Power to the Purchasers!

Frances B. Smith, executive director of Consumer Alert in Washington, D.C., was interviewed via telephone by Navigator's associate editor, Roger Donway.

Navigator: Let's start with an overview of Consumer Alert. What is its general structure and essential purpose?

Smith: Consumer Alert is a free-market consumer group that views issues from the perspective that a market economy benefits consumers—by increasing choice and by providing competition that leads to lower prices and to technological advances that in turn improve health and safety.

We have a small membership base of about one thousand individuals located in all fifty states, and Consumer Alert is funded by individual contributions, some private foundations, and some corporations. Barbara Keating, now Barbara Keating-Edh, founded Consumer Alert in 1977.

Navigator: Her name rings a bell.

Smith: Perhaps because she was the New York State Conservative Party's candidate for Senate in 1974 against incumbent senator Jacob Javits, where Barbara got almost a million votes. She has always had a strong free-market philosophy, and she founded Consumer Alert to provide a counterbalance to the many pro—big government, pro-regulation consumer organizations. In the late 1960s and early 1970s, numerous Ralph Nader—type groups—Public Citizen, Consumer Federation of America, Center for Science in the Public Interest, and others—had been formed to "protect" consumers from evil industries that were charged with cheating, killing, or maiming their customers. Partly as a result of their efforts, government regulatory agencies gained more power, and new agencies, like the Consumer Product Safety Commission [CPSC], were formed and issued ever more government mandates. Barbara Keating felt that there was a need for a counterbalance to these groups—an organization to show that one-size-fits-all government mandates can have unintended consequences for consumers and that free markets would in many cases offer superior protection.

Navigator: I wonder if you could elaborate further on the activities CA undertakes and the activities you personally undertake.

Smith: The activities cover a broad spectrum of issue areas ranging from consumer product safety, to agricultural- and food-safety issues, to energy issues, to privacy, technology, and trade.

We do some original research on specific issues, but in many cases we will translate what other people have done into arguments relating to the consumer impact of policy proposals. Then we approach policymakers with monographs and issue briefs on the topics. We also testify at congressional hearings and federal agencies' public meetings. Since we are not a lobbying organization, we are more active in the regulatory realm, not only in commenting on proposals but also in suing regulatory agencies when they overstep their statutory mission.

Of course, we write opinion pieces and do media interviews, and increasingly we are trying to reach consumers, the media, and policymakers through electronic means. Besides several electronic newsletters, we originated and maintain five Web sites.

Navigator: How does Consumer Alert fit into the free-market movement—comprising organizations such as the Cato Institute, the Competitive Enterprise Institute, the Institute for Justice, the Institute for Humane Studies, The Objectivist Center?

Smith: Consumer Alert is unique within free-market circles as a consumer group that directly counters the big-government consumerists in a range of fora, both domestically and internationally. We have made a concerted effort to be recognized by regulatory agencies as a consumer constituency group. Traditionally, only the pro-regulation consumerist groups have been the "insiders" able to exert influence on government agencies. Overwhelmingly, as so-called consumer representatives, they are brought in to testify before committees and are named to influential panels and committees. They are considered groups that have to be involved as participants and commentators at public meetings before regulatory actions are proposed. That gives them an enormous advantage in guiding the issues.

We have been pushing to get Consumer Alert recognized as an alternative and credible consumer voice. We don't claim to represent all consumers, as the consumerists do. Instead, we present our positions as representing a valid voice for consumers' interests.

And that is a critical role in the public-policy arena. Market-oriented policy groups are at a disadvantage in the legislative and regulatory process in presenting credible consumer arguments because they are rarely invited to represent consumers. Just about every congressional hearing or agency public meeting on a consumer-related issue has a "consumer panel," usually exclusively comprised of the consumerist groups. Although free-market policy groups testify regularly, they are usually doing so from a "think tank" perspective, not a consumer perspective.

Another big difference from other free-market groups is our focus on making these issues meaningful to consumers in their everyday lives. That means translating the big numbers into how a government program will restrict consumer choice, decrease safety, or impact an individual's pocketbook. Besides our policy work, we provide consumer educational materials that explain complex everyday concerns and help consumers make more-informed decisions.

Navigator: How successful has Consumer Alert been in becoming a consumer group "insider"?

Smith: We have had some preliminary successes. Consumer Alert last year was named to the National Academy of Sciences' prestigious Food Forum—the only other consumer group serving is Consumer Federation of America. Just recently, I was asked to serve on the U.S. Trade Representative's Trade and Environment Policy Advisory Committee, which has a statutory mandate to advise the USTR on trade agreements. Increasingly, too, Consumer Alert participates on agency panels at public meetings, such as two last year on e-commerce and privacy issues run by the Federal Trade Commission. The USDA [U.S. Department of Agriculture] and the FDA [Food and Drug Administration] include our staff in their consumer constituency briefings—we're still the only free-market consumer group that is considered part of those.

Navigator: Excellent. I notice from your Web site that you seem to be active in building coalitions. Can you say something about those—what they do and what they help you to do?

Smith: As a small consumer organization, we're up against some very large, very powerful, very well funded groups that promote big government. And those groups have enormous credibility and clout with policymakers as a result of their large membership numbers, their funding, and their connections with the media. On the free-market side, there are some excellent and effective think tanks that produce studies, journals, and books, and that have had a significant impact on public policy over the years. But they have not had their most significant impact in the consumer field.

No matter how efficient we show free-market policies to be, no matter how we argue the consumer benefits of a market economy, advocates of more government regulation almost always claim the mantra of consumerism. How many times have you seen a news story that says businesses favor deregulation but "consumer groups" say it will hurt consumers? Why are big-government solutions the only policies seen as "consumer-friendly"?

In part, this is due to media bias, but principally big-government proponents can continue to claim the consumerism mantra because of the way they organize around issues. Consumerists have long experience framing the issues, have large consumer "membership" numbers, and closely coordinate and mobilize national- and state-level groups.

Given these facts, we took a lesson from our opponents. We found that organizations on the other side, call it the leftists or big-government advocates, work very well together. They'll form groups that include think tanks for academic research; other organizations for grassroots support; and groups that specialize in reaching out to the media. And they all work toward a common goal. Groups on our side had only been doing that in fits and starts and usually not focusing on consumer issues. We felt there was a need to reach out to organizations with large numbers that share our philosophy and try to get them to focus on the consumer impact of government proposals. Joining together on these issues gives us leverage, in terms of greater credibility and clout on these issues.

Consumer Alert formed the National Consumer Coalition [NCC], which includes about twenty-three nonprofit organizations with about three million members, and we operate three different subgroups of that coalition. For example, we have the Cooler Heads Coalition, which focuses on energy issues and global warming. We also have an NCC Privacy Group, which deals with privacy and technology issues. And we have an NCC Food Group that focuses on agriculture, food, and trade issues. For each of those groups, we originated and maintain a Web site that reaches out to a broader audience.

Also, because more and more domestic issues are moving into the international arena, we have formed an international coalition, called International Consumers for Civil Society[ICCS]. We now have as members twenty-four nonprofit groups in thirteen different countries. Those are mostly free-market think tanks, because in many of those countries there aren't comparable consumer groups with a free-market perspective. Consumer Alert and ICCS are accredited NGOs [Non-Governmental Organizations] with several international institutions, such as the World Trade Organization. As a consumer-group NGO, we go up against many of the anti-globalization, anti-trade, anti-technology consumer and environmental NGOs that claim to represent "civil society" and thus dominate those international institutions. Through our international coalition we're trying to reclaim that term for the diverse interests of civil society. As we know, no one group or several groups or a committee can speak for "civil society." Consumer-group representatives may represent "some consumers'" views, but we all represent certain constituencies, some very different from others.

Our presence as an NGO brings that point home—whether through commenting formally, attending meetings, or distributing materials, we can present information that is extremely useful in conveying a balanced picture.

And our participation gets attention not only from the international organizations themselves but also from the national governments represented.

Navigator: What has been your main focus in the international arena?

Smith: The importance of open trade to consumers in both developed and developing countries has been a major focus. We advocate reduction of tariffs, subsidies, and price supports, and oppose non-tariff trade barriers, such as using food-safety issues not based on science as protectionist measures. As an NGO with the World Trade Organization, we regularly track trade issues. We also appear at public meetings and formally comment to the U.S. delegation to the international food-standards and food-safety body, the Codex Alimentarius. As far as I know, Consumer Alert is the only free-market organization involved with Codex activities. Our trade analyst, Barbara Rippel, focuses on those and other issues in a weekly electronic newsletter, a food Web site, and articles and monographs.

In almost all the international fora in which we are involved, we have been opposing the use of "the precautionary principle," applied to such issues as food safety, genetically modified foods, chemicals, greenhouse-gas emissions, and many others. It is not really a principle at all, but rather a mind-set promoted principally by the European Union that says unless you can prove something is perfectly safe, it should not be introduced. First of all, you can't prove a negative. Secondly, nothing is perfectly safe. If we had used the precautionary principle, we would not have introduced vaccinations, which kill some people, or electricity, which kills something like two hundred people a year in the United States, or even chlorination, which has some negative side effects. We would not have allowed those types of advances to take place.

Proponents of the precautionary principle include many of the consumerist and environmental groups that serve as NGOs. They claim that we can make the world safer by erring on the side of "caution," but that bias ignores the fact that caution may instead mandate innovation. Focusing on the possible risks of the new and raising fears about many minuscule risks, they ignore the growing risks that food shortages might become severe without innovation, that vaccines and antibiotics might become ineffective without innovation, even when the evidence on these risks is not conclusive.

We point out that the precautionary principle is a one-way ratchet. It obsesses about imagined or potential risks of new technology or innovations while ignoring the real risks of the status quo. The elites of the world will still eat well in a world where biotechnology is banned. The losses will fall on the people in developing countries, where the human and environmental benefits of agricultural biotechnology are likely to be most dramatic and widespread.

Furthermore, the precautionary principle can never be satisfied as long as an inventive alarmist can think of yet one more hypothesis about a possible risk that has not yet been absolutely proven not to exist.

Are consumers better off if their fears and misperceptions are taken as fact and steps taken to "protect" them from their self-created concerns? Of course not. Yet that's where the precautionary principle will lead us, and it is a scary thought. Pandering to fears is not protecting consumers.

Navigator: You have mentioned food-related issues a number of times. I gather that genetically modified food is an area of special concern. Can you tell us what has been happening and what you are trying to do?

Smith: Sure. We view almost every issue from a risk-versus-risk perspective, and that applies to our approach to genetically modified food. That is, there is always risk in introducing new technology, but there is risk in restricting new technology. In the case of food, we have long been involved in promoting the important role of technology in making food safer. No food is safe. Nothing is safe. But things can be made safer by advances in technology. In the food area, biotech has the potential not only to help feed the world's burgeoning population but also to lessen the impact of agriculture on the environment. Biotech crops can get higher yields out of less acreage, with less use of pesticides. So, we see genetically modified [GM] food as having the potential to offer enormous benefits.

So, with GM food we are saying one should assess it from a risk-versus-risk perspective. There is risk and we need to look carefully at that risk, but we also need to look at the consequences of not allowing GM food, because we are seeing some very dramatic effects of the precautionary principle in Africa, with millions of people starving. In Zambia, for instance, the government said it would not accept food crops produced through biotechnology because they may cause some harm. Well, when you have three million people facing possible starvation, the failure to accept GM food has the potential to cause enormous harm.

I see Consumer Alert as a critical element in a larger battle—a battle that pits those who want to force governments to turn our backs to the future against those who see the future as full of possibilities, not just problems.

Navigator: I see that you keep a close watch on the Consumer Product Safety Commission. What have they been doing, or not been doing, that you are concerned about?

Smith: The CPSC oversees consumer products that are not regulated by their own regulators. For instance, the Department of Transportation regulates automobiles; the Food and Drug Administration oversees drugs and food; and the Bureau of Alcohol, Tobacco, and Firearms—it's pretty clear what it regulates. Most other consumer products, about 15,000, are regulated by the CPSC.

Consumer Alert, when dealing with the CPSC, has been fortunate to have a former CPSC commissioner as a board member and a former CPSC chairman during the Reagan years on our advisory council.

As for our concerns, I need to distinguish the way things were from the way they are now. Under the previous chairman of the Consumer Product Safety Commission, the approach seemed to be that every product had to be perfectly safe, even if consumers misused the products. Consumers were also told they did not have any responsibility for their own safety in terms of using a product properly.

We were very concerned about that approach, because the result of mandating or trying to mandate that products should be perfectly safe may be that many consumers cannot afford the product at all and will go to an inferior alternative. For instance, if you can't afford the perfectly safe ladder, with all of its special safety devices, you might put a chair on a table to change a lightbulb. So, again, we looked at unintended consequences, and we looked at the moral-hazard problem in many of the directives. Policies that lull people into a false sense of security—into thinking a regulated product is safe for any and all uses—may cause consumers to misuse products or not to monitor product use when children are involved. Policymakers should evaluate how addressing a low-level risk by banning a product may have unintended consequences and may dramatically increase consumers' risks. Consumers may have to use an earlier product that presents a higher risk or may use a makeshift substitute with far fewer safety features.

Also, we were greatly concerned about the agency's undermining private standard-setting organizations, some of which have been operating for over a hundred years. Those standard-setting bodies, such as Underwriters Laboratories, have done an excellent job and are able to respond quickly to new technological advances, to change standards when new information becomes available. The CPSC might take four years to mandate a change, only to find that the change they were responding to had changed again.

Worse still, the past chairman wanted to move way beyond the CPSC's consumer product regulatory mandate. For example, the CPSC was attempting to regulate escalators and fixed-site amusement park rides. Yet, in the case of escalators, the agency had not compiled data on the risk of injury riding escalators. The CPSC also didn't compare the risk with escalators' alternative: stairs, which cause thousands of serious accidents.

What we see now is the Consumer Product Safety Commission, under a new administration, focusing more on its statutory mission to remove unsafe consumer products from the market. Consumer Alert will be trying to make the CPSC as good as it can be under that law.

Navigator: One area of concern that you mentioned, and that readers might not expect you to focus on, is privacy.

Smith: We have been involved in a range of privacy issues, but we distinguish between the government's collection and use of an individual's personal data, which usually involves some kind of coercion, and the private compilation and use of data, where consumers are usually getting something of value in return. Privacy decisions in the private sector include trade-offs, so that consumers may make their own decisions about whether to reveal certain private data in exchange for receiving special offers or other benefits. Different consumers will choose different levels of protection of their personal data. We caution policymakers that, before they focus on further restrictions on the private sector, they should look instead to "market regulation" through competition among companies, consumer choice and satisfaction, and new technologies and privacy intermediaries that can better allow people to choose their own level of privacy.

I previously worked for a financial trade group and know the value of credit-bureau information. People may sometimes complain about it, but that compilation of data reduced the cost of information to lenders to such an extent that credit became available to the masses. Having access to large numbers of consumers' credit histories and other financial information allowed lenders to make better and faster decisions about extending or denying credit. That credit-bureau information was mainly responsible for insuring credit wasn't provided only to those who didn't need it. So that is just an example of the private compilation and use of data that can be extremely beneficial in reducing the cost of important services to consumers—in this case, it led to a democratization of credit.

At the same time, we have become very, very concerned about the anti-terrorism campaigns and the government compilation of personal data and surveillance of private citizens. In today's world, the issue has been framed as liberty versus security. Under our Constitution and Bill of Rights, it should instead be viewed as liberty and security. That means that legislative proposals that would not be temporary measures need careful scrutiny. If hastily enacted without asking basic questions about their relevancy and likely effectiveness in targeting terrorists, some actions would encroach upon Americans' basic rights, especially those provided by the First and Fourth Amendments. Others would open up private citizens' communications and financial transactions to government scrutiny and could interfere with individuals' ability to defend themselves against charges.

Consumer Alert focuses on these and other privacy issues through its Web page on privacy: www.nccprivacy.org. The editor, James Plummer, names a privacy villain of the week and a privacy hero of the month. Not surprisingly, it's harder to find privacy heroes.

The privacy villains, in some cases, are government agencies—whether federal, state, or local—that misuse information or gather information through coercive means. For instance, the Pentagon's Total Information Awareness program would link transactional data—financial data such as credit card and bank accounts, travel data, event attendance, medical records—with authenticated biometric data such as your fingerprints, your retinal scan, your face, even how you walk, in one huge Department of Defense database. That is the sort of thing we want to call attention to: When a government exercises its coercive power to collect information about you, and that information goes into government databases, those are often broken into or misused, either by individuals who work for government agencies or by other agencies.

Navigator: A general question: You testify a great deal about consumer issues, before Congress and regulatory bodies. How receptive, frankly, are your audiences to the message that consumers benefit from free markets?

Smith: I think that the message is received with quite a bit of skepticism. That is why we generally do not present an issue from that broad perspective.

I have found that when we frame issues by using a risk-versus-risk paradigm, that can be much more convincing. I also think that when one talks about unintended consequences, and about who is hurt by legislation or regulation, that can be very effective. So, we take the high ground on a lot of issues and show that a particular proposal is misguided because it will harm people more than it will help them.

For instance, on the airbag issue—about twenty years ago, before my time here—Consumer Alert took the position that airbags should not be mandatory and consumers should be able to choose whether to buy a car with an airbag. At that time, too, Consumer Alert pointed out that not enough research had been done about the effects on children of those airbags, which had to be deployed with enough force to protect an average-size male not wearing a seatbelt. Of course, in the last five or six years it has been found that airbags kill more children under thirteen sitting in the front seat than they help. Tragically, our message was not listened to.

But we keep making those kinds of arguments and delivering those kinds of messages. And that risk-versus-risk message can resonate with policymakers if you have good, hard information to back it up.

Navigator: Let me go back a bit and pick up on your own history. When did you join Consumer Alert and why?

Smith: I joined Consumer Alert in the summer of 1994. I had worked primarily for several financial trade associations, and, as part of my job, I formed a foundation to provide information to consumers on personal-finance topics. That foundation commissioned studies and reports and so forth. But it was very frustrating, because no matter who we would get to do the report, whether it was the University of Michigan or whoever, the consumer groups would say it was industry-funded and there was no validity to it. So, I wanted to see if there were any consumer groups that were pro-market, that took positions to show that the market economy benefited consumers, and had also thought about starting a new consumer group. I discovered Consumer Alert and learned that their mission and purpose were very similar to what I envisioned. The chairman, William MacLeod—who's still chairman now and actively supports Consumer Alert's mission and activities—was looking for a new executive director at the time.

Navigator: Let me close by asking you to say how people can support Consumer Alert if they wish to.

Smith: We ask individuals, private foundations, and corporations to help fund our organization and its activities. They can donate through our Web site, which is www.consumeralert.org, or send a check to Consumer Alert at our address: 1001 Connecticut Avenue, N.W., Suite 1128, Washington, D.C., 20036.

Navigator: Thank you.