Multinational Monitor Editors blog

The chair of the Federal Trade Commission (FTC), Deborah Platt Majoras, is leaving her job. She’s going to become vice president and general counsel for Procter & Gamble (P&G).

Should it raise eyebrows for the head of the leading U.S. consumer protection agency to leave and take a job with the largest consumer products company?

Not in Washington, D.C.

Asked about the propriety of the move, FTC spokesperson Nancy Judy explains that Majoras will need to abide by a year-long “cooling off” period. She’ll never be able to represent P&G before the Commission on matters on which she worked while at the FTC. And once she announced that she would be taking a job with P&G, she removed herself from any matters that might affect the company.

Shira Mintz, who is the assistant general counsel for ethics at the FTC, says that Majoras is “extremely conscientious” about ethical matters, and that everything she has done is above board.

OK, but is there any concern about appearances here? Or is this just how things work?

“It is how things work,” says Mintz. “The nature of the business is the revolving door.”

Wow.

“You get extremely qualified people to come into government, and then they go back into the real world,” says Mintz. “Real world” means well-paying corporate work.

Majoras came to the FTC from the Bush Justice Department. Prior to that, she worked for the corporate law firm Jones Day. Jones Day claims more than half of the Fortune 500, including P&G, as clients.

Procter & Gamble is the largest consumer goods company in the United States (not counting Altria/Philip Morris, which is breaking itself apart later this week). It makes Old Spice deodorant, Charmin toilet paper, Pampers diapers, Duracell batteries, Ivory soap, CoverGirl cosmetics, Dawn dish washing soap, Clairol hair dye, Pepto-Bismol, Tide laundry detergent, Crest toothpaste, Bounty paper towels, Gillette shaving products, Folgers coffee and Pringles potato chips, among many other products.

The FTC is an independent federal agency with authority over both consumer protection and competition policy. Given the breadth of the FTC’s jurisdiction and the breadth of P&G’s product line, what the FTC does — and does not do — is of potentially enormous importance to P&G.

Under the Bush administration, including the period since 2004, when Majoras became chair, the FTC hasn’t done much.

Consider just a few of the issues that touch on Procter & Gamble’s interests:

+ P&G is the leading company involved in “buzz marketing” — employing regular people to talk up company products, often in exchange for free merchandise. P&G says it has 250,000 teens working for its Tremor division. P&G sends them stuff, and they are supposed to talk to friends about the products.

The head of the Tremor division told USA Today in 2005, “If we’ve done our work correctly, they talk to their friends about” the gifts. Tremor doesn’t tell members to say they are part of Tremor, he explained, “because you never tell a [panelist] what to say.”

An organization with which I work, Commercial Alert, petitioned the FTC in 2005 to investigate whether buzz marketing operations violate federal rules on deceptive advertising. The basic FTC rule is that paid marketers must disclose that they are paid.

The Commercial Alert petition asked the FTC to review evidence that “companies are perpetrating large-scale deception upon consumers by deploying buzz marketers who fail to disclose that they have been enlisted to promote products. This failure to disclose is fundamentally fraudulent and misleading.”

The petition specifically focused on P&G, arguing that “the Commission should carefully examine the targeting of minors by buzz marketing, because children and teenagers tend to be more impressionable and easy to deceive. The Commission should do this, at a minimum, by issuing subpoenas to executives at Proctor & Gamble’s Tremor and other buzz marketers that target children and teenagers, to determine whether their endorsers are disclosing that they are paid marketers.”

A year later, the FTC responded. The Commission agreed with the thrust of Commercial Alert’s argument: “In some word of mouth marketing contexts, it would appear that consumers may reasonably give more weight to statements that sponsored consumers make about their opinions or experience with a product based on their assumed independence from the marketer.” But then the Commission declined to undertake an investigation or rule-making, saying it would consider matters only a case-by-case basis. The P&G case — involving a quarter of a million teens who are not instructed to disclose their relationship to the company — apparently was not noteworthy enough.

Said Gary Ruskin, Commercial Alert’s executive director at the time, “Instead of acting like a watchdog, the Commission is more like a docile lapdog nestled in the lap of its corporate masters.”

+ A major emerging technology for consumer products is RFID (Radio Frequency Identification) systems. These systems, involving the attachment of tiny, trackable electronic chips to products (or people, pets and cars), offer the possibility of precise inventory control and management. They also portend some major privacy concerns.

The Electronic Privacy Information Center (EPIC) warns of the possibility of “an Orwellian world where law enforcement officials and nosy retailers could read the contents of a handbag — perhaps without a person’s knowledge — simply by installing RFID readers nearby.” There are concerns about retailers and manufacturers being able to track consumers once they leave the store.

These issues are being taken seriously in Europe. There, says EPIC executive director Marc Rotenberg, “the European Commission has undertaken an extensive public consultation and has recently held several high-level events.” The European Commission is now soliciting comments on proposed privacy standards for RFID technologies.

In the United States, in 2004, the Federal Trade Commission held a workshop on RFID issues. P&G presented at the workshop, detailing the company’s privacy policies and how it would ensure that RFID technologies were not abused. EPIC also presented.

“EPIC submitted very detailed comments with clear recommendations,” says Rotenberg. “No action since.”

+ Childhood obesity rates in the United States have more than tripled over the past four decades. The childhood rate of type 2 diabetes, once known as “adult-onset” diabetes, has more than doubled in the past decade. No serious person believes skyrocketing childhood obesity rates are unrelated to the onslaught of junk food marketing targeting kids. The staid Institute of Medicine finds, “food and beverage marketing practices geared to children and youth are out of balance with healthful diets and contribute to an environment that puts their health at risk.”

It has been impossible for the FTC to completely ignore this issue. But the FTC has doubly worked to protect the junk food marketers. It emphasized that many factors besides marketing are driving the obesity epidemic — which is true, but a way to divert attention from the agency’s regulatory role. And, as Majoras said in 2007, “the focus of the FTC/HHS [Department of Health and Human Services] joint initiative on childhood obesity has been on marketing and industry self-regulation.”

In recent years, facing the threat of litigation, federal legislation, state and local regulation, and citizen pressure campaigns — just about everything but serious FTC action — the junk food companies have adopted some modestly helpful marketing guidelines to curb some of their most aggressive practices. But the guidelines remain voluntary and are non-enforceable. Although it has held some interesting meetings, the FTC has been absent on the regulatory front.

These are just three among many examples. Other FTC policy issues implicating Procter & Gamble include online marketing to kids, product placement on TV, and mergers (the FTC in 2005 approved a controversial, $57 billion P&G takeover of Gillette, a decision from which Majoras recused herself.) There are many others.

There’s no reason to suspect Majoras is violating any laws in going to work for Procter & Gamble, or that she will in the future. There is no reason to believe she did favors for P&G in anticipation of a job with the company. From her new, high post, she personally may never take up a matter before the FTC.

But the deep corruption inside the beltway is not the illegal, Jack-Abramoff stuff. The real corrupting influences are the things that are legal. The things that Washington insiders view as just “how things work.”

Note: I serve as managing director for Commercial Alert.

As part of a national day of action, hundreds of people marched in downtown Washington, D.C. this morning to protest five years of the Iraq war and occupation. They blocked traffic and sought to highlight the Washington institutions that have enabled the long-running, criminal and disastrous war.

A group of protesters gathered outside of the American Petroleum Institute (API), for what was called a celebration of an expected announcement that API will change its name to the Alternative Power Institute.

Said a mocking release from the protesters: “Its first act as the new API is anticipated to be the notification of every member of the United States House and Senate whom it has legally bribed in recent years that, in light of API’s just announced transition to promotion of renewable energy technologies, there is no further requirement to fund the occupation of Iraq.”

This is parody with a purpose.

What if in fact the United States was no longer addicted to oil? Can anyone seriously believe the United States would have invaded Iraq? Alan Greenspan among others has acknowledged that guaranteeing the Middle Eastern supply of oil was the underlying rationale for the war.

What if in fact the oil industry — and that of other fossil fuel industries — ceded its political power (or if that power was taken away)?

Suddenly, the transition to a sustainable energy future would be much more achievable.

The United States, and the world, needs a massive infusion of resources into energy efficiency, renewable energy technology deployment, and research into new efficiency and renewable technologies.

We face financial and technological challenges of an enormous scale.

But the threshold problem is political. Governments are not doing what they can — and that which scientists say must be done immediately — because of the balance of power. Too much power for Big Oil, the auto companies, the utilities and coal companies. Too little power mobilized by the people in order to save the planet.

Since publication of Ron Suskind’s 2004 New York Times magazine article, it has been commonplace to ridicule the Bush administration for not living in the “reality-based” world. I confess to having engaged in this guilty pleasure myself.

But in fact the famous Bush aide quote mocking “the reality-based community” deserves at least as much emulation as ridicule. It wasn’t a comment about faith versus reality, it was a statement of a political philosophy and commitment: not to be constrained by apparent political or other restraints, but to act decisively to make history. There is a lesson to be learned here.

The aide said that guys like me were ”in what we call the reality-based community,” which he defined as people who ”believe that solutions emerge from your judicious study of discernible reality.” I nodded and murmured something about enlightenment principles and empiricism. He cut me off. ”That’s not the way the world really works anymore,” he continued. ”We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality — judiciously, as you will — we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors … and you, all of you, will be left to just study what we do.”

OK, there is a degree to which this quote suggests that maybe even the laws of nature can be overcome with enough willpower, but essentially the Bush adviser was saying that the administration’s mission is not to accept reality, but to make it. There is something to learned here.

One lesson that can be drawn from the fifth anniversary of the shameful Iraq war, as well as from the recent Federal Reserve actions to uphold the financial system, is that the United States can find the money to do things it believes important. There are real fiscal limits, but the spectacular wealth of the United States gives it the power to find astounding resources for top priorities.

The federal government has spent $700 billion to kill hundreds of thousands of people in Iraq, on a mission leading to the deaths of 4,000 U.S. soldiers and the maiming of thousands more. The Federal Reserve has conjured $200 billion to keep Wall Street functioning.

Can there be any doubt that the United States could, tomorrow, begin spending $100 billion a year — or much more — to address global warming?

We can only hope that today’s demonstration at API is an early, small step, taking us to alternative power — a new political balance of power and a new and urgently felt commitment to alternative energy investment and deployment.

There have been few experiments as reckless, overhyped and with as little potential upside as the rapid rollout of genetically modified crops.

Last month, the International Service for the Acquisition of Agri-biotech Applications (ISAAA), a pro-biotech nonprofit, released a report highlighting the proliferation of genetically modified crops. According to ISAAA, biotech crop area grew 12 percent, or 12.3 million hectares, to reach 114.3 million hectares in 2007, the second highest area increase in the past five years.

For the biotech backers, this is cause to celebrate. They claim that biotech helps farmers. They say it promises to reduce hunger and poverty in developing countries. “If we are to achieve the Millennium Development Goals (MDGs) of cutting hunger and poverty in half by 2015,” says Clive James, ISAAA founder and the author the just-released report, “biotech crops must play an even bigger role in the next decade.”

In fact, existing genetically modified crops are hurting small farmers and failing to deliver increased food supply — and posing enormous, largely unknown risks to people and the planet.

For all of the industry hype around biotech products, virtually all planted genetically modified seed is for only four products — soy, corn, cotton and canola — with just two engineered traits. Most of the crops are engineered to be resistant to glyphosate, an herbicide sold by Monsanto under the brand-name Round-up (these biotech seeds are known as RoundUp-Ready). Others are engineered to include a naturally occurring pesticide, Bt.

Most of the genetically modified crops in developing countries are soy, says Bill Freese, science policy analyst at the Center for Food Safety and co-author of “Who Benefits from GM Crops,” a report issued at the same time as ISAAA’s release. These crops are exported to rich countries, primarily as animal feed. They do absolutely nothing to supply food to the hungry.

As used in developing countries, biotech crops are shifting power away from small, poor farmers desperately trying to eke out livelihoods and maintain their land tenure.

Glyphosate-resistance is supposed to enable earlier and less frequent spraying, but, concludes “Who Benefits from GM Crops,” these biotech seeds “allow farmers to spray a particular herbicide more frequently and indiscriminately without fear of damaging the crop.” This requires expenditures beyond the means of small farmers — but reduces labor costs, a major benefit for industrial farms.

ISAAA contends that Bt planting in India and China has substantially reduced insecticide spraying, which it advances as the primary benefit of biotech crops.

Bt crops may offer initial reductions in required spraying, says Freese, but Bt is only effective against some pests, meaning farmers may have to use pesticides to prevent other insects from eating their crops. Focusing on a district in Punjab, “Who Benefits from GM Crops” shows how secondary pest problems have offset whatever gains Bt crops might offer.

Freese also notes that evidence is starting to come in to support longstanding fears that genetically engineering the Bt trait into crops would give rise to Bt-resistant pests.

The biotech seeds are themselves expensive, and must be purchased anew every year. Industry leader Monsanto is infamous for suing farmers for the age-old practice of saving seeds, and holds that it is illegal for farmers even to save genetically engineered seeds that have blown onto their fields from neighboring farms. “That has nothing to do with feeding the hungry,” or helping the poorest of the poor, says Hope Shand, research director for the ETC Group, an ardent biotech opponent. It is, to say the least, not exactly a farmer-friendly approach.

Although the industry and its allies tout the benefits that biotech may yield someday for the poor, “we have yet to see genetically modified food that is cheaper, more nutritious or tastes better,” says Shand. “Biotech seeds have not been shown to be scientifically or socially useful,” although they have been useful for the profit-driven interests of Monsanto, she says.

Freese notes that the industry has been promising gains for the poor for a decade and a half — but hasn’t delivered. Products in the pipeline won’t change that, he says, with the industry focused on introducing new herbicide resistant seeds.

The evidence on yields for the biotech crops is ambiguous, but there is good reason to believe yields have actually dropped. ISAAA’s Clive James says that Bt crops in India and China have improved yields somewhat. “Who Benefits from GM Crops” carefully reviews this claim, and offers a convincing rebuttal. The report emphasizes the multiple factors that affect yield, and notes that Bt and Roundup-Ready seeds alike are not engineered to improve yield per se, just to protect against certain predators or for resistance to herbicide spraying.

Beyond the social disaster of contributing to land concentration and displacement of small farmers, a range of serious ecological and sustainability problems with biotech crops is already emerging — even though the biotech crop experiment remains quite new.

Strong evidence of pesticide resistance is rapidly accumulating, details “Who Benefits from GM Crops,” meaning that farmers will have to spray more and more chemicals to less and less effect. Pesticide use is rising rapidly in biotech-heavy countries. In the heaviest user of biotech seeds — the United States, which has half of all biotech seed planting — glyphosate-resistant weeds are proliferating. Glyphosate use in the United States rose by 15 times from 1994 to 2005, according to “Who Benefits from GM Crops,” and use of other and more toxic herbicides is rapidly rising. The U.S. experience likely foreshadows what is to come for other countries more recently adopting biotech crops.

Seed diversity is dropping, as Monsanto and its allies aim to eliminate seed saving, and development of new crop varieties is slowing. Contamination from neighboring fields using genetically modified seeds can destroy farmers’ ability to maintain biotech-free crops. Reliance on a narrow range of seed varieties makes the food system very vulnerable, especially because of the visible problems with the biotech seeds now in such widespread use.

For all the uncertainties about the long-term effects of biotech crops and food, one might imagine that there were huge, identifiable short-term benefits. But one would be wrong.

Instead, a narrowly based industry has managed to impose a risky technology with short-term negatives and potentially dramatic downsides.

But while it is true, as ISAAA happily reports, that biotech planting is rapidly growing, it remains heavily concentrated in just a few countries: the United States, Argentina, Brazil, Canada, India and China.

Europe and most of the developing world continue to resist Monsanto’s seed imperialism. The industry and its allies decry this stand as a senseless response to fear-mongering. It actually reflects a rational assessment of demonstrated costs and benefits — and an appreciation for real but incalculable risks of toying with the very nature of nature.