Crooked Corporations and Forgetful Customers

In a market where consumers have cognitive limitations (for example, where they forget bad experiences, or frequently resort to cognitively cheap heuristics) - and where quality is costly - firms that cheat on price signals will win out.

Even if the firms are just retailers, instead of manufacturers.

Who polices the quality controllers, in a market where customers are forgetful, and not very clever?

An even bigger role for the incentive to 'be good' and not to 'reward bad behaviour'. What makes people 'good'?

How to Treat the Feeble Minded

From around 1840 to 1970, people who were diagnosed as 'feeble-minded' in Cambridge (UK) were confined in the Fulbourn Mental Hospital. Especially dim young girls who had a baby out of wedlock. And they were buried there, as rejects from the local community. It was something to be ashamed of.

How do we treat, today, the less-capable?

We spam them with deceptive pricing - so that they get a worse deal. We follow up purchases with 'would you like to buy insurance for that' - which, for consumer goods, is a truly rotten deal. We idolize baubles and meaningless celebrity, for them. And litter their lives with reminders of lust, fattening morsels, and addictive substances. To fund such consumption, we offer easy 'consumer-credit' - which only serves to make their life even more expensive. And, again, penalises the lazy, the ill-informed, and the incompetent.

Why is it that most smokers are among the poor in our society? (A habit costing GBP £5 per day here - when benefits are about GBP £100 per week). Is it, perhaps, because we offer them smoking as something that is 'manly', 'sexy', 'tough', or as an (illusory) way of feeling better about their lives?

Given the right attitude to commercial success, and to commercialism in society, is it any wonder that one can make 30% of a society obese (and 70%[?] overweight)[as now in the UK]?

As Michael Sandel points out there is a lot of virtue that cannot be measured by commercial success, and as Robert Sirico says there is a lot of virtue in rewarding that which is frugal and satisfies peoples choices. But there is more.

All of us are unable to keep more than a few of thoughts in mind at any one time, or of safely controlling motor vehicles at speeds much over 60 miles per hour, obsessed with sex and plumage, and weak and slow. Cetaceans are in all probability a lot smarter.

Given the environment of unfettered commercialism that we seem to think is best - with its rewards for 'marketing' and 'selling', as opposed to 'being good', or actually disseminating accurate information - is it any wonder that the poor are among the most resentful in our society?

Their young men come around to our houses and smash up the place trying to steal a few gadgets. Or do thousands of pounds damage to our offices when stealing a couple of computers they might get GBP £20 for from their drug dealing 'associates'. They blame scapegoats - and so often vote for hate and populist measures. (Like blaming bankers for crises of unpayable debts).

In some countries they keep virtually all such people in jail. (Where, I think, they give them cigarettes...).

Surely there should be much more investment in: Better rewards for socially productive interventions. And in innovations that spread good norms and values - often called 'education' and 'faith'.

After all social innovations and values are 'economic public goods', and so are under-provided by free markets.

The Christian church proved to be a pretty good, and durable, way of doing that in the absence of an effective state. And states, too, need moral and ethical foundations.

The Aims of This Blog

Most of the world's problems are ultimately due to the choices and actions of individuals. These can be changed for 'good-living'. You can make a bigger pie; You can restrict access to the pie - Or, redirect shares of it (while possibly making the pie smaller); Or, you can use information and incentives to get people to behave better.

There Is More To Value Than Just The Price

You Are Voting for Company Values with Your Spending

Efficiency is very important, because it is by being efficient that we get richer: through doing more with less (or the same). Hence it is important that we do not promote waste.

None-the-less when you buy anything you are actually voting for the values of the company, (or co-operative, farmer, stallholder, or state-enterprise) that is selling the item to you.

Thus if you always buy the cheapest, you are telling the company that it is only price that matters. And leaving it to other people to tell them things like: how well to pay their unskilled workers; how much to spend on the environment; whether to contribute to good causes; whether to use unethical marketing practices; and how much to minimise tax. (With globalization most of these can often just be ignored).

If you always buy the cheapest, the companies that find ways of getting round these 'external' costs will win. The others will just go bankrupt. Your spending is an enormous influence on producers, so choose your brands with care, and vote with your money for worthy corporations and coop's.

Some Chinese state enterprises, and Israeli kibbutzim, have schools, old age homes, and housing to support - and although they are moving slowly to market provision of these things, they still face markets where some employ 16 year-olds and house them in dormitories. Most large companies in the UK provide corporate pension plans for their workers - these can be a big burden, and make it near impossible to compete with companies that avoid the responsibility.

"Vote Wisely With Your Money"!