IN THE FOLKLORE of the free-enterprise system, the used car business occupies a special place. It is the very metaphor of business chicanery and consumer vulnerability.
In the heyday of the consumer movement, what goes on under those flashing lights on the corner lots inevitably drew the attention of the Federal Trade Commission. If one of the commission's jobs is to make the market place less dangerous for consumers -- and many think that is exactly what the agency should do -- where better to begin?
The commission's investigation, just ended, turned up precisely what you might expect. The used car market is full of deception, it says, and the average consumer is hard put to make a knowledgeable choice. But somewhere between completing its investigation and writing regulations, something happened, and the commission has now backed away from trying to provide consumers with much help.
Its proposed used car regulations got caught in the general drive to reduce the burden of regulation that the federal government places on business. Congress, as every regulatory agency knows, responded by kicking the FTC around for a whole set of initiatives, including its used care investigation. If Congress correctly interpets the sentiment back home, the mood of the country has shifted dramatically. Senate Majority Leader Howard Baker and former House minority leader John Rhodes wrote to the FTC just last week, saying that its regulations for used cars "seem particularly out of harmony with the current economic and political climate in America."
The result is that the FTC has abandoned the proposal to require dealers to put a sticker on each used car describing its major components as "OK," "Not OK" or "We don't know." In its place, the commission is considering a rule requiring a sticker that describes what, if any, guarantees dealers are willing to give. While we never thought the original proposal would provide much real help to used car buyers -- enforcing it would have been difficult -- we have even less hope for any beneficial effects from the new proposal.
In this instance, the consumer movement has run out of gas, at least on the federal level, or it has been beaten back by an aroused business community that demands that Washington take its hands off the marketplace. The critical question is how wide this mood of deregulation will sweep.
It is one thing for the federal government to decide, perhaps wisely, to back away from serious regulation of the used car business. Caveat emptor will continue to apply there, as it always has. It would be quite different for the government to start backing off from regulating all other parts of the marketplace -- food, drugs, securities and so on. Those are products consumers usually buy without ever thinking about the trustworthiness of the person from whom they are buying.