Truth in Advertising

The Federal Trade Commission (FTC) enforces "truth in advertising" rules. According to the FTC web site, the following rules apply to advertising:

• Advertising must be truthful and non-deceptive;
• Advertisers must have evidence to back up their claims; and
• Advertisements cannot be unfair.

The site goes on to say that an ad is deceptive if it contains or omits information that:

• Is likely to mislead consumers acting reasonably under the circumstances; and
• Is "material" - that is, important to a consumer's decision to buy or use the product.

Finally, the site states that an ad or business practice is unfair if:

• it causes or is likely to cause substantial consumer injury which a consumer could not reasonably avoid; and
• it is not outweighed by the benefit to consumers.

Using the above criteria, it would seem that the FTC could stay extremely busy simply prosecuting politicians. For example, consider this statement from Rep. Barney Frank made during hearings on Freddie Mac and Fannie Mae in 2003:

I think it is clear that Fannie Mae and Freddie Mac are sufficiently secure so they are in no great danger... I don't think we face a crisis; I don't think that we have an impending disaster... Fannie Mae and Freddie Mac do very good work, and they are not endangering the fiscal health of this country.

As we all know, a few years later these two government sponsored enterprises had to be bailed out because of bad loans. Frank's statement in 2003 was made in response to warnings by the Bush administration that Freddie Mac and Fannie Mae were heading towards financial problems. Frank denied this truth in 2003, and he subsequently argued for more government intervention into the housing market. His "advertising" was not true, it was misleading and material to the government's subsequent actions, and it resulted in substantial harm to taxpayers. Yet rather than be prosecuted for false advertising, Frank has been rewarded with more power.

Consider Mr. Thompson’s Barry Obama's promises to cut the taxes of 95% of Americans. He could confiscate all of the income of the top 5% of American earners, and still not have enough money to fund his spending proposals. The numbers don't add up, and yet Barry won't be prosecuted for false advertising.

In Houston, zoning advocates have long said that tougher land-use regulations are necessary to attract businesses and fuel job growth, and to protect property values. Yet Houston--the city without zoning--led the nation in job creation in 2008. We did not experience the devastating effects of the housing bubble--our property values remained relatively stable. The facts belie the promises made by zoning advocates, and yet they won't be prosecuted for false advertising.

Politicians are largely immune from the laws that they impose on everyone else. They can make grandiose promises, and when those promises fail to materialize they get a free pass. They can make statements which deny the facts and they respond by casting aspersions on their political opponents. They can advocate proposals that cause immense harm to taxpayers. They can engage in the types of distortions that would get a businessman thrown in jail forever, and they simply get re-elected. They hold businessmen to impossible standards, and impose none on themselves. And that is the truth.