them to specific makes and models. BLS will not jeopardize its sources of voluntary information used in the calculation of its price index; it is not given any needed information by the auto industry regarding productivity increases, which it always holds out the hope of obtaining some day.

GOVERNMENT'S AUTHORITY TO OBTAIN COST DATA

What about the authority in the National Traffic and Motor Safety Act? Given the legislative history, the definition of "motor vehicle safety standard" and section 112 (c) and (e), a persuasive case can be made that the Secretary of Transportation has authority to obtain a wide range of cost data. After all, how is he to take cost into effect without cost data from the manufacturer? The decisiveness of such authority can be assured, however, by amendment.

Indirect action by the Department can lead to important cost information, particularly that which may issue from new technologies incurring lesser cost. This subject of new technologies incurring lesser cost, lowering the barriers to entry, was explored quite thoroughly recently by Senator Hart's Subcommittee on Antitrust and Monopoly.

NEW YORK STATE SAFETY CAR PROJECT

The New York State safety car project, now dormant because of a lack of funds after finishing its intermediate design phase, is the kind of research and development undertaking that could break new ground in determining costs of new safety systems.

I might add here, Mr. Chairman, that the projected budget for the total completion of this project, which would end in the development of 15 or 20 prototype safety cars suitable for mass production, crash tested with all the data publicly available, was $5 million. The cost of traffic safety in wage loss, medical payments, insurance overhead expense, and property damage, every month is a billion dollars. I do not think there is anything clearer that shows how misallocated some of our resources are in this country when it comes to health and safety. I say this against the background, for example, of the recent request for over $225 million for the civilian supersonic transport program in the next fiscal year.

PUBLIC'S ABILITY TO OBTAIN DATA

The question as to whether the public should be able to obtain from Government all, or substantially all, cost data in the latter's possession is important. Certainly, that data obtained from nonindustry sources should be freely available. There are strong policy arguments for urging that virtually all cost data on vehicle safety in Government possession should be made public. This can be suggested not just for scholarly analysis, but more importantly for added exercise of consumer democracy vis-a-vis a concentrated industry whose dominant firms have made a mockery of workable competition and the free market system.

Certainly, if numerous antitrust exemptions insulating companies from the rigors of competition can be enacted, on the basis of over

riding political, economic, or social objectives and if special tax privileges can be passed enabling certain costs to be depreciated faster for similar reasons, then the secrecy of safety cost data can be overridden to enable Government and the marketplace to work better for safety. Depriving the public of this information simply encourages a convergence of Government and industry interests in nondisclosure.

PRICE INCREASE QUESTIONED

Mr. Gardner Ackley, chairman of the Council of Economic Advisers, for example, can state in early December about the September auto price increase that, "given the high level of auto industry profits and the trend of productivity advance, it is hard to see why a price increase was necessary." I might say that this is a considered judgment by the chief economist in the U.S. Government and one which might have made an impression on Mr. Bridwell.

Yet, later that month, he can remain silent-that is, Mr. Ackleyabout a second price increase allegedly attributed to the shoulder harnesses, and continue to remain silent to all further inquiries. For he had met in private with auto executives prior to the latter's public announcement. I believe the arena of citizen participation-insofar as access to the facts-should be broader than the cloistered offices of the Council of Economic Advisers.

PRICE DATA BASIC TO WORKING OF SAFETY LAWS

In signing the Auto Safety Act, President Johnson urged the automobile industry in 1966 "to build in more safety without building on more costs." This hope has not materialized despite the nominalism of most of the standards and the profit-productivity increases described by Mr. Ackley. The general issue before the subcommittee, Mr. Chairman, has been given so little attention over the years and is so fundamental, I think, to a more effective functioning of the safety law that considerably more thorough inquiry needs to be pursued in order to refine whatever judgments we might make.

It is imperative, I would think, that the individual, domestic auto companies be given an opportunity to express their views and contribute their information on cost-price disclosure. I understand that they have been invited to do so, by the chairman. Hopefully, those appearing will possess high executive authority and also the requisite familiarity with company cost analysis. Notwithstanding its complexity, the essential points can be presented meaningfully and clearly. To quote GM's R. C. Mark again: "It is up to accountants to record the facts; to take the mystery out of them for those who do not talk the accountant's language; and to get them to all levels of management in time. * * *

I would hope such a comparable performance is forthcoming when they appear before the subcommittee.

Thank you.

Senator RIBICOFF. Mr. Nader, would it be convenient for you-it is a few minutes before 12-to come back at 2 o'clock for questions? Mr. NADER. Yes, sir.

Senator RIBICOFF. The committee will stand in recess until 2 p.m. (Whereupon, at 11:58 a.m., the hearing was recessed, to reconvene at 2 p.m., this day.)

Afternoon Session

Senator RIBICOFF. The committee will be in order.

STATEMENT OF RALPH NADER-Resumed

Senator RIBICOFF. Mr. Nader, do you believe that the Government and the public are entitled to know how much they pay for safety features in automobiles?

Mr. NADER. Yes, definitely, Senator, particularly when the purported figure for the cost of the safety features can be used to delay or defeat the imposition of the safety standards as well as contribute to an inflationary spiral.

ABILITY OF INDUSTRY TO PROVIDE COST DATA

Senator RIBICOFF. Do you believe that the automobile industry has the ability to disclose and provide this information?

Mr. NADER. No question about it. If there is one thing that the automobile industry can be credited with, that is some of the most refined cost accounting in the history of modern business. I think that is well documented in some of the public statements that their people have made in this area.

Senator RIBICOFF. Where do you think the responsibility exists within the Government to procure this information?

Mr. NADER. Well, I think the primary responsibility should be in the Department of Transportation. I think that does not obviate the need to have additional responsibilities located throughout Government. I think multiple sources of data procurement are always a healthy development, so I would think that GSA does have a role here in finding out what it is paying, particularly since it is so close to the statutory limit of $1,500.

PRICE RISES ATTRIBUTED TO STYLE CHANGES

Senator RIBICOFF. Now, you said on page 6 of your testimony that price increases attributed to safety features actually include cost of styling changes. How do you know this?

Mr. NADER. Well, first of all, the inflated nature of the safety features indicates that there must be something else covered besides safety. Now, several studies in the past have indicated that the cost of styling in an annual model change is really staggering. I refer to a statement in the Senate's antitrust and monopoly subcommittee hearings in 1958, the Ford executive who testified that, in 1955, 72 percent of special-tooling cost was spent for bodies and front-end components which are most susceptible to styling obsolescence. A later study by a number of professors at MIT and Harvard indicated that the car buyer was paying in the late fifties an average of $700 retail price of the car for the privilege or the burden, depending on

which way you look at it, of the annual styling change. Also the stylist chief for Ford, Mr. Bordinat, once indicated that a style change for the rear end of the Mustang would cost on the order of $25 to $50 million; that is, the cost for that change.

So we come against fact one, that styling is still subjected to annual changing, that it is extremely expensive, and that it must presumptively be included under such inflated safety price increases. There is no other explanation for it. No other allocation for such an increase. I think the specific information can only be obtained from the industry. I think they know actually, what they are including under this so-called safety umbrella.

Senator RIBICOFF. I would like to read a passage from your book "Unsafe at Any Speed," and here is a passage:

The automobile makers permit only economists and marketing specialists, not engineers, to meet with Bureau of Labor statisticians. Selective information is given only to bolster claims of improved quality. The automobile companies put great pressure on the Bureau of Labor statistics to accept these claims without their producing adequate data to support them. The industry then turns around and uses Bureau of Labor statistics quality improvement credits as proof that the consumer is getting the better automotive quality for his money. During the last 3 years has any change occurred in the situation. you describe in your book?

NADER SAYS BLS EXPLOITED BY INDUSTRY

Mr. NADER. Substantively, no. I think that Commissioner Arthur Ross made a statement in September of 1966 conceding that BLS could avail itself of more refined technical advice and that they were going to obtain this advice from the National Highway Safety Bureau, U.S. Bureau of Standards, and the General Services Administration. To my knowledge there has not been much communication from those three agencies to BLS. I think the basic problem with BLS is that preeminent in its mind is the integrity of its statistics and not only does it want to continually get volunteer inputs from industry for its consumer and wholesale price indexes but it would like to develop other indexes, and one of them deals with productivity, and that is why it wants to be, shall we say, on the good side of industry in order to encourage further contributions of that kind. Unfortunately I still believe that BLS is being exploited by industry. They are giving them biased information. I am quite certain they don't tell BLS personnel when they go out at the beginning of a model year to look over the cars in Detroit, that the industry does not tell the BLS economists what the deteriorations in any given year have been, such as a few years ago in cutting down tire size or skimping on brake linings or cutting corners on suspension. They just obviously accentuate the positive.

I recall, when I looked into this a few years ago, one of the BLS people told me that on one occasion when they went out to Detroit, by some mistake, perhaps, an engineer from one of the companies crept into the room and divulged some information which was embarrassing to the particular company. The upshot was that engineers were never allowed in these conferences. Basically they meet with the economists and public relations people.

Senator RIBICOFF. I have a question here submitted by Senator Kennedy:

What kind of government agency can supply the consumer with proper cost information about safety? Can it be done without compelling cost data from manufacturers? Can you suggest structural changes in the safety agency which would make it better equipped to find out the cost of safety?

Mr. NADER. If I understand the thrust of that question, it is can the agency do something in terms of collecting price information and cost information without the industry's cooperation. And I think they can. Senator RIBICOFF. They can, you say?

CONFIDENTIAL DATA MAY BE COMMON KNOWLEDGE

Mr. NADER. Yes, I think they can. This information basically is floating around the insides of these companies and in between them, and it is not really very difficult for investigators legitimately to find out what this information is, because much of it, however confidential may be the label, is common knowledge. For example, literally hundreds of dealers know what a spark plug costs General Motors, at a very close range. They know what the shoulder harnesses cost. It is just a matter of going around systematically finding this information, cross-checking it and coming up with reasonable estimates. Obviously it would be preferable to have the industry divulge this information on their own but I do not think their lack of willingness to do that is an insuperable obstacle.

Senator RIBICOFF. Senator Hansen.

Senator HANSEN. No questions. Thank you, Mr. Chairman.

Senator RIBICOFF. Now, Mr. Nader, is there any other information, material, or exhibits that you would like to submit to the committee to be made part of the record that you might not have included in your testimony?

SHOULDER HARNESS PRICE, ENGINEERING SCORED

Mr. NADER. Yes, I would like the opportunity to submit some commentary for the record. It would be too long probably to discuss here, but at this point I would like to make one comment on the shoulder harness. I think in addition to the price markup being unconscionable, attention must be paid to the really sloppy engineering and installation of these shoulder harnesses. I am sure that many engineers in the auto industry are embarrassed at the lack of opportunities given them to make relatively simple and fast modifications that would improve the comfort and usage of these shoulder harnesses. For example, the use of an inertial reel, so when you take the shoulder harness and put it on and take it off, it will just roll back over into a proper stowage and won't fly off, if, for example, you are driving a car with noboby else in the car and the shoulder harness is in stowage. That could be a hazard under today's designs.

The Swedes, who have produced more innovations in safety by proportion to their size than many larger manufacturers, have come up with an inertial reel where you can literally wear the shoulder