Consumer Policy Issues: Global Trends For the 1980's

ABSTRACT - Consumer laws move in cycles, the current cycle (projected for 1978-1998) including over 4,000 issues not yet adopted in America. U.S. response lags Western Europe's precursor-Sweden - typically by some 6-8 years. Implementing dates for consumer laws can be accurately forecast years ahead of time using some of 160 indicators of socio-political change.

Citation:

Graham T. T. Molitor (1981) ,"Consumer Policy Issues: Global Trends For the 1980's", in NA - Advances in Consumer Research Volume 08, eds. Kent B. Monroe, Ann Abor, MI : Association for Consumer Research, Pages: 458-466.

Advances in Consumer Research Volume 8, 1981      Pages 458-466

CONSUMER POLICY ISSUES: GLOBAL TRENDS FOR THE 1980'S

Graham T. T. Molitor, Public Policy Forecasting, Inc.

ABSTRACT -

Consumer laws move in cycles, the current cycle (projected for 1978-1998) including over 4,000 issues not yet adopted in America. U.S. response lags Western Europe's precursor-Sweden - typically by some 6-8 years. Implementing dates for consumer laws can be accurately forecast years ahead of time using some of 160 indicators of socio-political change.

ONSLAUGHT OF GOVERNMENT CHANGE

How can we tell where we are going? What's in store for the 1980's?

What lies ahead for consumer policy? The current cycle of consumer issues which began in 1978 is growing (Exhibit 1). Presently Public Policy Forecasting, Inc., is following over 4.000 separate and specific consumer issues that have not been enacted by the Federal Government.

EXHIBIT 1

PATTERNS OF CHANGE

New laws steadily increase. The U.S. Congress, during a two-year term, receives an average of 20,000 bills and enacts some 1,000 new laws (Exhibit 2). Added to this are an estimated 9,000 federal regulations issued annually. Compound this domestically by the 50 states which entertain some 100,000-125,000 bills yearly, of which 15-25,000 are enacted (Exhibit 3). Add inputs from some 78,218 special districts (counties, school districts, municipal authorities). Next, multiply these results by the 155 or so nations the world over and the overwhelming global magnitude of government-imposed change begins to be perceived. Steadily, and with an increasing rate of growth, this myriad of law and regulation concerns the 'consumer.

The impact of regulation and accompanying changes in social attitudes also has been seen in the courts. For example, in 1960, there were 50,000 product liability claims filed; alarmingly the number had swollen to over one million by 1970. In just 3 years between 1974 and 1977, the number of product liability lawsuits filed in federal courts rose from 1,579 to 4,077. Judge and judge-and-jury awards in such cases have mushroomed as well. The record-setting 100 million dollar decision against the Ford Motor Company in a case brought as the result of alleged safety defects of a Pinto automobile is an incredible landmark award. Despite reduction of the award on appeal, the impact of just how far things could go sent waves of apprehension throughout industry. In related judicial trends verdicts against physicians in malpractice suits also dramatically raised their liability insurance costs. Ultimately, of course, it is the consumer who winds up paying.

Paradoxically, consumer legislation and regulation, especially when viewed from the citizen's, as well as from judicial and legislative viewpoints, can be counterproductive to the consumer. Witness the costs passed along to the consumer, such as inflated insurance premiums, added cost of mandatory automobile safety and environmental protection gear, overhead expended for legally mandated paperwork, and so forth.

The tide is toward more and more regulation. More and more change is in store. Large as well as small businesses stand in the growing shadow of government regulation. Products can be banned from the marketplace by the stroke of the lawmaker's pen or by a regulator's arbitrary edict. Limited government is a thing of the past; government-imposed change cannot be ignored (Exhibit 4). Wrenching dislocations may engulf the unwary or the unprepared.

What can be done to get out in front of impending public policy change?

Change. That is the key word.

Changes in public policy seldom come as a bolt out of the blue. Changes evolve.

Change is prompted by social frictions which expose abuses or wrongs. When such "social dissonance" gets out of hand and can no longer be ignored, when the momentum of forces clamoring for reform swell in numbers, government response and reform are not far behind.

The Six Indicators of Change

Six key indicators are most useful for detecting, tracking, measuring, and predicting the trend and direction of public policy change (Exhibit 5).

The process invariably begins with aberrant and unique events. Novel or bizarre, at first, such happenings go largely unnoticed. Their accumulation over time eventually leads to aggregation which helps to reveal meaningful patterns. Event patterns emerge in many different ways. Among them: innovation from introduction of new technologies and social inventions, increases in magnitude, and practical experience.

As events unfold and become the object of attention various authorities and advocates (often the "victimized") observe, analyze and begin to comment on such emerging phenomena. Authorities include the gifted few who can be found in any discipline and the geniuses who propose a theory which may take years to prove. Albert Einstein was one of these men. Less intellectually capable, but extremely vocal, are the victims of an event who can evoke such sympathy that their sufferings begin to focus widespread attention and help bring about change. Galvanizing tragedies often goad public policy change. The sinking of the Titanic on April 14, 1912, led to many reforms and some innovations in the safety of ships which carried into the age of aviation. By 1912, Congress had passed amendments to the Ship Act mandating minimum radio communications/procedures for seagoing vessels. (Later this law was amended by the Radio Act of 1927 which, in turn, was supplanted by the Federal Communications Act of 1934.) The revolutionary fringe, the deviants, cranks, and oddballs of yesterday often start a process which, though ignored at first, may have a profound impact later -- such figures as Alexander Graham Bell, the Wright Brothers, and Benjamin Franklin were not taken seriously initially. Scientific discoveries and technological breakthroughs can be, and often are, major events, even though their impact may not be felt for years.

EXHIBIT 2

US CONGRESS/JOINT RESOLUTIONS INTRODUCED AND PASSED (PUBLIC AND PRIVATE)

EXHIBIT 3

BILLS PASSED/INTRODUCED. 1973 AND 1874 REGULAR SESSIONS SELECT STATE LEGISLATURES

EXHIBIT 4

POLITICAL INVOLVEMENT IN SOLVING SOCIAL PROBLEMS

EXHIBIT 5

PATTERN OF CHANGES

After the events occur, they are disseminated in what may be termed leading literature, often bringing with it institutionalization in the form of organizations which incorporate the new message and provide a sustained base for advocating change. Popularizers of public policy opinion, the public-spirited crusaders -- the Ralph Naders, the Howard Jarvis types -- make their contribution. So do the prophets of gloom -- the Club of Rome pessimists. Usually such efforts are cast into public interest groups and organizations which institutionalize the cause and provide a sustained base for advancing change.

Politicians and precursor jurisdictions -- domestic and international -- sensing the winds, pick up the trends. Finally, solutions to the excesses and abuses which have been generated are ensconced in legislation, regulation, judicial decision, or custom and voluntary undertakings.

The process -- leading events, leading authorities/ advocates, leading literature, leading organizations, and implementation by leading political jurisdictions (domestic precursors and leading nation-states) -- tends to follow an S-shaped curve. At the outset, the intensity takes off slowly, follows a steep slope of increase, then tapers off. The curve, when accurately coordinated with time and number or frequency of phenomena indicates past and present position and gives a sense of the momentum for change continuing into the future.

Lead-Lag and Precursor Jurisdictions

Lead-lag, as used here, describes time lapse between an event and its general adoption. As man's knowledge and capabilities have grown, lead-lag time bas shortened. For example, it took hundreds of years to perfect an engine capable of flying the heavier than air ornithopter (1910) which had earlier been designed by Leonardo da Vinci (c. 1500). Only some 15 years elapsed from the time that Alexander Fleming discovered penicillin (1928) to its commercial availability (1940's). A mere 3 years is alleged to have elapsed between invention of the transistor (1948) by Schockley, et. al, and its commercial introduction.

In terms of socio-political lead-lag, it has long been recognized that certain jurisdictions are -- at least for a season in history -- precursors of change. Precursor nations are the adopters, the leaders of innovation. What occurs in these jurisdictions today often is what happens elsewhere tomorrow.

Nations may be broadly classified into three groups according to their willingness and capacity to respond and adapt to change. The first group, bold/innovators and adopters, include (in typical chronological order) Sweden, Norway, Denmark, The Netherlands, West Germany, the United Kingdom, the United States, and Canada. Diffusion time among these nations varies as to issue. Some 6-10 years for consumer issues has been typical over the last few decades. There are few nations in this group (20-26 countries). Next come the great majority of other nations, which take from 10 to 50 years to follow the leader of the bold early innovators. They tend to range from the industrialized and advanced nations not included in the first group (Spain, Portugal, Italy, and Greece) to some of the progressive emerging nations. A minority of very poorly developed nations comprise the third group, the laggards which typically require many decades to respond to change. Frankly, they are the poorest and the least socio-economically developed nations -- Upper Volta and Zambia, for example. One must remember that the patterns, while normally consistent, are not invariant. At best, such diffusion patterns are a guide to the pace and direction of socio-political change. (Exhibit 6)

Sweden as a Precursor Nation

Over the last few decades, Sweden and the other Scandinavian nations have achieved a remarkably consistent record of "firsts" in consumer affairs. Swedish government officials are realists; indeed, in these nations, nothing succeeds like success and success depends upon tangible accomplishment. Perhaps more important they are motivated by a keen sense of and commitment to social responsibility.

Sweden has many tangible accomplishments to its credit. In the most basic terms -- terms of longevity -- the Swedish people live longer on the average than anyone else. This may be more than an accident of geography or genes. Swedish public policy places a high premium on preventive medicine and related matters. Sweden has a very low death rate from cirrhosis of the liver and a low rate of alcoholism. This is no mere coincidence. To accomplish this the nation placed many restrictions on alcohol, including high taxes based on the content of alcoholic beverages. Distilled spirits have a 90% tax as a percentage of retail price, and the tax graduates down to 50% on light foreign wines, 45% on strong beer, and 10% on very mild beer. Seven percent of Swedish inland revenue came from alcoholic beverage taxes in 1974. Furthermore, the state has a monopoly on the sale of all products with more than 3.6% alcohol, and it operates the package stores -- only 300 in the entire nation in 1976.

The hand of the Swedish government is felt in many other ways. Extremely stringent controls on advertising over alcohol and tobacco have been enacted. Included have been restrictions in outdoor, movie, and direct mail media to mention a few. Cigarettes must be sold with a "negative marketing approach" in which one of several regularly rotated warnings are placed on the packages. These warnings are much stronger and more persuasive than the U.S. warning. All media and information channels are used to discourage smoking.

The results? Swedes smoked 1,620 cigarettes per capita in 1970 versus 3,971 in the U.S. Part of the result of the state controls can be seen in the voluntary self-regulatory measures adopted by the Swedish Tobacco Branch Association in 1975 which included media limitations (ad bans and restrictions), advertising content restraints (e.g., limitation of pictorial displays, prohibition of pictures of humans or natural scenery unless the picture is part of the trademark), and other promotional restrictions.

Swedish action concerning alcohol, tobacco, and many other products is just a part of a large framework of preventative health measures. Swedish planners long ago committed themselves to the proverbial ounce of prevention being worth a pound of cure. National health policy, legislated and voluntary, has fallen into line.

EXHIBIT 6

PATTERNS OF CHANGE

The United States as a Precursor Nation: Myth and Reality

Many Americans mistakenly assume that this nation's leadership is all-pervasive, that America always -- or even usually -- leads the world. However, a careful study of history reveals that America has tended to follow the legislative lead of advanced European nations. (Exhibit 7)

During the 1700's and 1800's, the lead-lag was from 30 to 60 years. In more recent times, lead-lag relationships have been contracting for many reasons (the communications and transportation revolutions, for example), and international diffusion occurs at an ever-increasing rate. During the twentieth century, the lead-lag pattern has been reduced to some 5 to 20 years.

The U.S. has often been among the very last of the great nations to legislate a number of major programs:

- The U.S. was one of the last nations to abolish slavery.

- The nation is still a hold-out on compulsory, universal health insurance.

- With the exception of a very few small nations, the U.S. is the last nation to commit itself to metric conversion.

In terms of social and consumer issues, the U.S. lead-lag has been painfully conspicuous. The U.S. adopted:

- pure food and drug laws 46 years after the United Kingdom;

- workman's compensation 37 years after Germany;

- old age assistance 46 years after Germany;

- female suffrage 27 years after New Zealand;

- unemployment insurance 30 years after France:

- national nutritional (macro-nutrient) goals 6 years after Sweden.

Yet, a cautionary note is in order: just because Sweden or other precursor nations have adopted innovative policy changes does not mean that, ipso facto, the changes will be adopted elsewhere. Innovative change and dissemination is not an inexorable process. Fatalistic attitudes are not indicated. Some changes, for example, may not get too far:

- Norway, land of the ski, banned the manufacture, importation and advertising of skateboards in 1979.

- Sweden also during 1979 banned war toys, not an unusual move for a nation that has not been at war for over 150 years.

- Sweden also has taken steps to gird childrens' rights by restricting and limiting the spanking or humiliation of children.

- Finnish libraries (perhaps with tongue-in-cheek) have banned a corrosive symbol of Western decadence -- a literary character who has nephews of uncertain parentage, who has protracted a romance into a 50-year long love affair without benefit of matrimony, and who runs around with his rear-end exposed. Thus, one should not be so brash as to ask a Finnish librarian for any publication featuring Donald Duck!

Domestic Precursor Jurisdictions in the United States

With minor exceptions historically, certain jurisdictions in the U.S. have been consistent innovators in public policy: New York City and State, Boston and Massachusetts, and, more recently, California, are the leaders. New Jersey often follows the policy lead of its dominant neighbor. Dade County, Florida, is a newcomer that also has moved early in adopting new legislative concepts. Illinois, once a bellweather jurisdiction, has been slipping from a vanguard position in recent years. Some states are notable for innovation in one or two areas rather than on a broad-spectrum basis: Oregon with respect to environmental matters, or Minnesota on consumer and environmental issues. (Exhibit 8)

EXHIBIT 7

INTERNATIONAL DIFFUSION OF PUBLIC POLICY: LEADS & LAGS: EARLY OR 1ST ADOPTERS AND US

Once four to six precursor jurisdictions have acted upon an issue, the die often is cast. Taking the cue from experience gained by the early innovators and adopters, most other states are likely to follow suit. The less affluent, less literate, less culturally advantaged places -- Mississippi, Alabama, South Dakota -- usually bring up the rear. The lead-lag time from precursor to laggard states ranges from 5 to 10 years -- sometimes longer; a similar time span has been noted between state adoption of major legislation and federal action.

Federal action is probable when a number of factors --singly or in combination -- are present. Diverse state approaches can hinder interstate commerce, and almost invite Washington's interest to provide uniformity. State-by-state enactments can be insufficient or unable to deal effectively with problems, particularly those transcending geographic borders. Federal action can cover the interstices. In times of great urgency caused by a spectacular event (airplane crashes in the early 1920's) or widespread condition (the Great Depression), the states may be unable to deal with the problem by themselves because of logistical, funding, or leadership problems. Again, a cautionary note -- federal action sometimes precedes state action.

EXHIBIT 8

PATTERNS OF CHANGE

Identifiable factors predispose precursor Jurisdictions in the U.S. as they do in Europe:

A large amount of activity in an area (large population, as in New York, Boston, California, intrudes new problems associated with size); large expenditures (as for Medicaid in these huge jurisdictions where an astounding 40% of total U.S. expenditures occurred during the mid-1970's);

Special patterns of use (sheer size giving rise to traffic strangulation control in New York and Los Angeles);

Terrain and associated meteorological conditions (bringing on confrontations with air pollution in California and Kentucky).

Philosophical predispositions are also a factor. Liberal states are generally more innovative and progressive, and thus are likely to arrogate power to government. As time goes by, reform breeds further reform. However, excess reform can turn the political climate toward conservatism. The balance between these two extremes constantly is shifting over time -- like the swing of a pendulum.

No jurisdiction has a monopoly on any ideas or issues. Thus, comprehensive analysis of legislation/regulation requires monitoring of both precursor and other jurisdictions. Public policy trend analysis can provide knowledge as to precisely where an issue stands, what issues are flashed in the pan, and what issues are most likely to run their logical course.

In addition to legislative harbingers, it is also wise to monitor court decisions. In this century, the courts, especially on the highest state and federal levels, have exercised a sense of social awareness which has often been translated into reinterpretations of the common law. U.S. courts can, in effect, make law by restating, refining, expanding or contracting its meaning. Judicial precedent often reveals shortcomings that lead to across-the-hoard legislative standards.

Monitoring landmark decisions, counting cases on a specific issue, following groups which test the limits of the law (e.g., Americans for Democratic Action, the American Civil Liberties Union), and measuring the time that certain cases take to reach final appeal are Just some of the many methods for sensing and predicting this aspect of change. The courts have been s major change agent in a day and age when they have assumed an increasing role in legal interpretation, becoming what some observers feel is a shadow legislature.

Finally, the actions of the executive branch should be followed with care. The actions can take several forms:

1. Legislation in effect proposed by the President.

2. Legislation vetoed by the President.

3. The extent and vigor of executive enforcement of law and regulation -- or the lack thereof.

4. Occasional but weighty Presidential actions. Broadcasts to the nation are one of these. Nomination or dismissal of key appointments is another.

The Issue Universe for Consumerism

Analyzing and forecasting a particular problem area begins by charting the total issue universe. The process begins by -

(1) identifying the broad generic issue -- consumerism in this case,

(2) delineating the major issue sectors or groups (e.g., product safety, advertising regulation, macro-nutrient content, labeling disclosure),

(3) sub-categorizing each sector/group into discrete units.

Some of the major issue sectors Public Policy Forecasting, Inc., has charted are diet and health; food safety and quality assurance; advertising regulation; telecommunications; sugar, alcohol and tobacco regulation; organizational and institutional response to consumerism; health care coat containment; and others.

Issues such as these are broken into subcategories in the third stage. For example, under food safety and quality assurance, Public Policy Forecasting, Inc., has identified over 275 impending issues such as food colors, other additives, additive disclosure systems, allergens (primary and secondary reactions), synergisms, Delaney Clause revision prospects, natural foods, testing protocols, procedures and standards, and so forth.

As technology advances, the list grows, often logarithmically. One food safety drive aimed at reducing sugar consumption included over 125 individual issues aggregated into 20 sub-categories. New methods of measurement allow for the detection of one part per trillion of some food ingredients -- the equivalent of one drop of vermouth in 520 railroad cars each containing 30,000 gallons of gin, Coffee has been found to contain an estimated 2,000 individual chemicals. Diesel exhaust contains over 30,000 chemical components. At these rates, almost any product can be indicted as posing a risk to health.

Increasingly, decisions will be premised on such microscopic detail. Chemical reactions, right down to the individual basic atomic elements reactions and relationships, increasingly are becoming the new frontiers of government investigation and policy making. With each potential posing risks (or benefits), the magnitude of the issue universe we are attempting to describe can hardly be underestimated.

Cyclical Change

Though consumerism does not hold the headlines as much as it did in the late '60's and early '70's -- the Ralph Nader years -- and although consumerism may seem to be receding in light of current anti-regulation and tax-cutting (Proposition 13) moods, these are but a temporary pall, a breathing space, before the next large-scale expansion of consumer issues. A growing backlog of such issues continues to build up like the pressure in a knotted house. Remove the restriction and the stream will shoot forth once mare.

Consumerism tends to move in spurts or bursts, a phenomenon which is one of the major techniques of investigating public policy matters. Historic cumulative plots of major consumer laws and regulations (Exhibit 1) reveal three major cycles, each lasting about 10 to 30 years. The first, during the Progressive Era, was 20 years in duration -- 1887 to 1917, and emphasized social justice espoused by social reformers such as Lincoln Steffens and Theodore Roosevelt. A second cycle started after the war and the recovery period lasted from 1920 to the beginning of World War II, and climaxed vigorously during the New Deal.

EXHIBIT 9

CYCLES: ADVERTISING REGULATION

Following the end of World War II, the recovery phase, and the Korean War, the third cycle, emphasizing post-war and post-industrial transition and the New Politics, lasted from the early 1950's to 1974. This period did not have much movement until 1958 with the enactment of the Automobile Disclosure Act. Following this were Senator Kefauver's drug investigations, the truth-in-packaging drive, and the Kennedy years. The fourth cycle started in 1978. Public Policy Forecasting has predicted this new cycle will last until the turn of the century. It should be noted that issues other than consumerism follow similar cycles. We have found patterns for social welfare laws, women's rights, environmentalism, and other issues.

Each of the four consumer cycles noted also included the appearance and dominance of new communication technologies (Exhibit 9): a largely literate audience reading inexpensive newspapers and magazines at the turn of the century, especially in the cities; regular radio broadcasting beginning in the mid-1920's; television starting in the early 1950's; and computers and other electronic media by the late 1970's. Each major communication mode was accompanied by advertising. In each case overzealous advertising practices introduced abuses and excesses. Such social frictions became unbearable and efforts of voluntary rectification were followed by government-mandated standards.

Each cycle occurred during a period of major socioeconomic change, accompanied by relative prosperity. Conversely, during times of military confrontation, national priorities are altered to a wartime footing, requiring tremendous economic, monetary, and manpower commitments. These displacements relegate social interest issues to a low priority. Following cessation of hostilities a two to three year period of economic readjustment also deters commitment to social policy program of all kinds, including consumerism. Postponement does not mean abandon-merit, however.

Some Corporate Advantages Gained from Anticipating and Responding to Impending Consumer Issues: The Role of Forecasting

Consumer issues imposed by governments increasingly intrude on private sector activities, management prerogatives, and market decisions. Often politically, rather than rationally inspired, some of these changes can be difficult to foresee and assess. Nevertheless, short-term trends are generally clear down to the level of specific issues: longer term trends are harder to predict, but the basic directions are usually distinct. What is important in this era of rampant and pervasive change is to keep one step ahead of regulators and to stay abreast of consumer demands, which are invariably mirrored by government action later.

Some advantages business can gain from foresight are:

- Identify or corroborate new marketing opportunities and problem.

- Gain the lead time required co develop, re-design, or reformulate products and procedures. Check design soundness, establish alternate supplies, conduct test marketing surveys, reposition existing products, and so forth.

- Avoid, or at least minimize, the often costly impacts of government mandates which catch unwary managers by surprise (e.g., costly and embarrassing inventory and recall/disposal problems following bans).

- Consider undertaking coordinated industry-wide lobbying to champion, redirect, or defeat impending change, or to cooperate in writing laws that all can live with comfortably.

- In the same vein, avoid the cost and bad public relations in lobbying for lost causes.

- Exercise industry leadership by moving first and setting trends, rather than just responding in a purely reactive mode which often results in a negative public relations image. In the long run, such actions can develop positive public relations potentials by building the corporate image in ways paid advertising cannot.

- Respond positively to humanitarian causes and socially desirable goals. When there is a low ebb of consumer confidence -- as is now being experienced -- responding positively to moral and ethical issues builds corporate stature.

If one can foresee the future, one can help manage it. The past is prologue.

Short shrift must not be given to historical and global perspectives. Much can be gained from past experiences and actions taken elsewhere. Short of this we may be doomed to repeat the mistakes of history.

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