History of the U.S. Consumer Movement

1
History of the U.S. Consumer Movement

• Garman, E.T. (1996). The consumer movement
  continues to evolve. Chapter 2 in Consumer
  Economic Issues in America. TX DAME
  Publications Inc.

2
Objectives

• Identify causes of or problems upon which each of
  the three eras of the consumer movement were
  based
• Identify common and unique causes of the three
  eras of the consumer movement
• Discuss future of the consumer movement

3
What do we mean by consumer movement?

• Consumer movement consists of the organized
  efforts of individual citizens and private,
  not-for-profit organizations to enhance the
  rights and collective welfare of consumers
  (Herrmann Mayer, pp. 584)

4
What is the goal of a consumer movement?

• Primary goal of the movement is to advance
  efficiency and equity in the marketplace
  (Herrmann Mayer, pp. 584).

5
Pre-Industrial and Industrial Revolution
Marketplace

• Dependence on ones own skills
• Honesty and competence of local producer
• Last four decades of 19th century
• rapid industrialization nationwide markets
• could no longer depend on past experience to
  judge goods no information upon which to judge
  new goods entering marketplace
• corruption in business and government corporate
  schemes to eliminate competition control prices

6
First Era Early 1900s

• Reformers
• National Consumers League
• Muckrakers/U.S. Government
• McClures Magazine
• Dr. Harvey Wiley - U.S. Dept. of Ag
• Theodore Roosevelt
• Upton Sinclair

7
First Era Early 1900sLegislation

• 1887 - Interstate Commerce Act
• 1890 - Sherman Antitrust Act
• 1906 - Pure Food and Drug Act Meat Inspection
  Act
• 1914 - Federal Trade Commission Clayton Act

8
First Era - Endings

• Consumer awareness diverted by
• Economic hardship
• World War I

9
Second Era 1930s

• 1920s
• incomes rose
• advertising new products
• purchasing unfamiliar consumer durables and foods
• Your Moneys Worth (Chase Schlink, 1927)
• Consumers Research (CR)

10
Second Era 1930s

• Great Depression
• Consumer Organizations/Books
• 1933 - 100,000,000 Guinea Pigs (Kallet Schlink)
• 1935 - CR bitter strike over unionization and new
  organization formed in 1936 Consumers Union
  (CU)
• 1936 - American Chamber of Horrors (Ruth Lamb)
• FDA activities and FDR sent message to Congress
  to strengthen FDA
• 1937 - sulfa drug tragedy

11
Second Era Legislation

• 1930 - Federal Power Commission
• 1934 - Federal Communications Commission
• 1938 - Federal Food, Drug and Cosmetic Act
• 1938 - Wheeler-Lea Amendment

12
Second Era Endings

• Attention diverted by
• World War II

13
1950s

• rapid increase in real income
• high levels of consumption -pent up demand
• 1953 - Flammable Fabrics Act American Council on
  Consumer Interests established
• The Hidden Persuaders (1957)
• 1958 - Food Additive Amendment

14
Third Era 1960s and 1970s

• Activities of Government
• JFKs Consumer Message in 1962
• Frances Kelsey (FDA) - Thalidomide
• Books/ Individuals Activities
• Rachel Carsons The Silent Spring (1962)
• Ralph Nader Unsafe at Any Speed
• Esther Peterson - first appointee to the post of
  While House Consumer Advisor

15
Third Era Legislation

• 1960 - Federal Hazardous Substances Labeling Act
• 1962 - Kefauver-Harris Drug Amendment
• 1966 - Child Safety Act Fair Packaging and
  Labeling Act National Traffic and Motor Vehicle
  Safety Act
• 1967 - Wholesome Meat Act Flammable Fabric Act
  amended
• 1968 - Truth-in-Lending Act Wholesome Poultry
  Products Act
• 1969 - Child Protection and Toy Safety Act

16
Third Era Legislation

• 1970 - Credit Card Liability Act Poison
  Prevention Packaging Act Clean Air Act
• 1972 - Consumer Product Safety Commission
  established
• 1974 - Fair Credit Billing Act
• 1975 - Magnuson-Moss Warranty and Federal Trade
  Commission Improvement Act
• 1978 - DEFEAT of legislation to create an agency
  of consumer advocacy

17
What are the elements that the three eras of the
consumer movement have in common?
18
Recent Decades

• Serious financial problems
• Little in terms of new consumer legislation
• Undoing or diluting of previous legislation

19
Current Consumer Protection Issues
20
What is the difference between legislation and
regulation?

• Legislation
• Regulation

21
What forms does regulation take in the U.S.

• Economic Regulation
• Social Regulation

22
Myths of regulation and consumer protection

• Regulation is ineffective
• Regulation is out of control
• Regulatory agencies are captured
• The purpose of regulation is efficiency only
• We have deregulated the economy

23
Realities

• Regulation is complex
• Studying regulation requires multidisciplinary
  focus
• Most regulatory analysis contains normative
  judgment

24
Policy Process

• How a Bill becomes Law
• Real players
• Subcommittees of congress congressional staff
• The agency, its leaders, and professional staff
• Industry groups
• Other governments
• Other interest groups
• Significant others
• What issues do we need to consider in order to
  understand these players and consumer protection?