Blowback and Creating a Constituency

E. Pendelton Herring noted in 1934 that, “Making political enemies was soon found to be an incident in the routine of (FTC) administration. The discharging of official duties meant interfering with business, and often ‘big business.’”[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][1] Herring’s observation applies with equal force today–the FTC is at risk of upsetting big business in its pursuit of protecting privacy.

Mark V. Nadel observed in 1971 that, “Given the new public concern with consumer protection the agencies (FTC and FDA) were surprisingly reticent in mobilizing that concern to their benefit. They failed to seize constituency-building opportunities…”[2] This is a challenge for the FTC. Unlike many other government agencies, the FTC lacks an industry that is heavily interested in its thriving.[3] Writing in the context of the Kidvid controversy, William Baer observed that the FTC “simply took on much more than its political base could support.”

In this, Baer identified a pathology that has plagued the Commission since 1919: at the behest of Congress, the FTC investigates a problem, it finds awful practices and campaigns against them. Meanwhile other members of Congress hear from constituents stung by the Commission’s activities, and instead of addressing the wrongs found by the agency, they attack the FTC. The meatpackers, insurance industry, and funeral industry all responded to Congressionally-requested investigations by attempting to decapitate the FTC.

In the privacy space, the EU-US Safe Harbor creates strong incentives for industry to be invested in the FTC. Companies that join the Safe Harbor are allowed to handle Europeans’ personal information without risking enforcement actions from all the European Union nations. Instead, the FTC handles enforcement of wrongdoing at the urging of EU member nations. If for some reason the FTC could not enforce Safe Harbor (because of an appropriations shutdown or adverse court decision), European Union nations could demand a right to directly enforce their laws against American companies. Thus although they may not realize it, services that control or process data internationally have a very strong stake in a functioning FTC.

Along the lines of Nadel and Baer’s critique, how else could the FTC strengthen itself structurally? How can it find industries vested in the FTC’s success, without becoming captured by those industries? Consider the 1990 recommendation of Thomas H. Stanton: 1) that the FTC focus on case-by-case enforcement, because the alternative of rulemaking has the effect of policing the most responsible while bad actors just ignore the rules; 2) that FTC leadership should court responsible industry by participating in business workshops and explain that the agency is concerned primarily with policing the minority of business wrongdoers; 3) that the FTC use its fact-finding powers to bring publicity to bad actors without using enforcing sticks.[4]

[1] E. Pendelton Herring, Politics, Personalities, and the Federal Trade Commission, I, 28(6) American Political Science Review 1016 (1934).

[2] The Politics of Consumer Protection 81-82 (1971).

[3] William J. Baer, At the Turning Point: The Commission in 1978, in Marketing and Advertising Regulation: The Federal Trade Commission in the 1990s (Patrick E. Murphy and William L. Wilkie, eds. (1990)(“…unlike such regulatory agencies as the Federal Communications Commission, the Interstate Commerce Commission, or the Food and Drug Administration, the Federal Trade Commission lacks a single industry with a strong, vested interest in its continued vitality. Thus, any significant agency law enforcement activity is likely to receive little support and to generate much controversy and criticism.”).

[4] Thomas H. Stanton, Comments on the Commission in 1978, in Marketing and Advertising Regulation: The Federal Trade Commission in the 1990s (Patrick E. Murphy and William L. Wilkie, eds. (1990).[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

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