Free To Choose: a personal Statement

Who Protects the Consumer?
223
political agency. You are free to choose. There is no policeman
to take the money out of your pocket to pay for something you
do not want or to make you do something you do not want to do.
But, the advocate of government regulation will say, suppose
the FDA weren't there, what would prevent business from dis-
tributing adulterated or dangerous products? It would be a very
expensive thing to do—as the examples of Elixir Sulfanilamide
and thalidomide and numerous less publicized incidents indicate.
It is very poor business practice—not a way to develop a loyal
and faithful clientele. Of course, mistakes and accidents occur—
but as the Tris case illustrates, government regulation doesn't
prevent them. The difference is that a private firm that makes a
serious blunder may go out of business. A government agency is
likely to get a bigger budget.
Cases will arise where adverse effects develop that could not
have been foreseen—but government has no better means of pre-
dicting such developments than private enterprise. The only way
to prevent all such developments would be to stop progress,
which would also eliminate the possibility of unforeseen favorable
developments.
But, the advocate of government regulation will say, without
the Consumer Products Safety Commission, how can the con-
sumer judge the quality of complex products? The market's
answer is that he does not have to be able to judge for himself.
He has other bases for choosing. One is the use of a middleman.
The chief economic function of a department store, for example,
is to monitor quality on our behalf. None of us is an expert on
all of the items we buy, even the most trivial, like shirts, ties, or
shoes. If we buy an item that turns out to be defective, we are
more likely to return it to the retailer from whom we bought it
than to the manufacturer. The retailer is in a far better position
to judge quality than we are. Sears, Roebuck and Montgomery
Ward, like department stores, are effective consumer testing and
certifying agencies as well as distributors.
Another market device is the brand name. It is in the self-
interest of General Electric or General Motors or Westinghouse
or Rolls-Royce to get a reputation for producing dependable,
reliable products. That is the source of their "goodwill," which

---

224
FREE TO CHOOSE: A Personal Statement
may well contribute more to their value as a firm than the fac-
tories and plants they own.
Still another device is the private testing organization. Such
testing laboratories are common in industry and serve an ex-
tremely important role in certifying the quality of a vast array of
products. For the consumer there are private organizations like
Consumers' Research, started in 1928, and still in business re-
porting evaluations of a wide range of consumer products in its
monthly Consumers' Research magazine; and Consumers Union,
founded in 1935, which publishes Consumer Reports.
Both Consumers' Research and Consumers Union have been
highly successful—enough so to maintain sizable staffs of engi-
neers and other trained testing and clerical personnel. Yet after
nearly half a century, they have been able to attract at most 1 or
2 percent of the potential clientele. Consumers Union, the larger
of the two, has about 2 million members. Their existence is a
market response to consumer demand. Their small size and the
failure of other such agencies to spring up demonstrates that only
a small minority of consumers demand and are willing to pay for
such a service. It must be that most consumers are getting the
guidance they want and are willing to pay for in some other way.
What about the claim that consumers can be led by the nose
by advertising? Our answer is that they can't—as numerous ex-
pensive advertising fiascos testify. One of the greatest duds of all
time was the Edsel automobile, introduced by Ford Motor Com-
pany and promoted by a major advertising campaign. More
basically, advertising is a cost of doing business, and the business-
man wants to get the most for his money. Is it not more sensible
to try to appeal to the real wants or desires of consumers than to
try to manufacture artificial wants or desires? Surely it will gen-
erally be cheaper to sell them something that meets wants they
already have than to create an artificial want.
A favorite example has been the allegedly artificially created
desire for automobile model changes. Yet Ford was unable to
make a success of the Edsel despite an enormously expensive ad-
vertising campaign. There always have been cars available that
did not make frequent model changes—the Superba in the United
States (the passenger counterpart of the Checker cab), and many

---