Ralph Nader is a self-styled “consumer advocate” who back in the 1960s came to the attention of the public by publishing Unsafe at Any Speed, an attack on the Chevrolet Corvair. Unsafe at Any Speed was instrumental, unfortunately, in launching a massive expansion of government regulation of consumer goods, that is to say, of government bureaucrats telling adult free-born citizens which goods they shall or shall not be allowed to buy or sell.
Nader ran for president a couple of times, and we have a colleague who actually voted for him. One day at lunch our colleague was extolling his virtues, claiming that Nader had “done more for consumers than anybody.” We replied, “Really? More even than Thomas Edison?” We certainly thought our colleague’s assertion to be dubious, but we didn’t fully realize just how dubious until we recently re-read “Who Protects the Consumer?”, the seventh chapter of Free to Choose by Milton and Rose Friedman.
The Friedmans mention Nader at just a couple of different places in the chapter. The first involves the infamous Corvair. Our Dad actually owned a Corvair, purchased new in the early 1960s. Dad never encountered any safety issues, but in terms of mechanical reliability, the car was a lemon. In any event, the Friedmans on p.192 say the following.
Ralph Nader’s attack on the Corvair, the most dramatic single episode in the campaign to discredit the products of private industry, exemplifies not only the effectiveness of that campaign but also how misleading it has been. Some ten years after Nader castigated the Corvair as unsafe at any speed, one of the agencies that was set up in response to the subsequent public outcry finally got around to testing the Corvair that started the whole thing. They spent a year and a half comparing the performance of the Corvair with the performance of other comparable vehicles, and they concluded, “The 1960-63 Corvair compared favorably with the other contemporary vehicles used in the tests.”
Nowadays Corvair fan clubs exist throughout the country. Corvairs have become collectors’ items. But to most people, even the well-informed, the Corvair is still “unsafe at any speed.”
Here “most people” includes our colleague, no doubt. But we do think it’s significant that the modern regime of consumer-product regulation was founded upon a case of pure malarkey. After all, if businesses were routinely harming consumers by carelessly selling harmful products, Nader and other advocates should have been able to motivate their agenda by finding a case of real negligence.
In reality, most of the harm to consumers is committed not by private business, but by government. For instance, we’ve heard self-styled consumer advocates on the radio going berserk over credit protection insurance sold by the credit card companies. The advocates might be right that the insurance does not provide full actuarial value but, after all, it costs only about $1 per month. Big deal, a $1 per month rip-off. Meanwhile, we ask ourselves, how much have we personally been harmed by, let’s say, Social Security? Not permitting us to save and invest our own money for retirement will end up costing us probably hundreds of thousands of dollars. Similarly, as Milton Friedman points out, consumer advocates curiously have little to say about tariffs and other trade restrictions, although they exact a substantial toll on consumers.
The Friedmans next mention Ralph Nader in connection with airline fares.
The case occurred in California, which is a large enough state to support several major airlines that fly solely within the state and as a result were not subject to CAB (Civil Aeronautics Board) control. Competition on the route between San Francisco and Los Angeles produced an intrastate fare that was much lower than the fare that the CAB permitted interstate lines to charge for the same trip.
The irony is that a complaint was filed before the CAB about the discrepancy in 1971 by Ralph Nader, self-proclaimed defender of the consumer….Nader could hardly have been under any illusions about how the airline case would be resolved. As any student of regulation would have predicted, the CAB ruling, later upheld by the Supreme Court, required intrastate companies to raise their fares to match those permitted by CAB.
So Nader’s complaint caused consumers to pay more, and it’s hard to believe that this result was inadvertent. Our colleague would have come closer to the truth if she had changed just one word–Nader has done more against consumers than anybody.
In the video (embedded below) accompanying the chapter, Milt takes us to Dayton(!), to recount the plight of Dayton Air Freight, a trucking company licensed by the Interstate Commerce Commission to truck freight between only Dayton and Detroit. At the time, the owners were struggling to get the ICC to license them for more routes. Fortunately, these licenses are no longer required, and the ICC has since been abolished, as has the CAB.
Indeed, the ICC found no defenders even among the consumer advocates in the panel discussion at the end of the video. In fact, Kathleen O’Reilly of the Consumer Federation of America argued for “elimination” of the ICC and other agencies that “have the major purpose of economically propping up a certain industry.” She then attempted to draw a distinction between those agencies and the “watchdog” agencies that she favors. But what prevents her watchdog agencies from also being captured by whatever industry they regulate? After all, when the ICC was created in the late 1800s, it too was intended to serve as a consumer watchdog.
Back when we lived in Washington, DC, we knew a guy who worked for the Consumer Product Safety Commission, regulating children’s toys. As part of his job, the taxpayers paid for this guy to attend the big toy convention in New York, where toy makers introduced their newest products. While in New York, representatives of the toy companies would wine and dine him at fancy restaurants. Do you believe the toy companies picked up the tab for this guy solely for the pleasure of his company? Or do you think maybe they did so to buy his favor? And if so, how do you suppose they got the idea that his favor might be for sale? The regulator gets treated to a lobster thermidor, and as a result, some kid shoots his eye out with a dangerous toy.
Well maybe, but not likely. Because fortunately, what protects the consumer is not government bureaucracy. What protects the consumer is competition among sellers.