Two more stories of Government distorting marketplaces: "rent-seeking" and "compassion"
Distorting the Marketplace: rent seeking and "compassion"
The first is "rent seeking" - private sector businesses using government to enhance their revenues by either:
- using political contacts to get government contracts, often at the disadvantage of taxpayers
- using the force of government, via laws or regulations, to defeat competitors
Neither scenario requires a superior product or service to compete in the marketplace - only a superior knowledge and influence of and within the labyrinth of Government contacts, laws, and regulations. Also called Crony Capitalism.
The first is from John Stossel - a dying industry utilizing government regulations to keep from losing what little marketshare they have left.
The Texas Department of Licensing and Regulation has fined salon chain Roosters for allowing its cosmetologists to shave customers’ faces. Texas bureaucrats say only licensed barbers are allowed to shave. It doesn't matter that the offending shaves were done with disposable safety razors:
"Any 10-year-old can walk into a drugstore and buy them," [Roosters owner Joe] Grondin pointed out. "Why would they be illegal?"
Simple: Because barbers in Texas lobbied for ridiculous regulations to protect their business. They are scared of competition:
Over the years, barbers have watched cosmetologists tie up more and more of the hair business, leaving barbers with little more than a shave and a haircut. "We are slowly losing everything that makes us barbers," Dorie Wallace, one of two licensed barbers in Hico, complained at a recent advisory board meeting.
… [T]he shave represents the barbers' last stand. "We're trying to protect our niche in the world," said Joe Sheppard, a third-generation barber… .
Barbering might be an ancient profession, but that doesn’t mean government should protect it.
The barbers refused to update their skills and the business practices. To be blunt, they got fat, dumb, and finally, unhappy. Either one stays up to date or goes out of business - for government can support you for just so long - you may survive, but you may well be "the last one".
...Even barbershop owners might benefit because they could hire cosmetologists. One barber even admitted that the cosmetologists can "cut rings around the barbers."
Those last two sentences say it all. In essence, NO ONE OWES YOU A LIVING! Never expect that anyone should give up something for your livelihood.
The second is about Government misguided attempt to be "compassionate" and protect...
Prompted by Verizon's recent increase in early termination fees for some users, Senator Amy Klobuchar (D-MN) has, along with three colleagues, introduced a bill in the Senate to specifically address "budget-busting" early termination fees. The bill would limit ETFs to no more than the subsidy offered on a particular handset, and require that the fee be prorated equally every month until the end of a service contract (typically two years).
Hmm, I just got my new phone not too long ago. There was a contract to review and sign. The problem is that most (in fact, I bet the vast majority) people never even glance at most of the verbiage - they just sign in their haste to "try out the new gear". What this esteemed Senator is railing against is a simple one:
One no longer has to be responsible for the contracts they sign
In effect, everyone who agrees to that contract is automatically a victim.
This isn't the first time Klobuchar has tried to address ETFs. Her Cell Phone Empowerment Act of 2007 mandated prorated early termination fees, as well as the elimination of other hidden fees.
Pretty much, if there is a fee, it has to listed. Unless it is a TAX, which, you know that Spanish-American War telephone one which held on for, oh, a 100 years AFTER that war? But we all know, being a politician is never having to say your sorry for a "policy gone bad" or one that continues to "charge taxpayers", but I digress...
The bill would have required carriers to provide the FCC with data on dropped call rates and coverage gaps, and would have given consumers a minimum 30-day notice to cancel a contract extension. In addition, the bill required that consumers be provided with detailed coverage maps so they could determine whether they would have coverage at home or work.
You know, this all comes down to being an informed consumer. Which, as it seems, is a dying trait and aspiration, as the esteemed Senator seems to want to reward. Look, you offer a service or product (or both); the consumer can either choose to accept or reject. All it requires is time spent on the part of the consumer to READ THE CONTRACT and ask questions about the stuff they don't understand. And ask again to make sure.
It really is not any more difficult to understand. And yes, I read ALL of the paperwork for my mortgage too - a feature and not a bug - and I am no rocket scientist.
So here's some of what I think may happen as a result of the Government via the Senator if this is passed:
- Providers are not going to accept losing money -costs will go up:
- The "smarter" (and thus more desirable) phones will rise in "advertised" cost as vendors will refuse to shoulder the upfront cost of the unit
- Indeed, Providers may start a move from subsidizing the cost of new phones altogether:
- Consumers will balk at higher costs and may not replace older phones
- The technical advances in the marketplace via newer phones may well slow due to lower sales and revenues
- An unintended consequence may well be higher monthly comm/data services costs - another way for vendors to insulate themselves from losing money
- The industry roll-out of newer features dependent on more advanced phones may slow down as R&D funds dry up.
My response? You can never, ever, protect stupid consumers enough - they will always find another way to be stupider. Yet, that is what politicians like Klobuchar believe they can do.
Trust me, she can't - I write code for a living. Writing the code to "do the thing" is generally straight forward; doing the "defensive programming" takes a lot of "looking in from the angles" - what will a novice or dumb person really do. No matter how hard a programmer tries, there is always someone out there "dumber" than your code.
Always.
