Capitalism Is Consumer Protection

Editor's Note for 1-21-2011: Today’s main story on is about Gov. Snyder’s call for repeal of Michigan’s item pricing law, which he says is outdated. The item pricing law is an example of a “consumer protection” law that has been aggressively enforced for several decades by all of the politicians who have previously served as Michigan’s Attorney General. This commentary, from 2009, spotlights some other examples.

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The hobbyhorse of so-called "consumer protection" is often ridden by the politicians who either hold or hope to hold the job of Michigan attorney general. Yesterday provided a couple of lessons that prove the point.

State Sen. Gretchen Whitmer, D-East Lansing, is running for the job of attorney general. Yesterday, she issued a press release announcing that she was introducing legislation that would "protect consumers from excessive and hidden fees tacked on by banks."

Do we naïve consumers need this protection? Only if we never watch television and thus never stumble across the advertisements from banks tripping over each other on the airwaves to tell us that they are the ones who provide the fewest hassles and no hidden restrictions on how we can access our own money (see below). Also, we need this help only if we never notice that credit unions provide yet another option that completely eliminates (for good and ill) many of the bells, whistles, fees and services associated with commercial banking.

This is America, and we all pretty much understand that the customer is king because he or she has the option to just walk away to many other competing businesses when not happy. We don't need a politician to help with this, whether the product is bread or banking.

Or at the pharmacy counter. Also yesterday, the current attorney general (who is running for governor) issued a press release announcing that his office had conducted an "undercover survey" to look into the price of liquid Tamiflu, a medicine often prescribed for children suffering from H1N1. Anyone who has shopped in America will recognize that the cost of items at some stores is often much higher than at others, particularly when one factors in the giant discount superstores. But this was apparently news to the "team of investigators" who were sent out shopping by the attorney general's office and discovered that "some consumers may be paying more than they need to" for Tamiflu. Noting that this development was "disturbing" to him, the attorney general encouraged those who believe they have paid too much to file a complaint with his Consumer Protection Division.

In both cases, if the politician succeeds, the result of this meddling will be fewer options for the consumer to choose from.

The retailers charging more for Tamiflu do so because this is how they make a profit or because their customers are willing to pay the higher price even though there are other less-expensive options. It's easy to see why this second situation may occur: When somebody in your family is sick, particularly a child, you may just want the medicine RIGHT NOW, at whatever price is available quickest from the nearest retailer, rather than waiting much longer or driving much further to have it filled more cheaply by somebody else. In America, you can almost always find somebody willing to fill that particular desire — for a price.

We have the glorious options of having what we want fast, cheap, with fees or without, and almost always some mix of all of the above and more, all because of businesses constantly looking to do what we want, when we want, how we want and at a price we're willing to pay. This magic of the marketplace happens in spite of politicians, not because of them. If the upshot of this political pressure and exposure is fewer retailers putting up with the hassle of selling Tamiflu at a price that isn't worth it to them, or banks that stop offering some services that come with certain fees, then the irony of it all will be that consumer choice will be limited by politicians competing with each other to strike the biggest blows for "consumer protection."