Nov. 2, 2007 at 8:00 AM ET
The state of consumer protection in America is abysmal. Competing by cheating seems to be the rule of the land, with thousands of companies acting as if there are no laws and demonstrating no fear that misleading or harming consumers puts them at any risk for penalties.
To know why, simply look at the roster of players assembled to fight on our behalf. The agencies charged with making America fair and safe have been undercut and underfunded for decades. It's as if we're asking a minor-league baseball team to play the New York Yankees on our behalf, only this is no game. The consequences of weakened consumer protection can literally be life and death.
You may have heard the curious story this week of the Consumer Product Safety Commission, which is supposed to make sure thousands of everyday consumer products don't pose unnecessary dangers. Given the spate of recent high-profile recalls, Congress has just discovered there's too much work for the agency's paltry staff of 400, and is now considering a law to beef up its work force Curiously, the commission's chairwoman, Bush administration appointee Nancy Nord, opposes the increase. Could this be: A government bureaucrat rejecting more resources? Many observers were shocked.
They shouldn't be. Since the 1980s, all federal consumer protection agencies have been bled dry. And many of their politically appointed leaders have actually worked to hamstring their organizations to ensure they don’t interfere with companies trying to make a buck.
Consider this: In the 1970s, when the Consumer Product Safety Commission was created, it had a staff of 900. Today, it’s fewer than half that. At a time of unprecedented growth in world imports, and unprecedented product recalls, the commission's staff has never been smaller.
How bad is it? The New York Times recently reported that the agency has basically one person assigned to inspect new toys.
FTC: Shrunk from 1,700 to 1,000
Now let's look at the Federal Trade Commission, the granddaddy of consumer protection in America. In 1979, the FTC had 1,746 full-time employees. By 2006, that number had shrunk to 1,007 -- down nearly 40 percent. During this time, the FTC picked up a few more duties: Internet fraud, identity theft and the Do Not Call list, just to name a few. Not to mention the proliferation invention of infomercials, digital advertising, and the addition of 75 million more people to the U.S. population.
The FTC is loaded with well-intentioned lawyers who spend their days and nights chasing after bad guys, sending warning letters to companies that engage in blatantly false advertising and other unfair or deceptive trade practices. But given the massive staffing cutback, it's no wonder that our nation's airwaves are jam-packed with charlatans. Is it any wonder that the FTC’s warning about unfair and deceptive mortgage advertisements, for example, didn’t arrive until a few weeks ago, when just about every last potential victim of an exotic mortgage already had one?
The FTC files occasional lawsuits and tries to make examples out of as many cheaters as it can, but those serve as little more than a few thumbs in a crumbling dam.
FDA: Food safety inspectors lacking
The same story is repeated at virtually every federal agency chartered to protect us. Here’s another, concerning the very basic task of keeping food safe. The Food and Drug Administration has 1,000 fewer food inspectors than it did 10 years ago, William Hubbard, a former FDA commissioner, told msnbc.com on Thursday. Seems like bad policy at a time when imports from countries with far different food safety standards than ours have exploded. The agency had planned to close about half its field inspection office and outsource some of its work, but recent scrutiny and a flood of imported food scares postponed any action. Even so, according to a recent New York Times story, a typical inspector must review 1,000 "food entries" every day. And on Thursday, Congress heard testimony that the FDA can't even keep track of what foreign firms it inspects, and probably two-thirds of foreign drug makers are never inspected.
States can't help, either
You might think that state government agencies would provide you with fall-back protection. Unfortunately, just as federal consumer protection agencies were being slashed, a second, parallel trend took hold during the past decade -- a trend toward pre-emption of state laws, rendering them null and void in the face of similar federal laws. Today, there are many situations where state officials simply can't help you. Most disputes with the nation's credit bureaus, for example, can only be addressed by a federal agency.
Industry groups favor this trumping of state power. It's easier to lobby and control one Congress than 50 statehouses. For example, when Congress this week deliberated giving the Consumer Product Safety Commission new resources, industry opponents took umbrage at a provision that would allow state attorneys general to sue companies over safety violations.
The law’s opponents trotted out a familiar argument: "We don't want to have to deal with a patchwork of 50 different laws.” Don't fall for that line. Consumer protection at the state level is just about all we have left. Federal consumer protection is nearly dead, or at least comatose. After decades of atrophy and neglect, it will take years to revive it.
This week, the Senate took a small step in that direction. Over the objection of the commission's leader, the U.S. Senate Commerce, Science, and Transportation Committee approved a budget increase for the Consumer Product Safety Commission. That's good. But it is a baby step. Even if the legislation were to become law, which is unlikely, it would only increase staffing by 20 percent. As we've mentioned, there's only one toy inspector for the whole country. Adding a one-day-a-week toy inspector won't really keep the country’s children safer.
Regulation is not a dirty word
Instead, what's needed is a dramatic change in attitude and approach. It begins with an end to the anti-regulation era. Somehow, decades ago, many Americans were convinced that regulation was a dirty word, and that agencies that produced and enforced rules were to blame for any economic hardship the nation faced. Free markets, they were convinced, meant freedom from regulations.
Dismantling regulatory powers instead has meant freedom to exploit consumers. Hidden fees and unsafe products have been the obvious consequence.
Some say, "Well, that's a free market. If people are too stupid to protect themselves, government shouldn’t do it for them." But outside of the pure mean spiritedness of that sentiment, that kind of thinking is economic lunacy. Good governments serve a few limited functions, such as providing for common defense and safety. Establishing fair marketplaces is one such role. Imagine if there were no weights and measures rules so oil companies could lie about how big a gallon of gas is (which, by the way, they do) and delis could fix their scales to cheat you out of meat. Or what if restaurants never had to pass a health inspection. All these require government regulations and regulatory agencies. We couldn’t function without them.
Our world is ever-shrinking. Goods and services can come from anywhere and contain anything, and money can move around the world in a blink of an eye. Being a consumer is more confusing than ever. We need rules to keep things fair; and we need people to enforce these rules. That's a basic government function, one that's been abdicated for far too long.