Seattle fisherman Rich Laws, who was saved after 27 hours in frigid Alaskan waters despite a leaking survival suit, bobbed up in a congressional hearing yesterday as an example of the Federal Trade Commission's controversial new emphasis on the economics of consumer protection.
After Laws' close call, the FTC's Seattle office wanted to recall 6,000 of the Bayley survival suits.
But an FTC economist, following the commission's new policies, suggested it might be better to let the families of victims sue to force the manufacturer to correct any defects. "Market forces" could be better than direct regulation, he said.
Rep. Albert Gore Jr. (D-Tenn.) charged that the FTC's Seattle office was thwarted from trying to recall the Bayley suits, despite what the office called "a life-threatening defect," because the commission now insists on giving heavy weight to economic analysis in enforcement cases.
But FTC Chairman James C. Miller III, author of the new policy, defended the suggestion of the economist, identified in the hearing as Lou Silverson, and said the possible use of market forces "is a relevant question to raise. He was only asking the question he was supposed to ask." Silverson, reached at his FTC office, declined comment.
The case provided a vivid illustration of the sharp differences between the Reagan administration's view of regulation as exemplified by Miller, which focuses on the economic impact of government actions, and the belief of administration critics that the government has a duty to protect consumers. It also illustrated the new influence of economists in the FTC, an agency many critics charge hampers enforcement efforts.
"Some screwball thought market forces could be defined as lawsuits by widows and orphans" and kept the Seattle office from moving for six months against the survival suit, Gore said. "There are still 6,000 suits out there because your commission has not done its job.
"This is not just an isolated case," continued Gore, who brought up the question of the Bayley suits at a hearing of the House Committee on Energy and Commerce's subcommittee on oversight and investigation looking into FTC activities under Miller, an economist who has headed the commission for 14 months.
"These charts make it clear a great deal of important work of the commission is grinding to a halt during your tenure there," Gore said, pointing to graphs along the hearing room wall that showed the FTC secured 17 consent agreements in fiscal 1982 compared with 27 last year and 161 in 1972.
Miller and the head of the FTC's Bureau of Consumer Protection, Timothy Muris, contested the subcommittee figures, declaring that FTC activities are not lagging. They acknowledged getting off to a slow start while they dealt with what Muris termed a "near-chaotic" situation left by past FTC heads, but they contended that the commission now is moving quickly against consumer fraud.
The numbers make no difference, said Miller, arguing that they don't tell if the FTC is bringing a large number of unimportant cases or a few key prosecutions.
"In the consumer protection area, we have focused on hard-core fraud and deception and have steered clear of the kind of social engineering that earned the commission the title of 'National Nanny,' " said Miller.
Muris argued that current negotiations between the FTC's Seattle office and the company that makes the survival suit could be jeopardized by the publicity generated by the subcommittee. He said he got the negotiations started when he heard of the "flap" between the Seattle office and Silverson, a member of the FTC's Bureau of Economics. "It's basically a sound case," said Muris.
"From time to time, you can find cases to second-guess," said Miller, defending his staff. "To focus on one case is not to question the value of economic input into case review."
Are you fully carrying out the law?" asked Committee Chairman John D. Dingell (D-Mich). "Are you having economists make decisions on legal matters or are you having lawyers make them?"