you exploiting or conserving national resources?

Over the past several years, these questions have arisen in a number of areas. In its usual hit and run manner the Congress, seeking its own instant gratification, has invariably dealt with consumer problems on a small scale problem by problem basis. Thus we had a toy safety act and a Poison Prevention Act one year apart. We looked into cigarette advertising one year, advertising of nutritionally deficient foods another year, and the effects of over the country drug advertising a third. But as the merging consumer orientation or our population develops, we recognize the need for a systematic analysis of the problems, and a well defined and broad based approach to solving these very critical matters.

We have in active consideration today an omnibus product safety bill. We are looking at the deficiencies of the automobile liability insurance system with a broad view, not only to correct the problems of non-availability, unreasonable cancellation, high rates, and slow payment. We are designing legislation which will expand the benefits within the system, which will improve the efficiency of the system, and which will reduce the necessity for high costs and losses.

And of particular interest to you, we will begin hearings next month on the creation of a Government supported behavioral research institution concerned specifically with marketing. We will look towards creating a systematic basis to seek an accounting of the social cost of marketing, an area of commerce beset with profound and unsettling questions.

Consumerism is a politically viable vehicle for tackling basic problems and questions concerning society. And your empirical and applied research on consumer problems will be a worthwhile contribution to our legislative solution to these problems.

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