A Tale of Two Movements: Consumer Protection in the U.S. from 1969 to 2010
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University of Pennsylvania ScholarlyCommons CUREJ - College Undergraduate Research Electronic Journal College of Arts and Sciences 5-2-2013 A Tale of Two Movements: Consumer Protection in the U.S. from 1969 to 2010 Diya Berger [email protected] Follow this and additional works at: https://repository.upenn.edu/curej Recommended Citation Berger, Diya, "A Tale of Two Movements: Consumer Protection in the U.S. from 1969 to 2010" 02 May 2013. CUREJ: College Undergraduate Research Electronic Journal, University of Pennsylvania, https://repository.upenn.edu/curej/168. This paper is posted at ScholarlyCommons. https://repository.upenn.edu/curej/168 For more information, please contact [email protected]. A Tale of Two Movements: Consumer Protection in the U.S. from 1969 to 2010 Abstract The passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and subsequent establishment of the Consumer Financial Protection Bureau marked an unexpected victory for consumers across America at the expense of the well-financed business lobby. Although classical social scientists, such as Mancur Olson, claim that consumer movements should fail to emerge due to the difficulty of providing public goods for large constituencies, consumer victories – like the passage of Dodd-Frank— have occurred in waves throughout the last century. In conducting this study, I thus sought to answer why it is that some consumer movements are able to push through consumer legislation while others fail. In order to answer this question, I conducted two cases studies, comparing Ralph Nader’s failed attempt to establish a Consumer Protection Agency in the 1970s with Elizabeth Warren’s successful push to create Consumer Financial Protection Bureau in 2010. Ultimately my research demonstrates that three variables are critical to the passage of consumer legislation: 1) the opening of a policy window via key events, 2) the existence of favorable structural conditions in the policy making process, and 3) the ability of political entrepreneurs to utilize successful legislative and framing strategies that help them advance their agenda within the broader environmental context. Based upon these determinants, I suggest that a policy window has been opened for the consumer movement following the 2008 financial crisis due ot an ideological shift from Friedman to Keynes which primed the current environment, the support of a Progressive Democratic President, and strong public support for consumer protection. Keywords Consumer Protection, humanities, Political Science, John Lapinski, Lapinski, John This article is available at ScholarlyCommons: https://repository.upenn.edu/curej/168 A Tale of Two Movements: Consumer Protection in the U.S. from 1969-2010 Diya Berger Advised by Professor John Lapinski A thesis submitted in partial fulfillment of the requirement for the Degree of Bachelor of Arts in Political Science with Distinction University of Pennsylvania Philadelphia, PA April 1, 2013 Acknowledgements First and foremost, I would like to thank my parents, Thomas and Sucharita, for being a constant source of support. Despite the international phone bills, they never wavered in their willingness to help me throughout this endeavor. I would like to thank Professor Lapinski for helping me hone in on my research question and develop my thesis. Finally, I would like to thank Dr. Doherty-Sil for her invaluable research seminar and constant encouragement throughout the thesis process. 2 Abstract The passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and subsequent establishment of the Consumer Financial Protection Bureau marked an unexpected victory for consumers across America at the expense of the well-financed business lobby. Although classical social scientists, such as Mancur Olson, claim that consumer movements should fail to emerge due to the difficulty of providing public goods for large constituencies, consumer victories – like the passage of Dodd-Frank— have occurred in waves throughout the last century. In conducting this study, I thus sought to answer why it is that some consumer movements are able to push through consumer legislation while others fail. In order to answer this question, I conducted two cases studies, comparing Ralph Nader’s failed attempt to establish a Consumer Protection Agency in the 1970s with Elizabeth Warren’s successful push to create Consumer Financial Protection Bureau in 2010. Ultimately my research demonstrates that three variables are critical to the passage of consumer legislation: 1) the opening of a policy window via key events, 2) the existence of favorable structural conditions in the policy making process, and 3) the ability of political entrepreneurs to utilize successful legislative and framing strategies that help them advance their agenda within the broader environmental context. Based upon these determinants, I suggest that a policy window has been opened for the consumer movement following the 2008 financial crisis due to an ideological shift from Friedman to Keynes which primed the current environment, the support of a Progressive Democratic President, and strong public support for consumer protection. 3 Table of Contents Part I: Introduction ...........................................................................................................6 Part II: Setting the Stage and Literature Review ........................................................11 The Definition and Origins of Social Movements .........................................................11 Consumer Movements in Theory and Practice ..............................................................15 A Brief History of the U.S. Consumer Movement ........................................................17 Waves of Consumerism Explained ................................................................................22 Determinants of Success in the Consumer Movement ..................................................23 Qualifying Mayer’s Environmental Factors via Pivotal Politics ...................................24 Frameworks to Analyze the Consumer Movement .......................................................26 A Model of Consumer Movements................................................................................27 Part III: Case Studies ......................................................................................................30 INTRODUCTION AND METHODOLOGY .................................................................................30 Note on the Definition of Success .................................................................................32 CASE I: PUSHING FOR A CPA BUT FALLING SHORT .............................................................35 From Keynes to Friedman: An Ideological Shift ...........................................................42 Congressional Composition ...........................................................................................46 Presidential Support .......................................................................................................49 Deregulation Under Nixon .....................................................................................50 Deregulation Under Ford .......................................................................................52 Deregulation Under Carter .....................................................................................55 Summary of Environmental Factors ..............................................................................60 Tactical Factors in CPA Formation ..............................................................................54 The Rise of Neoconservative Rhetoric ..................................................................61 Tactical Errors in Political Entrepreneurship: The Case of Ralph Nader ..............64 CASE II: THE FORMATION OF THE CFPB ............................................................................71 Legislative History of Title X ........................................................................................73 The Resurgence of Keynesianism Post 2008 .................................................................76 Keynesian Centralization and the Obama Administration.............................................83 Bicameral Politics: Composition of the House and Senate ...........................................85 Polarized Party Debates on the CFPB ...................................................................87 The CFPB: Conclusion Regarding Environmental Factors ...........................................93 A Tactical Utilization of Anti-Wall Street Sentiment ....................................................94 The Lack of A Framing Opportunity: The Business Lobby ..................................99 The Role of Political Entrepreneurship: Elizabeth Warren .................................102 4 Part IV: Conclusion .......................................................................................................107 A Tale of Two Movements ..........................................................................................107 Suggestions for Further Research ................................................................................114 Practical Implications of My Model ............................................................................115 Part V: Appendix ...........................................................................................................117 Appendix