It’s time I lay my red cards on the table. I’m not retiring from the world of professional soccer refereeing, rather, I’d like to make an entirely unoriginal point about the free market. The notion that people will “vote with their dollars” as a way of regulating commerce assumes that
- We always make good overall decisions with our money
- The sum of everyone’s individual decisions equals the best decision for the group.
This is probably true in the world of smartphones. Samsung and Apple’s users vote for whichever phone’s features they like better by buying that particular phone, and because Samsung and Apple both want to stay in business, they keep improving their phones to poach customers from each other. This results in both sides producing better phones – a win for everyone. But it only works because what happens to smartphones doesn’t matter. I enjoy the incredible devices that are available- but if the tide turned and everyone started buying cheap phones and drove Apple and Samsung out of the phone business, it would be difficult to mount a case that this was morally wrong.
But what of important things? A little while ago, the FDA began to require the full calorie count to be displayed on certain products (so that soda companies can’t suggest that their 12 fl oz can contains 3 servings of 100 calories each). This came up in conversation and I remarked that it was a great example of a government agency doing something useful. A friend suggested “I think it’s sad that the market couldn’t have produced the same result.” (As a side note – this was a flippant comment made in passing, and I’m not suggesting it represents all of his considered views on the subject.) But I found it interesting, because it’s a problem the market will never solve. If a company prominently displays the true calorie count on its products, fewer people will buy those products, and a company isn’t going to make a poor economic choice for the public good. Additionally, if one company starts doing this and others do not, the public isn’t going to buy the more accurately labeled product merely out of principle. When we move beyond the realm of preference into the public good, the market cannot effect change.
Another example – in the industry where I work, the last five years or so have seen considerable government action to enforce the notion that certain products are unacceptable to sell. While some of that regulation has been unnecessarily heavy-handed, the overall impact has been positive, as customers have been weened off of low cost, low quality products. However, market forces were incapable of producing this change. I am sure our industry would love to sell only high end solutions, but as long as there were companies selling low end solutions, everyone had to sell them to stay in business. Equally, customers would have loved a better solution, but couldn’t justify the cost as long as a low end one was available. When we move beyond the realm of preference into the public good, the market cannot effect change.
I say all of this to make a point about the smoking ban. Fort Collins is extending theirs next year, and I was amused to discover this weekend that Ault disregards the one which has been in effect for the last 7 years. The argument usually made when people dislike these regulations is “each business should be able to decide for themselves if they should allow smoking.” This presents the same problems as in the examples above – no business is going to make a decision which reduces the number of customers. Therefore, the question is not “is it the government’s decision or an individual business’ decision to allow smoking?” The question is “is the decision to allow smoking a matter of preference, or the public good?” And to answer it, we don’t need politicians or economists – we need scientists. Let’s stop making arguments about rights and freedom, and take a hard look again at whether it’s demonstrably bad to be around smoke. It could be that the impact of second hand smoke is negligible enough that the government doesn’t need to impose any rules – if that’s the case, it’s a matter of preference and the market will sort it out. And if not, then the government should restrict it in the way they are planning. When we move beyond the realm of preference into the public good, the market cannot effect change.
A small postscript before the whole internet piles on top of me: this is not a post in favor of, or against, the expanded restrictions Fort Collins is proposing. I’m just suggesting a better place to put the goal posts. The interesting question is “has it been shown that the impact of second hand smoke in a patio environment causes sufficient public health risks to warrant government regulation?” I have no idea what the answer to that is, but that’s a much more useful argument to have, I think.