In the beginning, there was regulation. Prohibitions against selling adulterated food and using false weights and measures, for example, can be found in the Old Testament, the Code of Hammurabi, the ancient laws of India. Measures to protect European consumers appeared as early as the 15th and 16th centuries.
There are two basic kinds of regulation: health and safety regulation and economic regulation, says Robert N. Mayer, associate professor and chairman of family and consumer studies at the University of Utah. Mayer is author of a new book detailing the history, impact and status of consumerism: "The Consumer Movement: Guardians of the Marketplace."While health and safety regulation remains an important part of consumer protection, economic regulation has experienced a great deal of scrutiny and change in recent years.
Along came deregulation.
"During the 1970s economic regulation came under considerable fire from both economists and consumerists. It was described as obsolete at best and a government-sanctioned form of price-fixing at worst. As a result, a substantial amount of deregulation has occurred," says Mayer.
Deregulation has benefited the consumers in some areas more than others, he says. Sometimes evaluating the effects of such policies is not easy. We can't go back and relive history without the policies in place. But it is possible to evaluate some specifics. The chart at right looks at results of a number of policy-evaluation studies and gives an idea of which deregulatory measures have had positive effects and which have been less positive.
In recent years, there has been some talk that deregulation may have gone too far, that there is a need for some re-regulation. That may happen in some areas, says Mayer, but he doesn't see a return to economic regulation of the pre-1970s.
But one thing we are learning he says, is that it is not enough for the government just to deregulate. There is also a need for good, easily accessible information so consumers can reap the full benefits of deregulation.
A study that Mayer did with John Burton and Cathleen Zick, two other members of the consumer studies faculty at the U., on the equal access decision for long distance telephone carriers provides some insight on how consumers react to deregulation.
"With the telephone system, first there was no choice; then suddenly there was lots of choice."
And consumers were confused. Then they were asked to choose a long-distance carrier - or else be randomly assigned one.
A survey of Utah consumers showed that, even with all the ads touting the advantages of companies such as MCI, Sprint and TeleAmerica, only 15 percent chose one of those companies. Some 27 percent asked for random assignment. The rest stayed with AT&T.
"If deregulation is to be effective, we need informed, involved consumers," says Mayer. It may be too late with the telephone issue, but there is still time with banking, the airlines and in other areas."
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3 case studies show 3 different solutions
Here are three examples of regulation, deregulation and potential re-regulation:
1. Food safety: Federal regulation of food safety goes back to 1862, when the newly created U.S. Department of Agriculture set up a laboratory to analyze samples of food, fertilizer and other agricultural products. In 1865, measures werepassed that outlawed the importation of diseased cattle and swine.
The efforts of the pure food movement culminated in 1906 with the passage of the Pure Food and Drug Act and the Meat Inspection Act. These were strengthened in 1938, with the passage of the Federal Food, Drug and Cosmetic Act.
In recent years there has been talk of cutting costs and improving efficiency by reducing some of the federal involvement in meat and food inspection - allowing plants to have their own on-site inspectors and only occasional federal inspections, for example. But concern over the safety effects has been such that this proposal has been abandoned.
2. Airline industry: Has deregulation of the airline industry had any cause and effect relationship to the number of airline accidents? Should the industry be re-regulated? A lot of people are asking that question these days, but,says Robert Mayer, there are other things you need to keep in mind.
One is the increased load of airline traffic, which has gone up about 30 percent due to deregulation. "If deregulation has an impact on safety, you would expect the number of accidents to increase proportionately. But that hasn't happened. Flying is still much safer than driving."
Still, he says, increased congestion in the skies is creating problems that will have to be dealt with in the near future - but not necessarily by new regulations.
"The obvious solution is to build more airports to divert traffic and reduce the load. But that isn't as easy as it sounds. Siting a new airport is extremely difficult. The last new one built in this country was Dallas-Fort Worth. Denver has spent years trying to find the place to put a new airport and will finally have one in 1992 or '93. But one new airport every 20 years won't do it."
So what might happen? "Economists are looking at different ways of pricing that will flatten out peaks of demand."
Some utilities, for example, use peak-load pricing, where you pay more for using them during the hours that everyone else wants to use them. We could see more of that with the airlines: charging consumers higher prices for flying from 9 to 5; charging airlines higher landing fees for landing during peak times; charging private planes at a different rate than commercial liners. We could see two kinds of tickets: one, more expensive, with a guarantee that the airline will get you there on time; another cheaper one would allow the airline to bump you to another flight if necessary.
"There are a number of plans than can shift demand," says Mayer. "Rather that going back to regulation, this is increasing deregulation because it allows the market to function as it would normally. Deregulation works on the premise that things should be priced at their value, but not everyone values them at the same rate."
3. Communications. The area where we perhaps have seen the most call for re-regulation is communications, says Mayer. For example, in 1984 restrictions on advertising in children's TV programs were lifted. Last year, Congress passed a bill that would reimpose some restrictions. That bill was not signed into law by President Reagan, and the issue is still a hot one in Congress.
Another example is the expiration of the "fairness doctrine" that said broadcast news media had to give balanced time to both sides of controversial issues. A bill reinstating that was passed but not signed in 1987. That's something we can also expect to see more about.