Washington as Mary Poppins: the role's changing
Washington — Washington's role as an economic nanny is changing. The Reagan administration believes business shouldn't hide from marauding imports behind government's skirts. Likewise, consumers shouldn't count on so much protection from built-in safety factors such as labeling requirements. Having someone to run to is all well and good, the White House says, but in the long run you'll have more by learning to fend for yourself.
But where's the line between coddling and caring? How much help can the government afford? Those questions lie behind almost every argument about economic policy in Washington today, from deficit squabbles to regulatory dust-ups. To answer them, it's necessary to hang a dollar value on risk. That's hard - a little bit like pricing a sunset.
Several little government-as-nanny issues surfaced on Capitol Hill the other day. They're relatively small now, but they will probably grow. And they show how difficult it is for any administration to convert ideology into law. Leaky import shelter for Detroit
Sen. John C. Danforth (R) of Missouri asks the official about the Japanese auto import restrictions. Were they working?
''It appears, overall, that they haven't worked out too well,'' admits David R. Macdonald, deputy US trade representative.
Eight TV cameras swing back and forth, senator to witness, as if they are watching a tennis match. The press table is full of foreign journalists. Next to me, a Japanese reporter from NHK radio flashes a tape recorder with a rising-sun sticker.
President Reagan didn't really want the restrictions in the first place; they aren't exactly a shining example of free trade. But his hand was forced by Congress, which threatened to legislate the same thing. Mr. Danforth (who drives a Mercedes) introduced one of the bills. He was ''not willing'' to do it, he says. Who made him? The American public, apparently.
''The American people can put up with this only so long,'' says Sen. Charles E. Grassley of Iowa. ''Then there's going to be retaliation. That's what we want to avoid.''
Technically speaking, the restrictions are working very well. The Japanese are not exceeding their first-year limit of 1,680,000 units. But those limits were set when the total auto market was expected to be 10 million units. In fact , US auto dealers will move closer to 8.5 million cars. So foreign cars will have about the same share of the US market this year: 26.5 percent.
The government's attempt to shelter the domestic auto industry, it turns out, was directed only toward the import problem. But weakness in the economy, consumer price resistance, failure to modernize: These auto industry problems made the import restrictions less effective. The hearing witnesses (Ambassador MacDonald and a pair of Commerce Department officials) say as much in their testimony. But they are not gathered before this gaggle of senators to criticize Detroit. Rather, they skip right on to more international finger-pointing.
The auto trade situation is ''symptomatic'' of a larger problem, says Lionel Olmer, Commerce undersecretary for international trade. That problem is ''the enormous US trade imbalance with Japan, which this year will exceed $15 billion, and unless present trends are changed could reach as high as $50 billion by 1990 .''
''The fundamental reason for Japan's surplus,'' Mr. Olmer says, ''is a profound inequality in our access to the Japanese economy.'' The Japanese, he claims, have a ''pervasive bias against imports at virtually every level of private and government decisionmaking.''
What might the United States do? Olmer doesn't say. Earlier this month, Japanese Prime Minister Zenko Suzuki shuffled his Cabinet to help deal with this rising chorus of trade complaints. But Japan will reportedly still reject an anticipated US demand for a further reduction in auto shipments.
So far, restrictions haven't helped anyone. And the trade deficit just sits there, chomping up dollars and getting bigger by the day. In its heart, the Reagan administration wants to deal with the monster in a free market, but the auto issue has shown how difficult that can be.
Sen. Bob Dole, the straight-backed Republican from Kansas, sums it up in an aside: ''It's a political problem now.'' The auto restrictions are not working as well as hoped. But if America thinks its good nature is being trod upon, the federal government will come under more political pressure to take tougher action. Advertising and the burden of proof
Protecting US industry from overseas predators is an issue with clear-cut sides. Protecting US consumers from Madison Avenue is a muddier problem. Do consumers have the sense to sort out patently absurd advertising from slickly presented facts? Should a company be able to prove every word in its ads?
James Miller III, new head of the Federal Trade Commission, maintains that FTC requirements that advertisers substantiate all their claims are too rigid. He believes industry self-regulation may be just as effective and far cheaper. This attitude, of course, causes consumer advocates to leap over their desks in haste to put out a denunciatory press release.
Sen. Dale Bumpers (D) of Arkansas, who is folksy enough to make Jimmy Stewart look sophisticated, faces the large, drawling Mr. Miller. Will advertisers be as careful about their claims? ''Isn't advertising, under the best of circumstances , misleading?'' the senator asks with a flourish.
Miller, flatly: ''No.''
Senator Bumpers offers to bring in ads of astounding duplicity that run every day. ''People would buy Post Toasties if they were told it cures baldness,'' he says. ''I'm more concerned about your attitude than about what you're saying.''
Miller is an economist in a post that is traditionally held by a lawyer. He has promised to give the FTC's Bureau of Economic Analysis a larger voice in policy formation.
Is it cost-effective to order studies to prove that whiter wash really is whiter? Miller believes most corporations would do it anyway.
''Cost-effective'' was Miller's watchword at Office of Management and Budget, where he was head of regulatory reform. It is the phrase at the heart of the Reagan administration's attitude toward government-as-nanny: Everyone is better off in the long run with less regulation, because costs will be lower and goods more numerous. It is an assumption that seems to shrewdly match the public mood.
But those consumer advocates are worried. ''We're kidding ourselves if we think government can develop guidelines in this area,'' a Democratic congressional source said when asked about the cost-benefit issue. ''I don't envy their task.''