In a recent post, “The Ethics of Sunscreen” marketer extraordinaire Seth Godin suggests the need for more regulation on products. He wonders why the more ethical companies don’t desire more regulation and why everyone cannot see that the “regulation of marketing claims is the only way to insulate consumers from short-term selfish marketers in search of market share, marketers who will shade the truth, even if it kills some customers?”
I’m a huge fan of Seth’s. However, I believe he misses a couple of points. First, regulations are often simply not that effective (as he mentioned, they are often watered down via lobbying efforts anyway). So, the ethical company doesn’t need them and the less ethical will do their best to skirt around them.
Secondly, most regulation is more effectively handled through free-market solutions. This, rather than government legislation based more on campaign donations and political expediency as opposed to what is best for the public.
What?! Regulation handled better through free-market solutions? Really?!
Let’s look at just a few examples:
All three are private-sector companies that specialize in researching their niche areas and providing their findings to consumers.
All three are trusted, as they are known to do consistently outstanding jobs. Best of all, they have real motivation for doing a great job; if they don’t, they lose subscribers/followers. Do they ever mess up? Sure, they are human. And, as private-sector companies, they are punished accordingly by their customers.
This is in direct contrast to government regulation where the bureaucrats in charge of enforcing the legislation operate anonymously and with sovereign immunity.
There are also companies such as UL through which ethical companies such as those Seth mentioned can have their products tested and certified. And, we haven’t even explored the difference between third-party certification as opposed to government licensing. Surprising to many is that — more than anything — state licensing requirements protect those already in business and make it more difficult (often prohibitive) for new businesses to get started. The result is diminished competition and higher prices… and not a bit more safety.
Is there ever a need for government regulation? Sure. Occasionally, there certainly is.
And, that’s okay. But, let’s not make government regulation our desired, fallback position. Let’s first always ask if there is a market-based solution. If so, let’s go there. If not, then look toward government. But, be wary. That’s not paranoia. The citizen-government relationship is one where vigilance is not only called for, but much more beneficial for the citizenry.
After all, if we stop keeping a watchful eye on government, we might one day, over the course of many, many years, find ourselves with a big, bloated, oppressive government that is on the verge of bankruptcy and has mortgaged the future of generations to come.
Naw, I must be paranoid. That could never happen. 😉