Fighting the Regulatory Fiefdoms

For nearly seven months, the Ford Administration has been calling for a revamping of the nation's inefficient federal regulatory system. Its argument is that freer markets and increased competition could lead to lower prices or better service in more than half a dozen heavily supervised industries, including airlines, railroads, trucking, natural gas, banks and utilities. White House free-marketeers have lambasted such alphabet agencies as the CAB, ice and FPC for acting as guardians of the businesses they are supposed to regulate. They have urged the creation of a national commission on regulatory reform, a sweeping proposal that has so far won little support in Congress and, predictably, even less from the agencies themselves. Undeterred, the Administration is now plugging away at a more modest program of regulatory reforms and making slow but discernible progress.

In a speech before the U.S. Chamber of Commerce last week, President Ford assailed regulations that may be adding "billions of unnecessary dollars to business and consumer costs every year" and voiced support for pending legislation that would ease the inflationary impact. Among Administration-backed proposals that now seem likely to get attention from Congress:

P: A bill that would allow railroads to adjust their rates up or down by as much as 40% without ICC approval. If railroads are given this authority, some might cut rates, but probably by much less than 40%.

P: Legislation that would give airlines and truckers less governmental protection against competition from new firms entering their industries, plus inducements to merge for greater efficiency and permission to alter some rates without CAB or ice approval.

-- Revision of the 39-year-old Rob-inson-Patman Act, which prevents manufacturers from giving price discounts to large retailers unless they can prove them to be economically justified and sets standards of proof that are almost impossible to meet.

P: Repeal of two federal statutes that have enabled 36 states to enact misnamed Fair Trade laws. These laws permit manufacturers to set minimum retail prices on nationally advertised merchandise; they prevent storekeepers from discounting prices on products ranging from bow ties to TV sets. Sweeping such laws away would save consumers $2.1 billion annually, estimates Republican Senator Edward Brooke of Massachusetts, chief sponsor of the federal repeal bill.

Easiest Battle. Prospects for repeal of Fair Trade laws are bright: some states are moving toward repeal on their own. A far tougher fight may have to be waged against alphabet agencies that have become highly independent fiefdoms. So far, White House strategy has been 1) to urge these bureaucracies to weigh the inflationary consequences of their decisions and 2) to maneuver for greater price competition within the existing rules rather than press for outright deregulation of entire industries. Later this spring, Ford plans to preach price-consciousness to the heads of the ICC, CAB, FCC, FPC, FTC, SEC, FMC, NRC (Nuclear Regulatory Commission), CFTC (Commodity Futures Trading Commission) and the CPSC (Consumer Product Safety Commission).

Unfortunately, Ford has coupled these worthwhile campaigns with open opposition to creation of a federal consumer-protection agency. His theory is that current bureaucratic excesses cannot be cured by forming yet another bureaucracy. Even so, the proposed agency for consumer advocacy stands a good chance of being set up by Congress in 1975, after five years of debate. One reason: it could lobby for the consumers' interest before the very regulatory agencies that the White House rightly accuses of neglecting that interest.

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