I’m an incompetent consumer. I have two settings: Buy and Don’t Buy. When I need to economize, I hit the brakes on spending indiscriminately. When I feel less constrained (by either circumstance or reality), I open my wallet, put my hands over my eyes, and hope for the best. More highly evolved consumers, I am given to understand, are not binary. They read Consumer Reports and Barron’s, they collect bids, they haggle, they exploit stock market trends and receive every last deduction they’re entitled to under the tax code. They know what the agate boilerplate says on their credit card bills. If they’re dissatisfied, they ask to see the manager or they write the company president.
I’ve made intermittent stabs at being like that. On the rare occasions when I consult it, I actually like Consumer Reports. The creation of Consumers Union, which publishes it, was (I have written) one of the Progressive movement’s greatest triumphs. When I visit my broker I pretend to ask him tough-minded questions about the direction of the markets and he pretends to answer them. I am, after all, a onetime reporter for the Wall Street Journal and onetime deputy business editor for U.S. News and World Report. But these spasms of competent consumption seldom last long. Eventually I return to my natural state of laziness and abject ignorance.
My persona as a journalist is quite different. On the job, I like to think, I am vigorous, tough-minded, and fearless. Nothing energizes me more than to burrow myself under a pile of received wisdom and emerge triumphant with the truth. It’s fun, I get paid to do it, and the utility to readers of my hard facts and surgical analysis gives my life meaning. Why can’t I be like that during my off-hours? Beats me. Fortunately, help is on the way from the consumer movement, which has revived itself with sufficient vigor that Slate has ordered up a column about it. Henceforth I will steer my hard-nosed public self into a realm that has long eluded my soft-bellied private one.
The consumer movement’s revitalization is largely the work of Harvard Law professor Elizabeth Warren, who with exquisite simplicity observed (in a 2007 essay for the political quarterly Democracy), “It is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house. But it is possible to refinance an existing home with a mortgage that has the same one-in-five chance of putting the family out on the street.” The government’s role in consumer protection, Warren argued, must extend beyond toasters and crib railings and safety belts to the financial markets, where exploitation of the unwary customer has become the norm. Thus was born, in the recent financial reform law, the Consumer Financial Protection Bureau. Warren may end up running it. (President Obama is hinting he’ll appoint her. Stay tuned!)
It may be some time before the CFPB gets it together sufficiently to actually propose new protections for financial consumers. In the meantime, though, the Federal Trade Commission, the Justice Department, and the various state attorneys general will be working, to varying degrees and with varying success, at guarding your wallet. There are also a host of more traditional consumer issues (salmonella, etc.) being grappled with at the Consumer Product Safety Commission, the Food and Drug Administration, the Transportation Department, the Environmental Protection Agency, and assorted other Cabinet and sub-Cabinet regulatory agencies. Writing in the New Republic in February, John Judis declared that President Obama is presiding over a “quiet revolution” in regulatory policy. For the first time in years, regulatory agencies’ budgets are being increased rather than whittled down, and in the White House the energetic and crafty Cass “ Nudge” Sunstein has taken charge of the Office of Information and Regulatory Affairs, an agency nobody’s heard of that wields considerable power over regulatory policies government-wide. Meanwhile, various private consumer groups are agitating for the government to address assorted ways in which consumers are getting screwed. I shouldn’t want for subject matter.
I am not one of those people who trembles at the epithet “nanny state.” The government has a necessary role in regulating commerce, and sometimes even in protecting the private sector from itself. You didn’t find a lot of libertarians, I would guess, at AIG when its credit default swaps brought the company to the brink of bankruptcy in September 2008. At the same time, I am not someone who assumes that regulation is the answer to every problem. I’m currently struggling to understand why the government must guarantee “net neutrality” to consumers who hog bandwidth by pirating movies and doing God knows what else. Maybe there’s a reasonable answer, but I haven’t found it yet.
In general, I believe that unwary consumers like my (I hope) former self tend not to get the help they need, by either the government or private industry, to understand the blizzard of explicit guarantees and pro forma consumer disclosures that purport to protect their interests. People are busy and depend on reasonable goodwill from the places where they perform the boring rituals of everyday consumption. (I include here the government itself.) Sometimes they get it and sometimes they don’t. Government agencies are created with the best intentions to protect the interests of you and me, but over time they tend to succumb to the desires of corporate lobbyists bearing campaign contributions to the politicians who control the purse strings. That’s why places like the Federal Reserve Board, which are supposed to be attending to the needs of taxpayers, end up having to create sub-agencies like the CFPB that … attend to the needs of taxpayers. It may seem like duplication, but it’s the only way anyone can think of to steer government away from its natural tendency, when left to its own devices, to pamper fat cats. If this happens at the Fed, which is freer from political meddling than any regulatory agency I can think of, it can happen anywhere.
Mostly, my aim in writing this column is to educate readers about the rococo perils they face in the marketplace. I desperately need someone to explain these to me, to flesh out their drama, and to tell me why and how they arose in the first place. Nobody else has volunteered for the job. So that someone will have to be me.