Leaders who espouse neo-liberal economic views tend to be those who look at government regulation as the black plague of industry; whereas, absolute free trade is the penicillin that leads to a strong, wealthy world economy. Furthermore, competition in all markets is what they view as the mechanism necessary to build a healthy economy. It is true that competition is important to a dynamic economy while supply and demand relationships certainly factor into the price, availability, and quality of goods, but as true democracy is maintained by the non-democratic Courts, the economy needs regulations to support beneficial free trade relationships and sustain healthy competition. However, when it comes to issues like competition and consumer protection, purist free trade arguments fall flat on their face.
In a consumer to producer relationship, industry thrives on the ability of the producer to sell a consumer its goods. When it comes to relatively low cost goods, such as children’s toys and food products, a large number of consumers must continually purchase a sufficient quantity of the products for a business to continue operating; therefore, it is imperative that a producer ensure an acceptable level of quality for the cost that consumers pay while it is in their best interest not to poison their consumers as it will destroy their business and drive their customers to a competitor. On the other hand, relying solely on competition to ensure the protection of consumers is by far more flawed than assuming competition, which does not engage in the same poor production practices, exists, the successful of competition regulated consumer protection requires the company to believe their customers will stop purchasing their good if they discover flaws in the product, the customer will be able to detect the flaw or perceive it as an unacceptable flaw, and the flaw will be great enough to overcome a discount cost that a particular producer might provide the customer.
In the cigarette industry and the illegal drug trade, people are purchasing goods that they know are harmful and deadly, but unless a great number of people instantly drop dead after using the product, none of the customers perceive the negative consequences as reasons not to purchase the goods from the same producer while producers understand they do not need to have a loyal customer base as they will soon enough need new customers anyways. Furthermore, if any producer assumes they can replenish their customer base, they are likely to overlook any harmful flaws that may be in their product. Customer loyalty in current times comes from customers feeling as though they cannot find a better product for a lower price, the difference in price between competitions does not out weigh the price of conveyance, or the price is so low that they ignore a lack of quality; therefore, the greatest effort a sales department has to do is attract new customers. Furthermore, market leaders can work on cooperative efforts that allow each other to take a piece of the action, thus, eliminating true competition in a self-regulated market while an entity with sufficient resources can crush any competition that arises. Therefore, competition in most industries is already difficult to sustain.
Moreover, producers hide their identity, so customers do not directly influence production practices. Producers do not necessarily have to appeal to their customers as they use representative companies, such as retail stores, to sell their good; thus, only when the representative businesses lose significant numbers of customers or a significant number of customers report complaints will a store no long carry a producers’ goods while the producer may or may not be forced to change. Furthermore, pricing is a means of attracting customers away from quality; one producer offers the lowest price possible with a product that is expectably comparable to its more expensive version, so those with spending habits, which thrive on cheap goods, will be attracted while their referrals with take away customers who are uneasy about purchasing less expensive goods; meanwhile, negative competition forces “brand name” producers, which supposedly represent higher quality purchases, to cut the cost of their goods, which often means lower quality. Furthermore, as numerous producers sell to stores and these producers often use vast levels of subcontracting, there is a displacement of cost that affects the overall product quality and leaves all producers’ “competition” to rely on the same subcontracts. Moreover, when quality in an industry decreases across the board, customers are left without choices, and so, competition fails. Because producers find various means of avoiding competitive pressures, negative competition leads to decreased quality of goods and, thus, a self-regulated industry fails to protect its consumers.
Looking at recent incidences involving lead and various other contaminants, the only reason concerns were raised is because consumer advocate groups double checked the Government’s haphazard job of guaranteeing the increased number of China goods entering the American market were safe. Parents who do not know if a product is dangerous or do not feel a certain level of contamination, in the case of lead, is harmful will not stop buying toys for their children. Furthermore, before a product is determined to be harmful, the customers may have been consuming the product for years and the negative effects might be irreversible. Frankly, for unhealthy products to be removed from the marketplace, competition requires people die or become seriously injured before market forces have the opportunity to push the product out of production while it will always fail when a producer is able to convince its consumers that the product was not responsible for any harm and is safe.
Expanding on the notion that customers trust their producers to provide safe products, the risk of a product doing harm may be minimized by a low price. People react to immediate consequences better than long term possible consequences, so they are particularly good at justifying unsafe decisions. For example, fast food restaurants do not have to serve foods cooked in oils lacking trans fats as their customer base is drawn to the low price while competition fails because customers will either neglect to heed the warnings on trans fats or fear a change in the taste of their food while competitors will agree not to cook food in non-trans fat oils or will lower their prices until the no trans fat craze is over. Overall, competition, at times, may help protect customers, but regulation is necessary for customers to be protected before a serious problem arises while true competition cannot exist without proper regulation from a third party, whose interest is in maintaining a health economy, like government.