The 1960s Corvair condemned by Ralp Nader as unsafe at any speed. Since Nader's attack, it's being increasingly accepted that we need government protection in a marketplace. Today, there are agencies all over Washington for burreaucrats to decide what's good for us. Agencies to control the prices we pay, the quality of goods we can buy, the choice of products available, it's already costing as more than 5 billion dollars a year.Since the attack on the Corvair, government has been spending more and more money in a name of protecting the consumer. This is hardly what the third president of the United States Thomas Jefferson, whose monument this is had in mind when he defined a wise and frugal government, as one which restrains man from injuring each other and leaves him otherwise free to regulate their own pusruits of industry and improvement. Ever since the Corvair affair, the US government has increasingly been muscling in between buyer and seller in a marketplaces of America. By Thomas Jefferson's standards what he have today is not a wise and frugal government, but a spendthrift and snooping government.
The federal regulations that govern our lives are available in many places. One set is here, in a Library of Congress in Washington D.C. In 1936 the Federal government established the Federal register to record all of the regulations, hearings and other matters connected with the agencies in Washington. This is volume one, number one.
In 1936 it took three volumes like this to record all these matters. In 1937 it took four, and then it grew and grew and grew. At first rather slowly and gradually, but even so, year by year, it took a bigger and bigger pile to hold all the regulations and hearings for that year. Then around 1970 came a veritable explosion, so that one pile is no longer enough to hold the regulations for that year.
It takes two and then three piles. Until, on one day, in 1977, september 28, The Federal register had no fewer than 1754 pages. And these aren't exactly what you would call small pages either. Many of those regulations, come from this building.
Consumer product safety our lines are busy would you hold please? Thank you. The Consumer Product Safety Comission is one of the newest agencies set up on our behalf. One of its jobs is to give advice to consumers. But it's main function is to produce rules and regulations, hundreds and hundreds of it.
Designe to assure the safety of products on the market. It's hard to escape the visible hand of the Consumer product safety comission. Except for food and drugs, ammunition and automobiles, which are covered by other agencies, it has power to regulate just about anything you can imagine. Already, it costs 41 million dollars to test and regulate all these products on our behalf.
And that's just the beginning. The Comission employs highly trained technicians to carry out tests like this-checking the brakes on a bike. But the fact is that 80 % of bike accidents are caused by human error. These tests may lead one day to safer brakes.
But even that isn't sure. The one thing that is sure, is that the regulations that come out of here will make bikes more expensive and will reduce the variety available. Yes, they really are testing how matches strike. And tests are very precise.
The pressure must be exactly one pound. The match exactly at right angles. No matter how many tests are done, children swings are never going to be totally safe, you cannot outlaw accidents. If you try, you end up with ludicrous results.
It hardly seems possible, but they really do use highly skilled people to devise regulations that will prevent toy guns from making too big a bang. The Comission in a fact is deciding what they think is good for us. They're taking away our freedom to choose. Consumers don't have to be hemmed in by rules and regulations.
They are protected by the market itself. They want the best possible product at the lowest price. And the self-interest of the producer leads him to provide those products in order to keep the customers satisfied. After all, if they bring goods of low quality here, you're not going to keep coming back to buy them.
If they bring goods that don't serve your needs, you're not going to buy them. And therefore they search out all over the world the product that might meet your needs and might appeal to you. And they stand back of them because if they don't they're going to go out of business. You see the difference between the market and the political action, the governmental agency.
Here, nobody forces you, you're free, you do what you want to. There's no policemen to take money out of your pocket or to make sure you do what you are told to. Over a quarter of century ago, I've bought second hand a desk calculator for which I've paid 300 dollars. One of these little calculators today, which I can buy for 10 dollars or so, will do everything that did and more besides.
What produced this tremendous improvement in technology? It was selfinterest or if you prefer greed. The greed of producers, who wanted to produce something that they can make a dollar on. The greed of consumers, who wanted to buy things as cheaply as they could. Did government play a role in this? Very little.
Only by keeping the road clear for human greed and selfinterest to promote the welfare of the consumer. When governments do intervene in business, innovation is stifeled. Railroads've been regulated for nearly a century and they're one of our most backward industries. The railroad story shows what so often results from the good intentions of consumer protection groups.
In the 1860s railroad rates were lower in the United States than anywhere else in the world. But many customers thought that they were too high. They complained bitterly about the profits of the railroads. Now the railwaymen of the time had their problems too.
Problems that arose out of the fierce competitiveness among them. Many railroads all trying to get their share of the market, all trying to make a name for themselves. If you want to see what their problems were as they saw them, come and have a look at this. From inside this private railroad car, it may not look as if the people who ran the railroads had any real problems.
Some, like the owner of this private car, had done very well. This was the equivalent of the private jets of todays business tycoons. But for each one who succeeded, many didn't survive the cut-throat competition. What we have here is a railroad map of the United States for the year 1882.
It shows every railroad then in existence. The country was literally criss-crossed with railroads going to every remote hamlet and covering the nation from coast to coast. Between points far distant, like for example New York and Chicago, there might be a half a dozen lines that'd be running between those two points. Each of the half dozen trying to get business with cut rates and rate would get very low.
The people who benefited most from this competition were the customers shipping goods on a long trip. On the other hand, between some segments of that trip, say for example Harrisburgh and Pittsburgh, there might be only a single line that was running. And that line would take full advantage of its monopoly position. It would charge all that the traffic would bear.
The result was that the sum of the fares charged for the short-hauls was typically larger than the total sum charged for the long-haul between the two distant points. Of course, none of the consumers complained about the low price for the long-haul. But the consumers certainly did complain about the higher prices for the short-hauls. And that was one of the major sources of agitation, leading ultimately to the establishment of the Interstate Commerce Comission.
The cartoonists of the day delighted in pointing out that railroads had tremendous political influence as indeed they did. They used the consumers complaints to get the government to establish a comission that would protect the railroads interests. It took about a decade to get the comission into full operation. By that time, needless to say, the consumer advocates had moved onto their next crusade.
But the railwaymen were still there. They had soon learned how to use the comission to their own advantage. They solved the long-haul short-haul problem by raising the long-haul rates. The customers ended up paying more, some protection.
The first comissioner was Thomas Cooley, a lawyer who had represented the railroads for many years. The railroads continued to dominate the Comission. In the 1920s and 30s when trucks emerged as serious competitors for long-distance hauling, the railroads induced the Comission to extend control over trucking. Truckers in their turn learned how to use the Comission to protect themselves from competition.
This firm carries freight to and from the Dayton, Ohio International Airport. It's the only one serving some routes and its customers depend on it. But Dayton Airfreight has real problems. Its ICC license only permits it to carry freight from Dayton to Detroit.
To serve other routes, it's had to buy rights from other ICC licence holders, including one who doesn't own a single truck. It's paid as much as a 100 000 dollars a year for the privilege. Our company is in the process of trying to get rights to go there now. Yes, well do that and thank you for calling sir.
The owners of the firm have been trying for years to get their license extended to cover more routes. I have no argument with the people who already have ICC permits except for the fact that this is a big country and since the inception of the ICC in 1936, there has been very few entrants into the business. They do not allow new entrants to come in and compete with those who are already in. Of course, Dayton Airfreight suffers.
But so de the customers who pay higher freight charges. Quite frankly, I don't know why the ICC is sitting on its hands doing nothing, This is the third time, to my knowledge, that we've supported the application of Dayton Airfreight to help us save money, help free enterprise, help the country, save energy, help, help, help... It all comes down to the consumers ultimately going to pay for all of this and they are the blame. The ICC has to be the blame.
Dayton Airfreight now has many of its trucks lying idle. Trucks that could be providing a valuable service. Far from protecting consumers, the ICC has ended up making them worse off. As far as i am concerned, there is no free enterprise in Interstate Commerce.
It no longer exist in this country. You have to pay the price and you have to pay the price very dearly and it not only means that we have to pay the price it means that the consumer is paying that price. The price consumers pay when it comes to medicine could be their lives. In the 19th century pharmacies contained an impressive array of pills and potions, most were ineffective and some were deadly.
There was an outcry about drugs that maimed or killed. The Food and Drug Administration in response to consumer pressure succeeded in banning a whole range of medicines. The tonics and lotions with their excessive claims disappeared from the market. In 1962 the Kefauver Amendment gave the FDA power to regulate all drugs for effectiveness as well as for safety.
Today, every drug marketed in the United States must pass the FDA. It's clear that this has protected us from some drugs with horrific side effects, like thalidomide. And we all know of people who benefited from modern drugs. What we don't hear much about however, are the beneficial drugs that the FDA has prohibited.
Well, if you examine the terapeutic significance of drugs that haven't arrived in the US. But are available somewhere in the rest of the world such as in Britain, you can come across numerous examples where the patient has suffered, for example there are one or two drugs called beta-blockers, which it now appears, can prevent death after heart attack, we call this secondary prevention of coronary death after myocardial infarction, which, if available here, could be saving about 10 000 lives a year in the United States in the 10 years after 1962 ammendments no drug was approved for hypertension. That's for the control of blood pressure in the United States, where as several were approved in Britain. In the entire cardiovascular area only one drug was approved in the 5 year period from the 67 to 72 and this can be correlated with known organizational problems at FDA.
These carts are taking to an FDA official. The documents required to get just one drug approved. Well, hi there, must be the new one you called me about... It took 6 year work by the drug company to get this drug passed.
All 119 volumes. OK, thank you very much. The implications for the patients are that therapeutic decisions that used to be the preserve of the doctor and the patient are increasingly becoming made at a national level by comittees of experts. And these comittees and the agencies for whom they are acting, the FDA, are highly skewed towards avoiding risks.
So, there's a tendency for us to have drugs that are safer, but not to have drugs that are effective. Now, I've heard some remarkable statements from some of these advisory comittees in considering drugs. One has seen the statement, there are not enoug patients with a disease of this severity to warrant marketing this drug for general use. Now, that's fine if what you're trying to do is to minimize drug toxicity for the whole population, but if you happen to be one of these "not enough patients" and you have a disease that is of high severity or disease that's very rare then that's just tough luck on you.
For ten years, Mrs. Esther Usdane suffered from severe asthma. The medication she received had serious side effects. Her condition was getting worse.
But the drug her doctor preffered was prohibited by the FDA. So twice a year, Mrs. Usdane had to set out on a journey. I have been very sick, I have been in and out of the hospital several times and they couldn't seem to find a way to control the astma and I had to change my lifestyle once I was out even for short time mainly because the cortisone derivatives were softening the bones and causing a puffiness of the face and other changes in my body.
The doctors were pretty anxious to get me off the cortisone derivative. The drug her doctor wanted her to have had been available for use for five years in Canada. Once across the boarder of Niagara Falls, Mrs. Usdane could make use of the prescription that she obtained from a Canadian doctor.
All she had to do was go to any pharmacy. There she could buy the drug that was totally prohibited in her own country. The drug worked immediately. This one made such a difference in my life, both because of the shortness of breath being resolved and also because now we dont have to worry so much about the softening of the bones.
Fortunately, once I got that medicine, very quickly, everything sort of reverted back to a much more of a normal lifestyle and Im very grateful that I was able to find relief. It was easy for Mrs. Usdane to get around the FDA regulations because she happens to live near the Canadian border. Not everyone is so lucky.
Its no accident that despite the best of intentions, the Food and Drug Administration operates so as to discourage the development and prevent the marketing of new and potentially useful drugs. Put yourself in the position of a bureaucrat who works over there. Suppose you approve a drug that turns out to be dangerous, a thalidomide. Your name is going to be on the front page of every newspaper.
You will be in deep disgrace. On the other hand, suppose you make the mistake of failing to approve a drug that could've saved thousands of lives. Who will know? The people whose lives might have been saved will not be around. Their relatives are unlikely to know that there was something that could have saved their lives.
A few doctors, a few research workers, they will be disgruntled, they will know. You or I, if we were in the position of that bureaucrat, wed behave exactly the same way. Our own interests would demand that we take any chance, whatsoever, almost, of refusing to approve a good drug in order to be sure that we never approve a bad one. Drug companies can no longer afford to develop new drugs in the United States for patients with rare diseases.
Increasingly they must rely on drugs with high volume sales. Four drug firms have already gone out of business. And the number of new drugs introduced is going down. And where will it all lead? We simply havent learned from experience.
Remember Prohibition? In a burst of moral righteousness at the end of the first world war, when many young men were overseas, the non-drinkers imposed on all of us prohibition of alcohol. They did it for our own good. And there is no doubt that alcohol is a dangerous substance. Unquestionably, more lives are lost each year through alcohol and also the smoking of cigarettes than through all the dangerous substances the FDA controls.
But where did it lead? This place is today a legitimate business, it's the oldest bar in Chicago. But during prohibition days it was a speakeasy. Al Capone, Buggs Moran, and many of the other gangsters of the day sat around this very bar planning the exploits that made them so notorious- -murder, extortion, highjacking, bootlegging. Who were the customers who came here? They were people who regarded themselves as respectable individuals, who would never had approved of the activities that Al Capone and Moran were engaged in.
They wanted a drink but in order to have a drink they had to break the law. Prohibition didnt stop drinking, but it did convert a lot of otherwise law obedient citizens into law breakers. Fortunately, were a very long way from that today with the prohibition on cyclamate and DDT. But make no mistake about it, there is already something of a gray market in drugs that are prohibited by the FDA.
Many a conscientious physicians feels himself in a dilemma caught between what he regards as the welfare of his patient and strict obedience to the law. If we continue down this path, there is no doubt where it will end. After all, if it is appropriate for the government to protect us from using dangerous cap guns and bicycles The logic calls for prohibiting still more dangerous activities such as hand gliding, motorcycling, skiing. If the government is to protect us from ingesting dangerous substances, the logic calls for prohibiting alcohol and tobacco.
Even the people who administer the regulatory agencies are appalled at this prospect and withdrawal from it. As for the rest of us, we want no part of it. Let the government give us information but let us decide for ourselves what chances we want to take with our own lives. As you can see all sorts of silly things happen when government starts to regulate our lives.
Setting up agencies to tell us what we can buy, what we cant buy, what we can do. Remember, we started out this program with a Corvair an automobile that was castigated by Ralph Nader as unsafe at any speed. The reaction to his crusade led to the establishment of a whole series of agencies designed to protect us from ourselves. Well, some ten years later, one of the agencies that was set up in response to that move, finally got around to testing the Corvair that started the whole thing off.
What do you suppose they found? They spent a year and a half comparing the performance of the Corvair with the performance of other comparable vehicles and they concluded and I quote The 1960-63 Corvair compared favorably with the other contemporary vehicles used in the test. Nowadays, there are Corvair fan clubs throughout the country. Corvairs have become collector items. Consumers have given their verdict on Ralph Nader and the government regulations.
As Abraham Lincoln said, you cant fool all of the people all of the time. Its time all of us stopped being fooled by those well-meaning bureaucrats who claim to protect us because they say we cant protect ourselves. The men and women who have fostered this movement have been sincere. They believe that we as consumers are not able to protect ourselves.
That we need the help of a wise and beneficent government. But as so often happens the results have been very different from the intentions. Not only have our pockets been picked of billions of dollars, but also we are left less well protected than we were before..
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