[Ip-health] Protecting Consumers

[James Love]

On Sunday, the NYT wrote an editorial, "A Voice for the Consumer," here: ht=
tp://www.nytimes.com/2009/01/04/opinion/04sun3.html

On the same topic, on Saturday, I wrote the following blog entry for the Hu=
ffington Post.

http://www.huffingtonpost.com/james-love/protecting-consumers_b_154983.html
January 3, 2009

Protecting Consumers
James Love, The Huffington Post

Back when campaign spending was limited by law, there was an effective quot=
a on taking money from special interests. After the cap was reached, it was=
 more effective to do favours for voters than corporate interests. One way =
to do this was to support consumer protection initiatives.

Politicians once made reputations fighting high prices, unsafe products and=
 misleading and unfair business practices. Somewhere along the line, after =
the Nixon appointees to the U.S. Supreme Court eliminated campaign spending=
 limits (Buckley v. Valeo), interest in the practical concerns of consumers=
 dramatically declined. There are some exceptions, but for every Member of =
Congress like Byron Dorgan, Henry Waxman or Ed Markey, there are many more =
who focus their energies on issues more relevant to helping out industry se=
ctors than consumers.

While a predictable consequence of un-capped campaign spending, the decline=
 in attention to the problems of consumers is rarely examined in terms of t=
he impact on the public.

To be fair, some of the lack of current activity is a consequence of past s=
uccesses. Reforms to protect consumers that were achieved during the 1960's=
 and early 1970s were substantial and durable. Cars are much safer. Airline=
s can't arbitrarily bump passengers without compensation. Generic drug mark=
ets work better. And lots more was done.

There is also loss of confidence in government. In the late 1970s and early=
 1980s, considerable attention was given to the risks of regulatory capture=
, or the unintended consequences of regulatory interventions. Good intentio=
ns are not enough.

The economy has also grown more complex. We are using a much larger number =
of products and services, many of which move in international trade. The pa=
ce of innovation is faster.

Still, despite the challenges, there is plenty to be done, and it matters a=
 lot to people struggling from paycheck to paycheck, and who suffer from po=
orly functioning markets.

Predatory lending and abusive debt collection practices, usurious interest =
rates on consumer debt, the high price of new medicines and medical, dental=
 and legal services, the proliferation of unfair contracts of adhesion for =
online transactions, the marketing of unhealthy food products, slumlords th=
at bilk renters of security deposits and fail to provide decent living acco=
mmodations, insurance policies or warranties that don't protect, the collec=
tion and sale of personal information leading to loses of privacy, the mani=
pulation of data formats to prevent consumers from switching to competing s=
oftware platforms, undisclosed conflicts of interest in reviewing and recom=
mending products, and thousands of other topics have an impact on our lives=
. (Ed Mierzwinski blogs about many of these issues here).

There are also broader ways of considering the interests of consumers.

I travel a lot, most of it internationally. I'm often appalled that airline=
s can sell seats with such limited leg room, that I have to contend with an=
 endless set of pay-for-use WiFi connections, that it is so difficult to fi=
nd electrical outlets in some airports, and I resent having to pay to use l=
uggage carts. I'd vote for a member of Congress who would champion a travel=
ers bill of rights to address these and other irksome aspects of travel. Th=
ere countless areas where governments could make consumers better off, if t=
here was interest and political will.

One should also consider more the impact of government policies on consumer=
s. The "incentive" for testing medicines on children is a six month extensi=
on of a drug marketing monopoly. It works, but at a very high price -- to c=
onsumers. Isn't there a cheaper way to do this? Do we really need to grant =
a 95 year monopoly as an incentive to publish new copyrighted works?

Many consumer protection measures involve disclosures of different types. C=
ertainly more can be done. A consumer protection agenda focusing on transpa=
rency might include requirements for more useful reporting of service probl=
ems for airlines, telecommunications providers, manufacturers of personal c=
omputers and other widely used consumer electronics products, and other ind=
ustries, perhaps provided by independent auditors. There could be far more =
transparency for pharmaceutical markets, including prices of products from =
manufacturers, hospitals and retailers (some hospital and pharmacy mark-ups=
 are very high), and information on actual R&D outlays on products, as well=
 as on marketing outlays and payments to physicians and academics who recom=
mend products. We need better adverse events reporting.

Regulators should collect information on revolving door employment situatio=
ns (including the relevant employment histories before and after government=
 jobs), to make the risks of agency capture more transparent.

There are other, potentially even transformative ways to consider the inter=
ests of consumers. The Internet was created by network users, and first exi=
sted and grew as a challenge to more restrictive and closed networks that w=
ere largely designed to control and exploit users. The Free/Open Source sof=
tware movement was likewise designed by both programmers and users, seeking=
 more access, freedom and voice in software development. The open access jo=
urnal movement is an effort by scholars and readers to create a publishing =
model that works better for them. The blogsphere is, among many other thing=
s, a collective effort by the public to create a rival systems of reporting=
 and commentary.

I'm currently involved in a deeply ambitious effort to transform the way we=
 pay for the R&D for new medicines. Rather than grant 20 year legal monopol=
ies to drug developers for new inventions, and suffer from a host of pricin=
g and marketing abuses, and weak incentives to invest in medically importan=
t inventions, drug developers would compete for shares of a massive R&D pri=
ze fund, that would reward drug developers for the impact of inventions on =
the improvement of health outcomes. (Read more, here, here and here).

In many different ways, political leaders could find ways to make things wo=
rk better for consumers. There are several instruments for doing this. Gove=
rnments can mandate greater transparency, regulate business practices, or u=
se government procurement policies* to shape markets.

In an era of limited economic resources for families, greater attention to =
the protection of consumer interests would be welcome.

In the 1970's there was an effort to create a federal agency to advocate on=
 behalf of consumers. This was a major initiative, that would have created =
a permanent institutional presence for advocating on behalf of consumer int=
erests before all federal agencies. The idea, championed by Ralph Nader at =
the time, was to provide a durable and well funded institutional capacity a=
nd mandate to evaluate and promote the interest of consumers in interagency=
 deliberations, ruling making, and other areas.

In 1974, a bill to create a federal Consumer Protection Agency (CPA) was su=
pported by thirty-two state governors, 120 national and local consumer, far=
mer and union groups, the Economic Crime Committee of the National District=
 Attorneys Association, the U.S. Conference of Mayors, and the National Ass=
ociation of Attorneys General. It passed the passed the House of Representa=
tives by a three-to-one margin. The bill was opposed by Presidents Nixon an=
d Ford, and by the nation's business establishment.

Carter promised to support the legislation to create the agency, but after =
he gave only lukewarm support, the legislation was defeated and eventually =
forgotten in the wave of anti-government sentiment that accompanied the ele=
ction of Reagan in 1980.

President Clinton was never focused on consumer protection issues. He pushe=
d a largely deregulatory agenda on issues concerning e-commerce, and refuse=
d to discuss anything but self regulation or industry controlled dispute re=
solution for online transactions. He picked corporate lobbyists to staff ma=
ny key positions in the government, got rid of the NIH requirements for rea=
sonable pricing of government funded pharmaceutical inventions, extended co=
pyright terms to 95 years for corporate owners and pushed for the anti-cons=
umer DMCA digital copyright legislation, blocked parallel trade on pharmace=
uticals from Canada and Europe, tried to undermine European Union privacy m=
easures, and he loaded up trade advisory bodies with corporate lobbyists, w=
hile he and his cabinet refused to meet with the TransAtlantic Consumer Dia=
logue. (As a Senator, Hillary has been much better than Bill).

Bush has been extremely hostile to consumer protection issues. Obama will s=
oon be President, working with solid democratic majorities in the House and=
 the Senate. He should use his power to advance consumer interests in ways =
that have been neglected for decades.

----------------
* Government procurement policy was used to induce auto manufacturers to de=
ploy cost effective air bag technologies, to simulate markets for recycled =
paper and to require more energy efficient computer designs.



--
James Love, Director, Knowledge Ecology International
http://www.keionline.org | mailto:james.love at keionline.org
Wk: +1.202.332.2671 | US Mobile +1.202.361.3040 | Geneva Mobile +41.76.413.=
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