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:
Consumer Reports, Standard & Poor’s, The Good Housekeeping Seal of Approval
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. 😉
Enjoy this post? Receive an update when our next post is published by entering your best email address below and clicking Get Updates.
I agree. Carrying a concealed weapon, using marijuana, driving while intoxicated … the government supposedly protects us through its stiff regulations, but what really happens? We see a lot of outlaws getting away with the very things the law supposedly restricts. People (and corporations) are more likely to toe a particular line if there’s something in it for them. Let’s reward the higher standard. Give responsible companies incentives to make safer, better products. I’m talking about more than tax breaks. Give them a little free press, a seal of approval, a rating. And one more thing: as citizens, we can reward them by purchasing their products and services.
Hi Mike, while I appreciate your thoughts, I’d respectfully disagree in a few areas. From where you talk about “reward the higher standard” here is my thought: I believe it is dangerous to ask government to reward the higher standard. In fact, I believe that keeps us in the same situation we are now in and possibly even worsens it. Here’s what I mean:If we do that, then we once again have government making the decisions for us. And, while they will then have the power to reward, they will also have the power to (indiscriminately) punish and, just like the current situation, it will usually be politically based; based on who owes what to whom. On the other hand, your last sentence was perfect: as citizens, we can reward then by purchasing their products and services. Yes, that is the natural course of things.
I think the Great Communicator can lend a hand here –> http://www.youtube.com/watch?v=6ixNPplo-SU <–. I agree with you Bob. The power is with the people in their selections. "Let's not make the government our desired, fallback solution." Amen to that! It all boils down to responsibility. Those who take personal responsibility for where they are, what they've done (or not done), and who they are… believe in free enterprise, the free-market system. We are not herds of cattle. We are eagles.
Another great, thought-provoking post Bob.
Blessings,
Michael
Actually, I was suggesting they get the incentives from private industries — free press from the media, a seal of approval or rating from something akin to Consumer Reports. I’m all about smaller government. If we’re respectfully disagreeing, I would add that having the power to reward need not be tied to the power to punish. Product advocacy companies regularly award the best of the best; the only penalizing to a brand is that it is omitted from the list, which is fair. You do have a valid point about political agendas, though — a reward system is only as fair and genuine as the people deciding who deserves the rewards. Like Mr. Maher said, great, thought-provoking stuff!
Great thoughts on this subject. In a Free Enterprise system, it only makes sense to seek out & utilize free market based solutions. Consumer Reports, Standard & Poor’s, The Good Housekeeping Seal of Approval, can be easily compared to as the “organic” market. Higher quality & value, passionate about end results, long term benefits over time & more people are finding their way there.
America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves. –Abraham Lincoln
I appreciate your stance Bob,
g
Bob for president!!!
What ever happened to “caveat emptor?” (Let the buyer beware). Are we saying the Consumer is too stupid to make a considered decision about a purchase and must depend on Govrnment to protect them from their own bad choices? We are regulated to death, and every regulation adds costs to every product and service. When it comes to food and beverage,,I think it is a good thing to have a mechanism to prevent companies from using cellulose as a filler in bread, or real ox blood as a color for colas, but some of these regs get rediculous! And, do food and drug rsps really need guns when they raid a health foox store they suspect of selling sugar pills? I think a strengthening of return policies and “no risk” or money-back guarantees may be in order, but good companies already do thos. We cannot protect everybody from their own bad decisions, and fast-buck artists will always prey on the credulos and gullible…it’s human nature. In a free society, over regulatoon has the negative potential of keeping good and beneficial products from the Market from an overabundance of caution. That is not how thi az countrg was founded, and, in my humble opinion, is not a prescription for a prosperous futufe.
Bob,
I agree with you completely, the less government interference the better. I believe that as social media develops and matures, you and I will see “policing” from the consumer like never before. A company that doesn’t keep promises, delivers shoddy products, or treats the customer badly will be unable to hide these defects for long. Thanks for the great article!
Thanks, Bob. I read the piece by Seth Godin (I’m a fan, too), and was equally bothered. There does seem to be a default position that if “somebody outta do something,” then that somebody ought to be the government. Seth can hardly be accused of being unimaginative, but he struck a dry well this time. Thanks for an excellent, well-articulated piece.
I’ve observed that “government regulations” result in two undesirable outcomes.
First, regulations piled on regulations always create loopholes. This means that companies with the money to pay professionals to find the loopholes can pretty much circumvent the regulations. These loopholes may not be intentional – but the result is the same. Layers of regulations also give special interests an easy way to shut down the small producer who doesn’t have the resources to find the loophole or even defend against an accusation of violations. (look at what is happening to small truck farms for example.)
Second, we are a lazy public. We’d LIKE to believe that if it passed government regulations it is safe for our use. We KNOW that is not historically sound reasoning, but we can always blame the government if we’re wrong. But, as you note here, Bob, government regulators have less incentive for being right about what is safe, what actually does what it says it does, etc… than do private reviewers and regulators.
After years in healthcare management and marketing, I can tell you that government regulations there indicate very little about safety or efficacy. Truly a “buyer beware” market, but also a “doctor beware” situation as well. Doctors who trust the government reports about the materials, procedures and products they use and offer are often putting their own reputations and even careers at stake.
Ultimately the “reward” all are vying for is greater market share – would you prefer that to go to those who can navigate the maze of government regulations or to those who take it upon themselves to submit their products for review knowing that review will be published for the buying public?
Just a quick note to say “thank you” to all of you. I’ve read all of your comments and have enjoyed and benefited from them tremendously. Thank you SO MUCH for taking the time to share your thoughts and wisdom!
But how do you account for the systematic, in-the-name-of-“free market” de-regulation and subsequent financial meltdown, at the hands of CEOs? I think we have been shown time and time again that many people, when a large amount of money or power is at stake, and are left to make a choice whether to do the right thing or not, will not. I would be weary of either side.
Hi Gina, thank you for joining us, and for your thoughtful question and comment. First (and this is so important): the financial meltdown of a couple years ago and from which we are still feeling the effects had nothing to do with “free market” or de-regulation. Unfortunately, most people simply don’t know this, and it’s such a shame. Capitalism/free-market took the blame when it had nothing to do with it. For a brief explanation, please read this article by Sharon Harris printed soon after it happened. https://www.burg.com/liberty.html. At the end of her article there is a link to another one. While a bit longer, I suggest reading it so you have a deeper understanding of the situation. Again, what happened in terms of the financial meltdown had nothing to do with free-market and everything to do with government’s “partnership” with Wall St. This is called “Corporatism” and *not* Capitalism. The two are, by definition, totally different, as you’ll learn from Ms. Harris’ article. Regarding your statement about being “weary of either side”, please don’t confuse free-market based solutions for regulation with having to “trust” companies to do the right thing. We are not suggesting they regulate themselves (that’s also a good idea but the “good guys” already do that and the “bad guys” ain’t gonna’) but that we look toward 3rd party groups and organizations rather than government which, for the reasons given in the article, do not do a very good of protecting the populace they are supposed to be protecting. Thank you again, Gina. Feel free to write back with any further thoughts or questions.