Protection: Let the Consumer Beware

...The Civil Aeronautics Board and the Interstate Commerce Commission, for example, have reduced competition in the air and trucking industries...

...The legislation ignores the social cost of impeding and delaying the introduction of potentially beneficial new drugs...

...Social, political, and economic pressures largely determine the performance of regulatory agencies...

...The cost of attaining a standard of 100% removal (zero pollution), even if technically possible, would typically be astronomical...

...Like Freddy, Jimmy had his run-in with the Mob and the Cop...

...These comments should not be interpreted to mean that consumer risks cannot be reduced...

...16 The Alternative: An American Spectator June/ July 1975 The same principle of comparing benefits and costs is applicable to areas of "consumerism" where spillover effects are not involved...

...Indeed, a consumer can only be fully protected in all his actions by abolishing his right to choose...

...Many observers viewed the defeat of the consumer agency bill last year as a setback for consumers and a victory for such groups as the U.S...

...It would also curtail or eliminate many recreational activities where people consciously seek or willingly accept high levels of risk, such as skiing, parachuting, mountain climbing, etc...

...Others may remember hobnobbing with university scholars, swapping aphorisms with pedants...

...One must compare consumer protection under competition (the market outcome) with the expected attainable alternative...

...Jimmy's atmosphere was of unimproved property put to highly profitable use, like a saloon in the Klondike...

...In such cases, regulation or consumer protection must be defended on grounds that consumers have less information than the regulator about the decision to be made by the consumer...

...The aim of government- intervention in such cases should be to achieve an optimal level of pollution...

...As the years passed, Jimmy made some additions to the bar, adding a University Room for the college clientele, where, supposedly, one was supposed to show an ID to gain entrance...

...Regulatory agencies generally appear to limit or decrease competition instead of protecting the public...

...We are also interested in product cost, time and convenience, freedom of choice, etc...

...These amendments were passed largely as a reaction to thalidomide disasters in Europe, but the result has been to attach an extremely high value to safety of new drugs, requiring much stricter standards, including longer testing for approval by the Food and Drug Administration...

...Any proposed change is beneficial to society only if the benefits exceed the costs...

...There are now two University Rooms,both somewhat a step above the older bar...

...A final reason why consumer protection will not necessarily be improved by creating a new government regulatory agency hinges on the nature of the regulatory process...

...Had I been in Paris in the Twenties, and entered Lipp's to find Ernest Hemingway busily scribbling in his notebook, I probably would have gone to the other side of the room...

...That is, additional information is socially desirable only as long as the expected benefits exceed the costs...

...Sponsors have revived the bill, and this issue continues to be a lively topic of legislative debate in 1975...

...An excessively high value is assigned to safety or purity seemingly without regard to the cost...

...Recent studies have found that costs of carriers exempt from ICC regulations are considerably less than for regulated general freight carriers...

...Since consumers have a multitude of interests, representation of all consumers is impossible...

...Protection: Let the Consumer Beware • • In the fall of 1974 a proposal to establish an agency to intervene as a consumer advocate in the affairs of other federal agencies was narrowly defeated in the Senate...

...there is little ground for optimism...

...Birds of a feather, I suppose, is the last word on this phenomenon...

...I too longed, to address the great man and "connect" with this fine educator and finer philosopher...

...Chamber of Commerce and the National Association of Manufacturers...

...Yet the gulf between us, student and professor, was as wide as the Royal Gorge, and I happened to be a terribly shy young man, always somewhat in awe of the faculty (with one exception, the genial and sympathetic David Riesman...

...Competition doesn't always protect the consumer as much as many would like...

...can only be achieved by cost increases, and there is an optimal amount of safety from the consumer's standpoint...

...If consumers were allowed the choice of a somewhat less safe but less costly flight, different people would make different decisions in the tradeoff between risk and cost just as they now do in auto travel...

...The stated purpose of numerous ICC regulations imposing additional costs on truckers serving interstate markets is to prevent "excessive competition...

...That is, it is more likely to give consumers what they want instead of what vocal consumer spokesmen feel they should want...

...An analysis of the potential effects of "consumer-oriented" legislation shows that the effects are often quite different from those envisaged by its proponents...

...The point is that safer autos, drugs, food, etc...

...First, many if not most regulations ignore a basic principle relating to benefits and costs...

...A recent study estimates that the de-regulation of interstate airlines could reduce passenger fares substantially—by from one-third toone-half (William Jordan, Journal of Law and Economics, April 1972, pp...

...and various regulatory agencies of the federal government (ICC, CAB, etc...

...Similarly, the Federal Aviation Agency now imposes minimum safety standards which make air travel safer than auto travel...

...Indeed, a recent study by Sam Peltzman found that the legislation, in fact, significantly impedes the rate of introduction of new drugs and thus prevents beneficial as well as harmful drugs from entering the market (Journal of Political Economy, September/October 1973, pp...

...This principle, though elementary, is frequently ignored in public policy...

...Only a local historian will care about the family names of these innkeepers, and I do not repeat them for the reader's sake...

...Though the theory of economic regulation is not now well developed, it seems fairly clear that shortcomings of regulatory agencies do not result from defects of the men in charge...

...That is not an encouraging sight...

...The role of information differs, to some extent, from the rules and regulations accompanying the consumer movement...

...A public policy designed solely to minimize risk to human life would have profound implications for auto and bicycle speed limits, the introduction of new drugs, the use of bathtubs, etc...

...Bud gave no kickbacks on quantity, and Jimmy sold a hell of a lot of beer...

...Their only appeal is to snobs and certified alcoholics...

...The vote was a setback for a coalition of labor unions and consumer organizations seeking a new voice for consumers in proceedings before existing regulatory agencies...

...When compared with protection through regulation, however, market competition is much more likely to accurately reflect a diversity of consumer interests...

...Regulations which require that trucks make return trips completely or partially empty and which forbid companies from shipping by the most direct route are prominent examples...

...The cries of aesthetic arguments often rose shrilly above the thundering of Beethoven's Ninth (an evergreen in university bars...

...Then Jimmy switched to Budweiser, and the famous quarrel with Bud came about...

...There was a lot of the Anna Christie mood there in the afternoons, before the college mob took over...

...But when I recall UT, or Freddy's, or Jimmy's, it is not with nostalgia but with curiosity...

...Socialists, anarchists, and Swedenborgians gathered to enjoy jimmy's lager...

...Its plusses were the excellent hamburgers served and the astounding selection of beers for sale (including Beamish Irish Porter...

...It was not uncommon to see abartender drinking himself into oblivion after finishing his shift...

...One advantage of the market is that it responds to the wishes of people of varying tastes...

...E.C...

...The consumer stands to gain more by the elimination of current regulations than from the creation of a new regulatory agency to protect his interests...

...And you see, those are not my feathers...

...So he switched to Schlitz, and the name of Anheuser-Busch became anathema...

...There is a legitimate and potentially useful role in providing additional consumer information in such cases...

...It also attracted citizens of the vie boheme...

...Chess was frequently played, but never did I ever see a single plebeian game of cards...

...A topical example is the movement to abolish pollution by numerous individuals purporting to protect consumers...

...The cost of removing an additional unit of pollutant rises rapidly as the zero pollution level is approached...

...Thus, a ban on pollution will seldom be the most appropriate remedy...

...Undoubtedly there are many cases where information is inadequate in the sense that an individual would choose differently if he had more information...

...We, as consumers, are not interested only in minimizing risks or maximizing product safety...

...The cost of removing an additional unit of pollutant, as the above example illustrates, becomes more and more costly as the environment becomes cleaner and cleaner...

...That is, since increases in safety or purity can only be achieved at anincrease in cost, we should not expect everyone to desire the same amount of risk (or be willing to pay for the same amount of safety...

...Our economy has traditionally relied to a major extent on the market mechanism...

...I recall none of this: though I met a few of the monuments of Chicago culture, they were chiefly forgettable in their conversations...

...So, oppressed by this dilemma, I drank up and left...

...Shortly after, Weaver died, to everyone's loss...

...For example, a power company is Pennsylvania spent two million dollars on a facility to remove 98% of the pollutants...

...In pollution problems of this kind, where acts by one individual involve spillover effects adversely affecting other individuals, there is often a strong case for government intervention...

...Furthermore, it is often difficult for consumers to determine the amounts of risk associated with the use of various goods and services...

...When one analyzes the effects of past and current regulatory activities ostensibly designed to protect the consumer, such as occupational licensing by the state (barbers, lawyers, etc...

...Thus, a consumer advocacy agency must select those tastes which it will represent...

...Proponents of such legislation often contend that quality improvements can be achieved without any increase in cost...

...This brings us to the second reason why consumer legislation will restrict the choices of individual consumers...

...For a time he served Fox Head 400, the Mob's brew (for a time, Tony Accardo served as its chief salesman...

...As a result, the consumer will face increased costs and a further limitation on his ability to choose freely among competing products...

...Writers, artists, and failures could be heard boasting about their works in progress...

...A persuasive case can be made that the alleviation in human suffering due to keeping harmful drugs off the market is more than offset by the suffering which results from not being able to obtain beneficial drugs...

...And I rather think that the profundities of students and assistant professors do not bear repeating, especially after ten years...

...As I have said, the atmosphere of Jimmy's was not genteel, save in the more "friendly confines" of the University Room...

...The fact that price competition isn't permitted effectively denies airline travelers the opportunity to choose a lower-quality service at a lower price...

...The cost of removing all pollution to meet a zero tolerance level would almost always far exceed the benefits accruing to society...

...The results of such an agency, however, are quite predictable...

...The firm had to spend an additional four million dollars to attain a new standard of 99%removal...

...University bars, like writers' bars, are possibly the worst places in the world to enjoy a beer...

...Thus, in assessing the desirability of any proposal to protect consumers, the expected benefits must always be contrasted with the expected costs...

...Furthermore, policy makers quite often apparently feel that even well-informed consumers must be prevented from exposing themselves to risks which the policy makers regard as socially unacceptable...

...Safety and other regulations, on the contrary, usually do not allow for this diversity of tastes...

...But after UT and Freddy's passed into history,- there was no other place...

...For example, the Senate originally passed by a vote of 86 to 0 the Muskie Bill which requires a zero level of discharge of pollutants into the nation's waterways by 1985...

...And that is most likely my problem...

...Others have nothing but raves about Jimmy's, recalling immemorable arguments over Hobbes or intricate investigations of Joyce's Wake...

...But I, on the whole, am not impressed with saloons as great cultural centers...

...But in today's atmosphere of manslaughter and muggings, these rooms seem an afterthought...

...The Alternative: An American Spectator June/ July 1975 17...

...A more appropriate remedy is some measure (such as a tax) to cause polluters to take into account the cost of the undesirable side effects in making production or consumption decisions...

...Pasour, Jr...

...Jimmy's was really, in the fifties and sixties, the University of Chicago bar...

...In truth, one hated Jimmy's...

...These examples illustrate the fact that organizations functioning as self-appointed consumer advocates cannot represent the interests of all consumers...

...One can always contend with justification that consumer information is incomplete...

...That is, a freely functioning market will provide a variety of sizes, styles, and costs of autos, drugs, and other products to meet a variety of tastes...

...Will the consumer be protected in the sense of having a wider range of choice at lower cost with a formal consumer advocacy agency...

...The specific authority of any consumer advocacy agency will vary depending upon the legislation enacted...

...151-176...

...Past experience gives little promise that the basic nature of regulatory agencies can be changed by making them stronger or by putting better men or a better regulatory agency in charge...

...However, there are sound reasons for expecting that legislation concernedwith information and regulatory aspects of consumer goods and services will increase costs and restrict the choices available to individual consumers...

...For example, many people willingly choose to operate a compact car at a lower cost even though they know that the accident rate is higher relative to a larger car...

...It was gloomy, its bartenders sullen, it was of a piece...

...Jimmy's...

...For example, since many auto passengers will not freely use seat belts and Other auto safety devices such as air cushion bags, many Congressmen have favored making the use of these devices mandatory...

...Jimmy's was a slum of a bar, its dusty board floors occasionally improved with sawdust...

...We, as individuals, prefer different amounts of safety or purity in the kind of autos or bicycles we ride, the kind of drugs or food we use, etc...

...Thus, pollution should be reduced but only as long as the expected benefits exceed the costs...

...I have no intention of leaving the taste of sour grapes in the mouth...

...There is no strong prima facie evidence that this is the case or that benefits exceed costs to consumers from consumer-oriented legislation such as that relating to truth-in-lending, unit pricing of grocery products, and auto safety...

...However, the same marginal principle relating to costs and benefits applies...

...I have saved for the last the most famous saloon of the era, still functioning, albeit in the midst of urban terror and unsafe streets (how things have not changed...

...Why do regulatory agencies ostensibly designed to protect the consumer often end up serving the interest of the industry they are supposed to regulate...

...1049-1091...

...Perhaps Jimmy's was (or is) greater than I think...

...In reality, however, the issue of consumer protection is not so simple...

...I grow old, of course, and solitary...

...Senator Kefauver's 1962 amendments to the Food, Drug and Cosmetic Act provide a good example of the point being made...