Personal Finance

Consumer Protection

I’ve travelled in developing countries such as Thailand, and one of the interesting things is that they won’t protect you from yourself.  You might be climbing up a mountain and where in the West there’d be a massive fence to prevent anyone from falling over the edge, in a developing country there’s a single chain around the outside.  Perhaps the message is “if you’re dumb enough to fall off a mountain, we’re not going to kill ourselves trying to prevent it”.  Another example is the ability to come into close contact with wild animals.  At a Thai zoo they were letting visitors bottle feed a tiger cub (which was VERY cool, but I suspect even a baby tiger could do some damage if it got its claws or teeth into you).  They also have elephant shows that involve things such as having the elephant step on an audience member.  Having a 10,000 lbs animal standing on you isn’t very bright, but if the audience member is willing to volunteer, the people running the show are happy to let it happen.

We all have our bone-head moments, and it’s no good if it leads to serious injury or death.  I remember one time at a camp fire I decided it was a good idea to move one of the rocks around the fire, reached out to grab it and gave myself a good burn.  The people with me were sympathetic but (rightfully) told me it was a pretty dumb thing to do.  And you know that elephant thing?  Yup, I did that too (it put one of its feet right on my chest, knocked the wind out of me).

Beyond physical danger, there’s also numerous people looking to take advantage of consumers by selling shoddy products (or outright fraud).  All levels of government try to protect their citizens from this but, as with many government endevors, they do a painfully bad job of it.  I’m certainly not blaming the victims, but I sometimes suspect there’s an unintended consequence happening where such attempts end up leading to MORE harm to consumers.

Because people living in a western country are protected so much, they start counting on it.  Some people ask, after seeing a commercial for the “$49.99 Path to Instant Wealth!”, if it isn’t true, how can they be advertising it?  Wouldn’t the TV station or someone in government quickly shut them down???  Others may not be so upfront about their feelings, but in their heart-of-hearts they can’t believe a scam artist would be advertising in the Globe & Mail’s classifieds or on network television.

I’m planning at some point to do a post on the anatomy of an infomercial, but basically there’s a group of people who’ve made an art of quickly gearing up some bogus product, advertising the heck out of it, then shutting down the company and draining all the cash as the regulators come knocking.  They re-brand themselves, and start pitching something similar, rinse and repeat.  The laws to prevent this type of thing (and people enforcing them) just can’t keep up.

As an aside, you sometime get a similar justification on the other end FROM the scam artist.  Apparently a number of people involved in running “Nigerian advance fee scam” truly believe that Western government reimburse citizens for money they’ve lost to the scam artists.  This is how they morally justify what they’re doing (“they’ll get all the money back from their government, so it’s ok if I steal from them”).

Once people become more trusting, because they’re used to this protection, it becomes easier for them to harm themselves, which leads to greater protection, and people making worse choices in a vicious spiral (every time you make it idiot proof, they invent a better idiot).

“Well Mr. Cheap,” you may ask, “do you want us to go back to a wild-wild west marketplace where scammers operate with impunity and there’s little protection for consumers?”  Yes, I suspect in many ways this would be better (or at least should be taken into account when considering expanding consumer protection).  We’d all get burned early and often, and learn that you have to factor the merchant’s trustworthiness into any transaction.  People such as Ellen Roseman would become even more important, as they’d propagate information about who is behaving well and who is behaving badly.  I think the door-to-door energy marketers are scum, but I also think they’ve made Ontario consumers far more cautious about doing business with strangers who come knocking at the door (which is good).  The obvious counter-argument would be that the barriers to commerce of having to evaluate the trustworthiness of everyone we want to do business with (and the varying ability of each of us to do so), would lose us more than any gains that would be made by encouraging more cautious consumers.  I don’t believe this, but I don’t have anything but a gut feeling for doubting it (and would be delighted if someone could provide compelling evidence that this is the case).

5 replies on “Consumer Protection”

I agree with you Mr. Cheap. I think having the government as pseudo-parents to adults is ridiculous.

The government didn’t tell me that I need physical activity!
McDonalds made me fat!
Cigarettes gave me cancer!
My kids can watch violence and pornography on the internet and on TV, the government should restrict it! OR you could be an actual parent.

And to Rob, if somebody needs to be warned that falling off a cliff could kill you – I say jump and see what happens. We need some more natural selection happening.

I’m on your side, Mr. Cheap. Well said.

Of course, I am a tried and true Libertarian so that should come as no surprise to those that know me. 🙂

We need less government babysitting and more personal responsibility and self-reliance. The government crutch is smothering us all and making our society weaker in the long run, not stronger.

Len Penzo dot Com

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