Tuesday, 10 August 2010

Getting rid of "consumer protection"

Intriguing post from the ASI here:

If we are throwing quangos into the bonfire, I'd like to fuel the flames with a couple of 'consumer protection' bodies. I figure that government agencies that aim to protect us from faulty goods and inadequate services do no such thing – and indeed, leave us more exposed to them because they tend to reduce competition in consumer markets.

And, by and large, I agree. Regulation does little to protect the consumer, because we already had lashings and lashings of bank regulations and yet the "credit crunch" somehow still happened.

My own experience of dealing with the Advertising Standards Authority where I had a demonstrable, provable case left me wondering a) why I bothered and b) why I was funding these cunts.

We've all seen how useless Ofcom and the PCC and the IPCC, etc., are. So why have them?

In the comments, someone raised the tale of the Ford Pinto, where Ford's boffins allegedly worked out that the cost of fixing the Pinto's design flaw was greater than the cost of paying for a couple of hundred people to get fried to a crisp. So they went ahead with an unmodified design.

And that kind of concept genuinely is a concern.

But the truth of the Ford Pinto design flaw case is not quite as clear cut as our commenter would have us believe:

the number who died in Pinto rear-impact fires was well below the hundreds cited in contemporary news reports and closer to the twenty-seven recorded by a limited National Highway Traffic Safety Administration database. Given the Pinto's production figures (over 2 million built), this was not substantially worse than typical for the time

No company wants to get caught hiding such a thing, the coverup always does the damage. The internet now massively improves the ability of people to get such information into the public domain.

In the main, most businesses also want to retain customer loyalty. It costs roughly five times as much to get £10 off a new customer as it does to get £10 off an existing one. That's why mobile phone companies spend so much time and effort analysing churn. And you're not going to retain a customer if you are seen to be doing things like selling cars that are significantly more dangerous than those of your peers.

Regulation always closes the stable door after the horse has bolted, by the time the business or industry has already learned the lesson and has no intention of repeating it. Regulation also prevents competition, which is one of the best ways of actually regulating bad business practices.

In this as in so many other things, regulation and regulatory bodies do not help us at all.

They only protect the players in the industries concerned.


Uncle Marvo said...

True enough. However, I will add this:

The powers-that-be have a Health and Safety Exec. When they visit this place, they are in awe of what "we" have done to implement the procedures. They can't believe that we have gone as far as we have. They think we are mad.

I do too.

It is Empire Building that is often the reason why these ridiculous measures are in place, not rules.

Anonymous said...

Whilst I'm 100% in agreement with you Obo, can I play Devil's Advocate a moment?

You wrote: "And you're not going to retain a customer if you are seen to be doing things like selling cars that are significantly more dangerous than those of your peers."

OK, but in your unregulated world is it not possible to imagine that all of that car company's peers would adopt a similar cavalier attitude towards safety, thus meaning that whilst the playing field remains level, overall quality reduces?

That is, why shouldn't we expect a race to the bottom?

Obnoxio The Clown said...

"That is, why shouldn't we expect a race to the bottom?"

Because the first innovator who comes along with a better product will immediately conquer everyone else.

Nick2 said...

Agreed re the (necessity for a) bonfire of the quangos - but one correction. The number of incinerated Pinto customers may be less than is generally quoted - but the problem was known about & repeatedly ignored by GM as the Pinto was known as the '2000 car' - which summarised a whole load of metrics about it, including the final retail cost. Lee Iococca (allegedly) refused to countenance additional expense on a project whose costs were already under extreme pressure.

And when the Pinto was tested by US safety experts after the initial safety allegations, GM imported a couple of car transporters' worth of Pintos to be tested from their Canadian factory just north of the border - all of which were fitted with a fuel tank that did not leak, at an additional unit cost of US$1. Allegedly.

What is stopping an organisation from doing something similar here?

Simon Cooke said...

While it doesn't change the argument, the ASA is of course self-regulation and funded by the advertising industry not the government

Mark Wadsworth said...

For the most part I'd agree, especially with smaller items where larger firms are keen to keep a bit of goodwill going, but there is no fundamental harm in making manufacturers liable for stuff exploding in your face and so on.

(and with one-off transactions that are hugely important to the weaker party (landlord-tenant, employer-employee) there have to be clear rules on each side (a lot of these rules make the landlord or the employer the weaker party, which is wholly counter-productive, of course).)

If that makes their product safer but a bit more expensive, then the consumer pays a bit more (obviously) and everybody is happy.

Anonymous said...

@Nick2- I guess if you don't actually have any facts it's ok to just make shit up?

Here is a good rundown of the FORD (NOT GM) Pinto case.


Anonymous said...

First attempt seems to have chopped off the end:

Joseph Takagi said...

"We've all seen how useless Ofcom and the PCC and the IPCC, etc., are. So why have them?"

They're a smokescreen to protect the state. You, the idiot prole are told that the NHS has set up "patient consultation" and so will listen to patients concerns and act for all of us.

The reality is that if you're on one of those committees, you're facing people who see you as an inconvenience and who will ignore anything they don't want to do, and they hold all the power. And none of the people up the chain of command (right up to health secretary) give a fuck whether they really work because it's bullshit PR.

It's why you need real markets and why these people will try to scare people away from markets. Because a market would mean that when a nurse spoke to me like the one at my local hospital, I'd fire the hospital and take my business elsewhere. What none of the statist or heavily regulated businesses want is that customers can easily fire them. They like the high pay and the cush job.

Anonymous said...

When it comes to buying items, theres really only one thing i am concerned about.

If i leave my video recorder on when i leave the house,will it burn my house down.

Now i know that there would be many free market ways of getting around this (indipendant testing compliance bodies that can stamp the product safe).

My concern is more that my neighber won't give a shit, will buy the knockoffs, and if he's house catches fire, my house will also be damaged.

The state making such liable to the manufacturer helps, wherase the individual would have to go to the expense of taking them to court (beyond alot of people financially).

Nick2 said...

I didn't make ANY of the facts up. Search every statement that you disagree with - it was either on the www or in various road safety books that I've read. Sorry that I typed GM instead of Ford - mental multi-tasking at the time. Thanks for your pdf link though - I'll read it with interest.

Anyway, more to the point - what is to stop an unscrupulous organisation from foisting a lousy/dangerous product on the UK, cowing any litigants, and maybe even getting a super-injunction to stop publicity/avoid momentum for a class action? If the ASA (which is a self regulatory organisation, funded by the industry) is ineffective, what would protect the 'little people'? A statutory body?

Anonymous said...

Would that be the same for the pharmaceutical industry?

KrAzY3 said...

Obviously, consumers are by far the best regulators of industry.

Cock Chugger said...

I cannot make my mind up about this one. In fact it remains one of the key reasons why I cannot fully submit to AnCap-ism.

Obo. You are old enough to remember the annoying days before plugs came ready attached to appliances. It was never enough of an issue to change product selection yet it cost enough that companies would happily send out their products with exposed wires rather than specify to a market.

To this comment writer it is a good example of why consumer legislation can be a good thing.

Would appreciate your views on this.