Every few months or so a diverse group of very determined advocates sits down around a conference table with the five members of the Federal Trade Commission and proceeds, one at a time, to denounce the commission's staff.
Most of these advocates, representing business, denounce the staff for proposing needless, ill-designed, excessive or punitive regulations. Others, meanwhile, decry what they see as milquetoast halfway measures, excessive deference to the free market and unseemly responsiveness to business concerns.
In what must be a Guinness world record for self-inflicted bureaucratic pain, the commission not only welcomes these torrents of criticism, but reimburses the out-of-pocket expenses of those who could not otherwise afford to document, assemble and present their complaints.
Now, the Chamber of Commerce, the toy manufacturers and some congressmen have generoulsy offered to relieve us of the necessity of having to listen to consumer and small business advocates by urging termination of the public participation program that reimburses them.
This would leave the opportunity of criticizing our staff's proposals to those business interests that can afford to do so (helped, of course, by their right to deduct the cost of whatever they spend from their taxable income). In the tradition of bureaucracy, we should be grateful for any reduction in the level of criticism directed at the commission. We're not.
The Federal Trade Commission's public participation program was created by Congress in the Magnuson-Moss Act of 1975.
For years it has been a cliche that regulatory agencies are captives of the industries they regulate. Whether that is true or not, the fact is that regulators have heard almost solely from those well-financed business interests that have a clear economic stake in the outcome and the economic resources to make their positions known. To redress the imbalance, Congress, in the Magnuson-Moss Act, set up a modest program $750,000 for this year) to reimburse those advocates representing a significant interest - consumer or small business - that would not otherwise be heard in the regulatory process.
Those who attack the public participation program and the Federal Trade Commission's implementation of it claim that it is wasteful and unfair. As they see the rule-making process, the commission staff proposes a rule and then the commission itself rubber-stamps the proposal and goes through the motions of a rule-making hearing, paying consumer groups and friendly small business to bless the proposed rule. This assessment would certainly provide grounds for concern - if it were not untrue.
The Federal Trade Commission has completed or neared completion of four rules under Magnuson-Moss since I joined it: 1) eyeglasses - freeing up price advertising; 2) vocational schools - providing pro-rata refunds for students; 3) insulation marketing - requiring that claims for home insulation be clear and substantiated; and 4) funeral homes - requiring that price information be given and prohibiting certain abuses.
In each of these proceedings, the commission listened to the participants. In each of them, the final rule has been (or will be) honed down substantially from the initial proposal, reflecting our effort to cut back on what we consider needlessly burdensome regulation, while preserving what we believe to be the core remedy for the demostrated consumer abuse. While we did listen to the evidence and arguments presented by industry participants, who on the average outnumbered consumer participants by 3 to 1, the safeguard in each rule-making against our overreacting to industry arguments was the presence of consumer and small business advocates able to point to the record and express to the commission their view of the severity of the consumer injury , and of the risks of weakening the rule to a point where its effectiveness would be destroyed.
As an individual commissioner, I know that I have benefited enormously from this clash of advocacy. I know that in each of the rule-making proceedings, I have found arguments by both industry and consumer witnesses persuasive on certain points. I also know that at the end of the process most ot those who participated, industry and consumer alike, while rarely uncritical of the final result, expressed satisfaction that the commission had been fair and open in listening to the arguments before making its judgment.
It would be ironic if Congress were to cancel this program in the face of its success.