Notes 8 1. U. S. President, Public Papers of the Presidents of the 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. U. S. Congress, Senate, Committee on Public Works, Compilation Office of Chief Counsel, EDA, Unofficial Reprint of the 13 C.F.R. 307.2, 307.3, 307.4, 307.5, 307.6, 307.13, - How to Apply," by Assistant Secretary Robert T. Hall, Report of the Committee on Appropriations, House of Representatives Report of the Committee on Appropriations, Senate on H.R. 12934 on Departments of State, Justice, and Commerce, the Judiciary and Related Agencies Appropriation Bill, 1979, 95th Cong., 2d session, July 28, 1978. Memorandum to John R. Delmore, Director, Office of Audits, Guidelines for EDA Funded University Centers for Technical Letter to All EDA University Center Directors, University Center 10 University Center -- New Reporting Requirements, June 1968. Notes con't 12. 13. 14. 15. 16. University Center Reporting Requirements, Effective April 1, EDA University Center Strategy for Fiscal Years 1978- Doctoral dissertation, "A Descriptive Study of the Area on February 21, 1977, by Glenn B. Fatzinger (hereafter Ibid., p. 89 and amended table for Fiscal Years 1975-1978. 17. Ibid., pp. 363-367; Memorandum to Secretary of Commerce Elliot R. Richardson, EDA University Center Program, from EDA Assistant Secretary John W. Eden, October 20, 1976; and Memorandum to EDA Assistant Secretary Robert T. Hall, EDA University Center Program, from I. M. Baill, Director, Office of Technical Assistance, February 11, 1977. 18. 19. Fatzinger, Doctoral Dissertation, pp. 368-376; and Fatzinger, Doctoral Dissertation, pp. 376-386. Mr. HIGHTOWER. Thank you, Dr. Westerlund, for being with us. and giving us the benefit of your experience. Mr. Alexander? Mr. ALEXANDER. Thank you very much, Mr. Chairman. I could engage Dr. Westerlund in a very long dialogue about economic development, but having had a good bit of experience myself in the subject, I don't see that it would be particularly productive at this time. He has made the record, and it stands for itself, and I can answer whatever questions I think the committee might need to have answered as we go along. Thank you very much. Mr. HIGHTOWER. Thank you, Dr. Westerlund. TUESDAY, APRIL 10, 1979. FEDERAL TRADE COMMISSION WITNESSES MICHAEL WEINSTOCK, MATTEL, INC. MARTY ABRAMS, MEGO TOYS DOUGLAS THOMSON, TOY MANUFACTURERS OF AMERICA Mr. HIGHTOWER. We would like, in the interest of time, to bring Mr. Michael Weinstock, Marty Abrams, and Douglas Thomson up together. Mr. Abrams, you have a prepared statement, and it will appear in full in the record, and we would be happy to hear from you in whatever order you choose, if you feel like making additional com ments. STATEMENT OF MR. WEINSTOCK Mr. WEINSTOCK. Mr. Hightower, thank you for giving Mattel the opportunity to present its views today. My name is Michael Weinstock. I am Assistant General Counsel of Mattel. We urge Congress to retrain the Federal Trade Commission's current rulemaking proceeding regarding the television advertising of toys to children by whatever budgetary or oversight means it sees fit. The proceeding is wasteful and encompasses proposed rules that are unconstitutional, economically injurious, thoroughly unnecessary, and in contravention of majority opinion. We have submitted to the members of this subcommittee copies of Mattel's Rulemaking Comment and Verbatim Statement filed in the FTC proceeding. We believe the comments and exhibits are directly responsive to the major concerns raised by Members of Congress. They include opinions by two of the leading constitutional law scholars in the U.S., Professors Laurence H. Tribe, of Harvard University, and Phillip B. Kurland, of the University of Chicago, establishing that the proposed ban on toy advertising represents an unconstitutional abridgment of freedom of speech. We include reports by Professor Robert L. Steiner, Adjunct Professor of Marketing at the University of Cincinnati, and consultant to the FTC, demonstrating that if presently all or virtually all television advertising of toys were prohibited, the level of retail pricing in the industry would advance in the range of 15-20 percent. At the industry's 1978 retail volume of around $4.8 billion, the consumer price penalty would be about $840 million annually. If the loss of funding for children's programming is factored in, the total annual inflationary cost of a ban on toy advertising on TV is estimated by Professor Steiner to be in the vicinity of $1 billion. We include a report by the Roper Organization, Inc., entitled "Changing Public Attitudes Toward Television and Other Mass Media 1959-76," showing that a large majority of adults ages 18 and over, including parents of young children, approve of commercials in children's programs. Finally, we include an explanation of the existing regulatory matrix of proscriptions governing advertising on television to children consisting of government rules and self-regulatory guidelines which, in combination, result in an atmosphere in which toy advertising to children can be fairly and truthfully presented. We believe these comments and exhibits present sufficient justification for dispassionate congressional intervention to prevent unwarranted regulation. More importantly, we implore Members of Congress, as trustees of the freedoms of the American people, to broaden their vision and appreciate the fundamental threat to ordered liberty that these proceedings represent. Professor Tribe stated it eloquently, and I quote: Viewed within its own four corners, then, the proposed ban on the advertising of toys on television, or any government-inspired action having a like effect, poses what appear to be insurmountable constitutional difficulties. Any such ban would violate the rights of children and parents alike in the name of protecting both, and would do so in a manner also violative of the First Amendment rights of those who manufacture toys for children. Inconsistent both with general First Amendment principles and with the doctrines specifically traceable to Virginia Board of Pharmacy, such a ban could not survive sustained legal challenge. But it would be a mistake to end the analysis here. For the most pernicious effects of the proposed ban would be felt well beyond the setting in which it was initially conceived. At least as dangerous as the ban itself is the form of argument that underlies it, and the sort of rationale that must be offered in its defense. First, especially since some parents obviously welcome the messages toy advertisers convey on television, the claim that such messages may be universally suppressed by government in order to meet the wishes of even a majority of parents, or to prevent all intra-family discord-whether by keeping children from nagging their parents or otherwise-reveals a disturbing conception of government as nursemaid and ultimately as family intruder, and comes dangerously close to embodying the vision that silence may be commanded in the name of universal harmony, a vision whose pursuit can only lead to "the unanimity of the graveyard." West Virginia Board of Education v. Barnette, 319 U.S. 624, 641 (1943). If toy advertisements may be banned because they might lead children to "lobby" their parents, may not depictions of wealth or of parental indulgence in situation comedies, or challenges to commercial values in documentaries, likewise be censored because they might cause unpleasant dinner-table conversations? We may hope that this sort of argument is but a makeweight in the case against children's toy commercials, but its very presence strikes a profoundly disquieting note. Even more disquieting is the argument that is surely central to the censor's case: the argument that commercials on television necessarily mislead when they operate in ways, and for reasons, of which a viewer is unaware. For this argument could not long be confined to toy advertisements, or to the broadcast medium, or to messages aimed at the young. Much of the material that persuades us and shapes our attitudes and expectations operates at levels of which we are never fully conscious at the time we encounter it, and in ways we do not fully comprehend until later, if ever. From the zestful couple frolicking in the cigarette ad to the loving family pictured next to the aspiring political candidate, from the purr of the car's engine to the warm glow of the fireside chat, appeals to fantasy and to unconscious identification lie at the core of communication. If the current effort to single out and suppress such appeals in the children's television context is not decisively rejected, no one should suppose that the censor's righteous zeal will abate. If the FTC staff is satisfied, others will not be. For neither the logical premises of this sort of censorship, nor the impulses that tend to drive it, can be easily cabined. To cede to government the authority to cleanse the airwaves of messages that even a majority deems inherently misleading and thus unfair or perceives as insufficiently uplifting is thus to take a long first stride towards thought control. It is only the safeguard of a required showing of real harm, and indeed of harm that more speech clearly could not avoid, which prevents current doctrines from leaving government with so deadly a degree of power over the contents of viewers' minds. It should not be surprising that such power is claimed first by the wellmeaning, and in an appealing anti-commercial cause. For, as Justice Brandeis reminded us half a century ago, "[e]xperience should teach us to be most on guard to protect liberty when the Government's purposes are beneficent. Men born to freedom are naturally alert to repel invasion of their liberty by evil-minded rulers. The greatest dangers to liberty lurk in insidious encroachments by men of zeal, wellmeaning but without understanding.” Olmstead v. United States, 277 U.S. 438, 479 (1928) (dissenting opinion) (footnote omitted). And it should be no more surprising that such power is claimed, in the first instance, to "protect" our children. But even they too have rights. And, given the rationale that would have to underlie the ban at issue here-the rationale that even ideas and information inducing no harmful action may be stamped out by a paternalistic government as inherently deceptive or intrinsically worthless-given that rationale, might we not all be viewed as children? Mr. HIGHTOWER. Thank you, Mr. Weinstock. STATEMENT OF MR. AbramS Mr. ABRAMS. I must tell you, sitting here, listening to Mr. Weinstock talk, that is the first time I agree with Mattel heartily. Mr. HIGHTOWER. I have always heard that the difference between an adult and child is that adults' toys are more expensive, and I can understand what you are saying about the FTC proceedings if it will make our toys more expensive. Mr. ABRAMS. I am going to paraphrase my remarks because of the late hour. When the FTC was originally created under Woodrow Wilson, I was under the assumption that it was to foster competition, not to restrict it. I am going to focus my remarks in terms of how that proposed ruling would affect a company such as ours, because we are a newcomer to the toy industry, and I say that candidly. Even though our business was started in 1954, in the 16 years that preceded that, to 1975, we only built the company to about $72 or $8 million worth of business. And since 1971, through calendar 1978, we built that to about $110 million worth of business, and it was really done effectively through the medium of television. How that effectiveness worked really was that the power does not rest in Washington, or rest in Chicago at Sears Tower, or Detroit with the K-Mart Corporation, but the effectiveness of the power of the purchase is at the buying level. We did not sell the first product to Sears, Roebuck until 1971, and the reason for that is that they did not deem it necessary to buy products from us. The moment we were allowed to bypass that buyer in Chicago, at that moment in time their doors opened up to us and said you have 43-900 O 79 21 |