Senator NELSON. We are pleased to have Dr. Till with us this morning. She is well remembered for her especially important work as a member of Senator Kefauver's staff in the Antitrust Subcommittee of the Senate Judiciary Committee several years ago.

Mr. NADER. Mr. Chairman, I want to thank you for the opportunity to appear at what I believe to be one of the most important inquiries ever initiated by any committee of Congress.

"Corporate secrecy" is not merely an aspect of the power of giant corporations. It is the first and usually decisive obstacle to knowledge of and response to the abuses, illegalities, and injustices which corporations heap upon citizens, governments, and environments. Without the ability to deny to the government, the small businessman, and the ordinary citizen literally every kind and form of information about their activities, large business enterprises simply could not dominateas they too often do our economic and political life. For control of the process of information is control of the process of policy.

Government, unfortunately, has miserably failed to play any significant role in redressing the information imbalance, which I shall begin to document today.

On the contrary, all branches of Government--the Congress no less than the executive-have too often played the role of the willing, if sometimes reluctant, servant in the enterprise of making business secrecy the rule rather than the exception.

Senator NELSON. Do you at any stage in your statement address yourself to the question of why governments have failed in this respect?

Mr. NADER. It is the same question as to why they haven't curbed corporate power in a policy sense, such as antitrust or regulatory activity. The two are intertwined. In a very real way, business secrecy is about as efficiently protected by corporations as any institutional secrecy in our country. In fact, we know more in public about the CIA and the national security agencies than is known about the internal workings and activities and information of General Motors, Standard Oil, International Telephone & Telegraph, and so on. They know very well that if they disclose more information, they have to share more power. It is an axiom of democratic control that if the audience for a particular set of information, whether it is pollution information or consumer information or financial information, emanating from corporations, is expanded, then the audience for sharing in the decisionmaking process is expanded as well.

Both the executive and legislative branches of the Federal Government have, I think, succumbed to the pressure by corporations that if the information flow can be cut off, then they don't have to worry about the policy change.

In the course of my remarks, I shall touch upon most, if not all, of the "16 major questions" which the staff of this subcommittee has prepared as a framework for these hearings, but I shall focus especially on the types of secrecy which have created significant problems for Government agencies, for legislators, and for citizens, and present a number of specific examples for the serious conditions resulting from secrecy in various areas.

In addition, I have a number of recommendations which I would like to describe briefly.

In the last few years, the Congress, some members of the press, and increasing numbers of citizens have been probing the multiple impacts of corporate behavior, but none have taken a comprehensive look at one recurrent theme running throughout these injustices: That the citizen and his Government could have been alerted to these problems earlier and could have had a better opportunity to deal with them if they had a right to know. (See exhibit 12.)

In fact, the right to know, as a phrase, is almost exclusively directed toward Government information. It should be increasingly directed toward corporate-held information.

Corporate secrecy-often enhanced and protected by Government secrecy is a sine qua non for the gestation and proliferation of corporate abuses.

Senator NELSON. When you say public problems could have been better dealt with if the public had a right to know, I assume there is no doubt in your mind about the right of the public to know about the activities of giant corporations. Is there?

Mr. NADER. No, except that legally they don't have the right to know.

The challenge to this subcommittee is this: It must relentlessly explore the types of information that the public has been denied by corporations and a willing Government, and it must critically examine every mechanism-in our law and in our public and private bureaucracies for impeding or blocking the flow of this information. You must seek to define the types of information that ought to be made available regularly and systematically-rather than episodically—and to develop principles for determining where and when to strike the balance between the public's right to know and the corporate interest in confidentiality. (See exhibit 2, app. IV.)

Senator NELSON. I assume that certainly there should be a right to know as much about the large corporation and the conglomerate as we do know about the manufacturer of single items. Is that the position taken in your statement? We did not get the statement until this morning.

Mr. NADER. Yes. In fact, that is a very important point in redressing the competitive disadvantage which many smaller, single-line businesses have when they are up against conglomerate-type corporations where the product lines are not disclosed, even in general terms.

The first area which I would like to discuss-and I will submit the entire statement for the record rather than read it in detail

Senator NELSON. The statement will be printed in full in the record.3

Mr. NADER (continuing). Is financial information. Small businessmen are particularly threatened by nondisclosure in this area-directly through the competitive disadvantages they face and indirectly through the resulting inability of our economic managers and our antitrust enforcers to know what is really going on in the whole economy. Big business, by contrast, has fantastic information systems. (See exhibit 3, app. IV.)

I hasten to add that our antitrust enforcers also seem to suffer from a congenital lack of courage, in large part due to their ability to blind themselves and the public to the enormity of the impact of concentrated economic power.

The Federal Trade Commission has data showing that if the leading oligopoly industries are broken up, there would be about a 25-percent price reduction in the cost of products that are sold.

Senator NELSON. You say the Federal Trade Commission has such information?

Mr. NADER. Yes.

Senator NELSON. And there would be a 25-percent reduction in the price of those products?

Mr. NADER. If these industries are broken up into more competitive

units.

Senator NELSON. That information has not been made public, has it? Mr. NADER. It is hard for us at this point to determine what is officially public and what isn't officially public in the Federal Trade Commission because it is brilliantly leaked like a sieve.

Senator NELSON. But officially they haven't released this information?

Mr. NADER. I don't think they have. They certainly have not publicized it at a critical point in time in the last 3 months when the President's economic programs have been offered, because it would be, I think, very useful for the public to know that the major policies that could lead to reduced prices in the marketplace were not undertaken by the President. This is an antitrust policy to break up the oligopolies. The mere filing of suits would have a salutary effect in preventing further inefficiencies that result from the collusive activities or conscious parallelism of these concentrating industries.

Labor unions, too, are severely disadvantaged by the nondisclosure of corporate financial data. The men on the other side of the bargaining table know all they need to know-in fact, all they can possibly knowabout the financial strengths and weaknesses of the union and of its members, yet, union bargainers have to beg for even the most innocuous information.

Consumers have no way of knowing the magnitude of the monopoly profits reaped on individual products and have no way of knowing what part of the price of a particular product is squandered on noninformational and often deceptive advertisers.

The United Auto Workers have long tried to find out about productivity increases in the auto companies. The Bureau of Labor Statistics have never demanded that productivity increases be filed with it by the auto companies. The UAW has to guess. How many times do you hear auto management say, "Labor wages should not increase faster than productivity gains." They continue to be able to say that because they don't have to disclose their productivity gains.

So they control the dialog in the public arena that way because they can decide what figure they are going to talk about in terms of productivity gains. Indeed, many times they never even have a figure. They just assume an excessive gain by labor negotiations over productivity. It is interesting, for example, to show another factor that tends to increase their ability to delude the public. The average blue-collar

wage portion of a $3,000 car at retail is no more than about $300 or $350 per car.

Senator NELSON. Are you talking about simply putting the car together once the materials arrive, or are you including labor costs in the materials, the cost of fabricating the steel that goes into the car, for example?

Mr. NADER. That is the cost to the auto companies. That is what, in effect, they pay out.

Senator NELSON. In labor costs?

Mr. NADER. Yes.

Senator NELSON. But that does not include the labor costs that go into the manufacture of the tire which they buy or the steel which they buy?

Mr. NADER. That is vague. When the Wall Street Journal estimated about 1958, they gave a figure of about $175 and they made no such distinction. But the point to make, regardless of whether there is such a distinction or not, is that the bulk of the cost input of the retail price of the car comes after the blue-collar input. For the auto companies to say, "Well, the UAW got a 10-percent increase, therefore, we have to increase the price of our cars by 10 percent," is obviously an arithmetic distortion.

If we knew more about exactly what the cost breakdowns are, the public would have, and the Representatives in Congress would have, and anybody who took an interest in this would have, the kind of information to arrive at a much more precise policy recommendation.

PRODUCT INFORMATION

Product information to the consumers is the critical touchstone of the effective functioning of the market system. Without the consumer knowing what he or she is buying, they cannot feed back critically through the market system and raise the quality of competition by choosing the better product or service and rejecting the shoddier.

This, of course, is the touchstone of the classical market theory which big businessmen like to pay lipservice to at chamber of commerce luncheons. But what do they do in practice?

They systematically deny consumers basic information on the contents of the most important products they buy, from food to automobiles. For example, the contents of processed food has long been an area of deprivation of information to the consumer.

Even when that information is available somewhere, the consumer has to have the aggressiveness of a Washington lawyer to get it from the bureaucrats who bury it away in nominally public files.

It was a whale of a time to try to get the information about fat content in hotdogs by brand name from the U.S. Department of Agriculture, who tested these hotdogs and then turned around and tried to keep the information secret on the basis that it represented proprietary information.

Citizens who pay fantastic premiums for drugs and medical care cannot examine the toxicological data that purports to demonstrate that drugs are safe and efficacious. Nor, for that matter, can they examine the books of the drug companies to see what portion of the

price of a prescription can be attributed to promotional activities which pass for "research and development” and what portion is attributed to the massive lobbying efforts and the enormous advertising budgets of the drug company. (See exhibit 4 in app. IV.)

It takes the herculean efforts of an Estes Kefauver or of a Gaylord Nelson even to begin to pierce the corporate veil.

And the same is true for the safety of automobiles, the hidden dangers in toys, contaminants like Monsanto's PCB, and the quality of thousands of other products. That was described in a Government memo, written by a Government scientist, as perhaps one of man's first doomsday chemicals and found to be most prevalent in ocean water in a recent National Science Foundation study, more so than DDT. (See exhibit 5 in app. IV.)

The same persons who harangue us about the virtues of consumer choice tell us also that we cannot trust the customer, that he is a victim of his own emotionalism-and yet, they spend millions of dollars on advertising which tells him little useful information about the products they expect him to buy.

The free marketplace will function as it should only when each and every consumer is able to easily obtain all the relevant facts that can be known about every product he is offered. That is, the fact about operation of the product, the durability, the safety, and the like.

Indeed, at the present time, Mr. Chairman, one of the hardest bits. of information to find out about some services is the price. That is an ironic deprivation by capitalists working in a price system, I might

say.

Congress had to pass a Truth-in-Lending law to start the ball rolling to get the financial institutions to disclose the true rate of interest. That is still in the process of becoming, of course. (See exhibit 6 in app. IV.)

But when it gets down to the cost of borrowing money, and you have secrecy or distortion here, then the uses of secrecy, the functions of corporate secrecy, to control the consumer, control the marketplace, perhaps can be more clearly seen.

ENVIRONMENTAL INFORMATION

The third category deals with Environmental Information. In this area, too, we have been victimized by a silent conspiracy to keep from us what is being dumped into our air and water and by whom and when and where. (See exhibit 7 in app. IV.)

For the last 8 years, the corporate giants have fought any of the hesitating efforts of Government officials to complete an industrial water waste survey. Now they seem to be jumping on the bandwagon by allowing almost all the information filed with the Corps of Engineers to be publicly available.

It remains to be seen how useful that information will be to the Environmental Protection Agency and to citizens who will want to monitor the effectiveness of that agency. This committee should investigate this sudden change of position.

Could it be that now that disclosure may result in a "license to pollute," proprietary information is more valuable in the public domain than in corporate hands? (See exhibit 8 in app. IV.)