Wednesday, April 7, 2010

Government Force vs. Personal Choice

Advocates of government regulations often argue that government intervention is necessary to protect consumers from unscrupulous businesses. They ignore the many ways that individuals can make informed decisions and protect themselves from fraud and similar practices. An interesting example comes from the paint industry and the Better Business Bureau (BBB):
The Better Business Bureau’s advertising arm has recommended that The Sherwin-Williams Company modify or discontinue certain odor-elimination claims for the company’s Dutch Boy Refresh Paint.
Sherwin-Williams (SW) joined with Arm & Hammer to create a paint that allegedly absorbs odors within a home. This claim was challenged by a competing paint manufacturer--PPG Architectural Finishes.

(I hasten to add that neither the BBB nor PPG is claiming fraud on the part of SW. The claims against SW are that its advertisements for the product are "misleading". I should also note that I am a painting contractor and use SW products almost exclusively, though I have not used the product in question.)

The BBB's advertising unit, the National Advertising Division's (NAD), reviewed information submitted by both SW and PPG and found the information inconclusive.
In the absence of reliable evidence, NAD routinely steps into the role of the consumer to determine the reasonable messages conveyed by the adverting.
In short, the NAD seeks to determine how a consumer might interpret an advertising message. The article does not state how the NAD does this, and such methods could be highly subjective. But the objectivity of the NAD isn't the point here.

As a private organization, the NAD cannot compel advertisers to abide by its findings. Nor can it force consumers to heed its warnings. Both advertisers and consumers are free to consider the NAD's conclusions, and accept or reject them based on their own individual judgment. In other words, while providing the information consumers need to make informed decisions, the NAD cannot impose decisions upon others. And this is how it should be.

There are many other organizations that provide similar resources for consumers--Consumer's Union, Underwriter Laboratories, and Angie's List are three examples. In each instance the consumer can judge the information provided within their context and on the basis of their needs and values.

In contrast are government regulatory agencies that impose their findings upon everyone. Rather than allow consumers to judge for themselves, government agencies necessarily force consumers and businesses to accept and act according to their dictates, for better or worse.

Contrary to what advocates of government regulation imply, consumers are capable of making decisions. And often they may want and need products or services that don't meet the standards imposed by regulators. That is their right--they have a moral right to act according to their own judgment, no matter what others might think (so long as they respect the mutual rights of others).


Mr. Moderate said...

I have no real objection to laws and regulations that force transparency and disclosure on businesses, and individuals, who are attempting to sell something to someone else. If a business wants to sell substandard items to consumers who are willing to buy them, that's OK as long as the consumer is fully informed about the true nature of the product or service. The natural follow on is truth in advertising laws. No lying about your products!

In the absence of transparency, disclosure, and truth in advertising, consumers cannot make informed decisions.

Brian Phillips said...

I agree that businesses should not lie about their products or services. That is fraud and an indirect use of force.

However, forcing businesses to be "transparent" is immoral and impractical. It is immoral because it forces individuals to act contrary to their own judgment. And it simply doesn't work. Such force did not prevent Enron, Madoff, or countless others from engaging in fraud.

If a consumer wants to make an informed decision, and a business does not provide the information he wants, the consumer should simply spend his money elsewhere. The fact is, a reputable company has nothing to hide and will be eager to supply that information.