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Marketing Madness

Greetings and salutations, Wizbangers!

The soon-to-be-vacationing Kevin has asked me to step in and blog in his absence. Clearly, he feels that all of you could benefit from continued lessons from me. I am sure that all of you are honored to be in my virtual presence.

And I hear some other bloggers have been invited, too.

But seriously, folks, it's good to be back. I'm both humbled and honored that Kevin would invite me here once more, and I look forward to crossing swords with all of you once more. I'm also glad to see that Will, Mary Katherine, and Rob are all back as well. This ought to be interesting.

I'd like to open with a couple thoughts about free markets. Last time I posted here, I drew serious flak for my contention that the federal government should have the right to regulate commerce at public accommodations, such as restaurants, hotels, department stores, and exotic dance clubs.

Several expressed the sentiment that a business should be free to deal as it wished with its clientele, including in its selection of the clients with whom it deals, even if that business chooses not to deal with individuals of a certain race, religion, or nationality. The implicit assumption, I think, is that those bad actors who choose to discriminate on such invidious grounds will inevitably correct their behavior because they will lose the business of those against whom they discriminate as well as those customers who disagree with the business's discriminatory policies.

I happen to disagree with this position; I believe that an unregulated market will not inevitably correct such behaviors, and that even if it does so in the long term, the short-term damage is unacceptable, as individuals who are discriminated against may find it difficult, if not impossible, to use the public accommodations that would be otherwise available if discrimination were prohibited.

I see a particularly pernicious effect in the form of combinations, either on the part of businesses or on the part of the business customers. A couple examples:

1. The companies that provide restaurant supplies in a given geographic area may agree not to do business with any restaurant that serves customers of a given race. A restaurant that does serve customers of that race will face increased costs for supplies because of that combination.

2. Citizens of a town may threaten not to patronize a bowling alley that chooses to serve customers of a given minority race. The bowling alley proprietor has two choices: cater to the minority and not make money, or bow to the will of the combination and not serve members of the minority race. (Note: While it is certainly legal to boycott a business to change its behavior, a business, even in the face of a boycott, may not undertake illegal behavior under the antidiscrimination laws without sanction).

Given the potential for bad behavior, not to mention the imbalance in bargaining power that inheres in many transactions in an unfettered marketplace, the potential harm in a totally unfettered marketplace argues for at least some government antidiscrimination regulation.

Pennywit is so attractive to the opposite sex that women swoon at the very thought of him. He also blogs at Pennywit.com.


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Comments (27)

So let me see if I get this... (Below threshold)
Darby:

So let me see if I get this right.

You think that the federal, state, and local government should be able to tell companies what to do, how to do it, and whom they should do it with?

Your saying that an unregulated, AKA, the freemarket, is unable to regulate itself? That a company needs to be forced into doing something that it doesn't want too?

If an upstanding citizen goes into an establishment and witnesses something that is morally incorrect they are not capable of taking action for themselves?

The free market is more than capable of regulating itself. Only when big brother steps in and starts bossing people around do things get really messy.

The beauty of a free market is that it IS self-regulating. But, wait, that's not fair to everyone is it?

Or did I completely misunderstand the point you were trying to make?

Not just that, but by regul... (Below threshold)
Robert:

Not just that, but by regulating your actually making big brother BIGGER and thus stiffling competition, and the ability for the market to make its own corrections.

Bigger government is not the answer. Hell I would be happy if the deparment of education, health and human services, and transportation pretty much went away. The purpose of the federal government is to protect its citizens. The state governments should have the jurisdiction to administer civil service.

Darby.Let me clari... (Below threshold)

Darby.

Let me clarify:

In a totally unregulated market, a bad actor faces no official retribution for his actions. Moreover, a coterie of bad actors could theoretically force good actors to take bad actions.

In the absence of government regulation, what factor (beyond blind faith in the free market) provides forthe punishment of bad actors, particularly when they choose to game the market through combination?

And if the harm fostered by these bad actors can be more immediately mitigated through regulation, why should disfavored consumers suffer the harm propagated by those bad actors?

--|PW|--

I think the point is that t... (Below threshold)

I think the point is that there should be minor government adjustments to "keep honest people honest".

Think about it, in the early days of the industrial revolution, you have to admit that working conditions weren't exactly the greatest. Remember the fires where women jumped to their deaths? Just one example.

The system shouldn't be there to completely let companies decide, and shouldn't be there to completely protect the employees. There should be a fine balance between the two. There should be a balance between a Free Market and a Controlled Economy. We currently have a Controlled Free Market.

Just as we accept that severe left wingers have messed up ideas, we can also agree that severe right wingers also have messed up ideas, otherwise we'd all be libertarian. The middle ground is where things seem to work out the best.

Just remember human nature, even if the system trusts everyone to behave as they should (to keep the market going) there are always going to be a few bad apples that will ruin it for everyone, which is why there are laws enacted to "keep honest people honest".

Exactly, in liberal la la l... (Below threshold)
bullwinkle:

Exactly, in liberal la la land why leave anything to the people, since liberals are admittedly incapable of responsibilty why in the hell wouldn't they assume that reasonable people don't share the same flawed mindset? Liberals obviously know they are eithe unwilling or unable to make the right decisions without guidance from their nanny, and it would be unfair to let those who are capable of deciding on their own do so. It would show everyone just how weak and pathetic liberals are.

RE: Robert's post (August 1... (Below threshold)
AnonymousDrivel:

RE: Robert's post (August 11, 2005 10:48 PM)

Bigger government is not the answer. Hell I would be happy if the deparment of education, health and human services, and transportation pretty much went away. The purpose of the federal government is to protect its citizens. The state governments should have the jurisdiction to administer civil service.

Well, at least someone dusted off their Constitution. Do you have extras?

"In the absence of governme... (Below threshold)
Darby:

"In the absence of government regulation, what factor (beyond blind faith in the free market) provides for the punishment of bad actors, particularly when they choose to game the market through combination?"

My point is that a truely free marketplace regulate itself. If a company is acting improperly it will show. People won't spend their money there, it will flounder and fail, isn't that punishment enough? So, the company will either have to change its policies, or go broke. Even then, the damage may already be too great for the company to change its image in the marketplace.

If you don't believe that, then you're leaning towards more of a socialistic/communistic system of government. I for one don't like that idea too much.

The fundemental difference between us is that you seem to think it's up to the government to decide if someone needs to be punished for questionable actions. I think that if someone is doing something immoral, the average person is capable of deciding... Hey, this guy's a twit, I'm not giving him my money for his dirty rat bastard policies.

You walk into a restaurant, you see roaches crawling around, do you go there? It's a health issue, they either, clean up the roaches, or go out of buisness. Here regulation is apropriate. It's a community health issue.

2 people, sit out in front of the local state house. The gentlemen asks her if she'd like a manicure. She says yes, he states his price, she accepts. He proceeds to give the lady a manicure even though he is not licensed as a manicurist. So they arrest him. Yes, they ARREST him.

Is that not a little excessive? They set this up to prove a point. I'll let you figure out the point yourself.

I agree that there are certain area's of buisness that regulation needs to be enforced. I'm not going to disagree with that.

Here's one. I'm a cab driver. you require 2 things to become a cab driver where I live. A drivers license, and a Cab Drivers license, AKA, Hack license.

So to renew my hack on a yearly basis, it costs me, $15 for Criminal Record, $10 for Driving Record. $50 Drivers License renewal, $80 for Hack renewal, $20 for up to date passport photo's. That's 175 bucks, just so I can work.

The state gets my money, the city gets my money. You know what the hack license gives me other than the permission to drive a person from point A to point B?

You got it in one. Nothing.

Pennywit,Where the... (Below threshold)
mesablue:

Pennywit,

Where the heck do you live?

I've spent most of my life in the Chicago and Detroit areas and have never seen any reason for you to even THINK what you are supposing.

EXCEPT, for a few instances in Detroit (where I live now) in the reverse.

Or are you just like one of those bad afternoon DJ's that is just trying to stir the pot to get people to comment. ;-)

Darby:Correct me i... (Below threshold)

Darby:

Correct me if I'm wrong, but does your city issue a limited number of hack licenses in order to prevent an overabundance of cabs from using the city streets? I could be wrong there, of course.

In terms of "improper behavior," what I'm worried about is that customers or marketplace players might conspire together to behave improperly and use their market power to prevent others in the same market from behaving properly.

All:

Now that there's been some recognition that professions or other aspects of business could/should be regulated by the government, what regulation is acceptable?

A tort system to ensure that those injured by a business are compensated for that injury? A contracts system that enforces contracts and prohibits unfair contracts (unconscionable, duress, etc.)? An antitrust system that prohibits businesses from conspiring to fix prices or conspiring to prevent other businesses from entering the market?

Property is surely a right ... (Below threshold)
bullwinkle:

Property is surely a right of mankind as real as liberty.
John Adams

You'd take property rights from individuals in the name of the supposed greater good, as long as it's YOUR idea of what the greater good is. I bet you just loved the Kelo decision. Owning something gives you the right to use it however you see fit, if you don't agree with the way someone uses it you can maintain your own rights over your money and use it somewhere else. It's that simple, but since your inferior liberal brain can't grasp that basic concept I can see why you'd support taking away the rights of others. Just one more example of how corrupt an ideology liberalism is. Your wit is still extremely overpriced at a penny, but since you don't have any property rights over it I think we should decide that for the greater good you should keep it to yourself. I'm as justified in feeling that way as you are in feeling that the nanny state should dictate to use what the correct usage of our property is.

Let me take Darby's analogy... (Below threshold)
fatman:

Let me take Darby's analogy a little further:

Where I live, taxi companies are regulated by the state's Public Utility Commission (PUC). The PUC grants a limited number of licenses to operate taxi companies, but apparently doesn't limit the number of licenses a single person or entity can own. Which enabled one company to buy up all the PUC licenses in my area, thus establishing a monopoly. Which is why taxi service in my area sucks beyond my ability to describe it in words.

And I would say that having ONE commenter agree with you (as of the time I'm typing this) and saying "...there's been some recognition that professions or other aspects of business could/should be regulated by the government" (presumably among the commenters) is stretching it a bit, IMHO. Not counting your comments, that's one out seven (now eight) agreeing with you to some extent. That's hardly a ringing endorsement.

I believe that an unreg... (Below threshold)
mesablue:

I believe that an unregulated market will not inevitably correct such behaviors, and that even if it does so in the long term, the short-term damage is unacceptable

How about a real world example of this with some linkage. Not just speculation.

History and our daily experience prove you wrong.

Thirty years ago your argument had some merit in some places in this country. Times have changed and they will continue to change. Not overnight and not with the heavy hand of government that would only cause resentment.

I look at how my grandparents felt about such issues, then my parents, myself and then finally my children. The difference is amazing.

I place my faith in time, not the government.

Penny, if you have children of your own and don't live in an insulated environment you should be able to see on your own that this will be a non-issue, nay, is a non-issue in most places.

OT:Bullwinkle, sta... (Below threshold)
mesablue:

OT:

Bullwinkle, start blogging -- now. Not like you don't have the time.

Or, would be happy to buy you a drink next time I'm in PDC, I'll drive down the coast.

Too many times you've made my needing to post a comment irrelevant by being right on point.

"Correct me if I'm wrong, b... (Below threshold)
Darby:

"Correct me if I'm wrong, but does your city issue a limited number of hack licenses in order to prevent an overabundance of cabs from using the city streets? I could be wrong there, of course."

Last time I checked, there were about 100 hack licenses out there in my city... There are 2 companies, each run 8 cars. So a total of 16 cabs cover a city of about 100,000 people. Not too many cabs, most people have cars here.

So limiting the amount of cab drivers is right out, there simply isn't enough of a demand to have more than 40 drivers working at one time.

80 bucks is excessive, considering what the license entails. Which is just the city saying, yep, you paid your dues, so you can drive people around. Which my Drivers License should entitle me to do anyways. Not to mention that there is talk of increasing the license dues, you know, to counter the cost of all that paper work the city workers do down at city hall.

My hack license doesn't entitle me to anything special. Its dependant upon my driving and criminal record, just to get it. It doesn't exempt me from speeding fines, it doesn't exempt me from accidents, and it certainly doesn't, in anyways shape or form, affect the companies auto-insurance rates.

So what is it? It's a retarded regulation that someone came up with to fatten the cities wallet.

ANYONE can get a cab license in my city. All you need is clean records. In my case, moderately clean.

What about that un-licensed Manicurist, Penny? Why does a private venture between two citizens need to be regulated?


Is it to protect the poor uneducated folks out there?
Or is it just another way for the government, either local, state, or federal to line their pockets with other peoples hard work?

Already I fear we're moving more towards a pseudo-social- communistic government. Private property, what's that? Kelo's solved that issue.

What's next Penny? Shall we regulate the freedom of speech clause in our constitution too? Oh wait. I forgot. The seven forbidden words to say on TV and radio. Well fuck me, if that isn't a first step towards regulating freedom of speech.

But hey, what do I know, I'm just a poor unedjumacated republican(who's leaning more libertarian, now though).

From the sounds of it Penny, it appears you don't have faith in your fellow man. It appears that you honestly believe that people are unable to watch out for themselves. That if big brother doesn't help them live their lives, spend their money, and even tell them what they should eat, then they're doomed.

Do you have so little faith in our founding fathers? Oh I know, it's a LIVING document, so it should grow. What's it growing into? That's what I'm afraid of.

I'm not saying regulation of things is a bad thing. But Liberals, and Democrats(that always confuses me, there are liberals, and there are democrats, but there are conservitive democrats too, and whatever, you know what I mean) want to regulate EVERYTHING. Even the dumbest of the inbred hick farmers know that it's against the law to use certain pesticides, and that's a good regulation.

Regulation is like anything else, it is acceptable in moderation.

There's a far more recent a... (Below threshold)
fatman:

There's a far more recent and far more egregious example of "regulating" free speech than George Carlin's seven dirty words; it's called the McCain-Feingold Act.

Bullwinkle:OK, are... (Below threshold)

Bullwinkle:

OK, are you saying no regulation at all? Does that mean no tort system for recovering damages from a business that wrongs you? No system for official rescission of an unconscionable contract or one reached under duress?

Mesa:

When you survey your family, I note that changes in attitude took three generations. Further, I note that behavior was changed through regulation, rather than through the free market.

Further, I chose my "race" hypothetical because the triggering mechanism for this discussion was the Danish pizza parlor proprietor who discriminated against customers based on nation of citizenship.

Fatman:

I note that Henry (for one) said regulation can keep people honest, and that Darby (for another) acknowledged that some professions need regulation.

Still, let me offer this: Should lawyers be required to get bar licenses? Should doctors be required to sit for their boards?

And, on a related note,

Darby:

I ignored the manicurist at first because I was more interested in assessing antitrust and discrimination regulation than in examining the issue of professional licensing.

You asked me to justify manicurist regulation, so I decided to see what might result if manicurists are not properly licensed. I found this 2001 story about a person who sued a manicurist over improper use of a chemical. Seems that her nails were discolored and use of her fingers was impaired. Granted, the manicurist was probably licensed, but it occurs to me that a well-tuned licensing scheme, or at least a regulation prohibiting the use of a certain chemical in manicuring, is superior to waiting for the free market to shut down a manicurist after he has disabled several customers' fingers.

It occurs to me that in many professions, particularly those in which there is a chance of serious harm to life or limb in the professional is negligent in the performance of duties, there is some justification in ensuring that those professionals meet a reasonable standard of competency.

As for your hack commission ... I am sorely disappointed in it. I have heard that some communities limit the number of hack licenses available in order to prevent too many cabs from using the roads. Further, I know that a community adjacent to my own has a rather complicated fare system set in place in order to discourage cab drivers from artifically inflating fares through "creative" routes.

And Darby, no, this isn't about my lack of faith in my fellow man. Instead, I have faith that eopel will not only watch out for themselves, but also tend to stick it to the other guy, given the chance. This sort of bad behavior, repeated again and again over time, convinces me that many businesses do require regulation.

======

OK, if you guys would like to see what I mean by the necessity of regulation, let's take a look at a recent, real-world situation:

To my eye, a recent example came up in Florida. A builder built a number of houses in a neighborhood for several homeowners. Included in the form contracts (signed by each individual homeowner) was a clause that prohibited the individual homeowner from talking to other homeowners in the development about his house.

Not long after moving in, several homeowners discovered serious defects in the construction of their homes. Several of these homeowners called a meeting with other owners in the development to discuss their property and their options ...

And the builder promptly slapped the homeowners with a breach of contract suit.

The question: Is this contract clause fair? Should a court throw out this clause as void against public policy? Should this clause be enforced becuase the homeowners didn't look out for themselves effectively in the purchase?

Furthermore, should the builder be held liable for the defects in the homes? I point out that even requiring warranties to be written into contracts if a form of regulation.

Another example: Not (for now) analyzing specific regulations of the Truth in Lending Act, is there merit to the idea that government should require that terms of credit be extended to consumers in a uniform way, so that consumers who are not financial gurus can better understand their contracts with the credit companies?

Another example: Antitrust regulations. If I am a freelance professional, should I be permitted to talk with other freelance professionals in my industry, and have all of us agree on what we think is a reasonable rate for our services, and all of us refuse to budge from that rate when negotiating with clients? What if we inflate that rate because we are the only players in the market? Should there be some regulation to prevent us from forming this sort of combination?

How about this: How would you address companies that fail to honor their contracts? Should they be held to their contracts in court? That's a form of regulation, after all. What about a company that's negligent and harms a customer tangibly? Would the "free market" correct that business by shutting it down, or should the tangibly harmed customer have some recourse against the bsuiness?

I await answers.

--|PW|--

What happens when the gover... (Below threshold)
Steve L.:

What happens when the government says, "You can no longer buy supplies from company X because they have a policy of (fill in the blank)?" It's the same thing. Government telling you who you can do business with.

How is that different from exclusive clubs? Take for instance the whole brouhaha about Augusta National. Should they have the right to accept as members who they chose? Absolutely. The other side of that same coin is the LPGA. Their rules expressly state that a player must be a woman. How is Augusta National's position wrong and the LPGA's not?

pennytwit, you're confusing... (Below threshold)
bullwinkle:

pennytwit, you're confusing property rights (that you want to take away like a good little Marxist) with the tort system, which is exactly how we handle it when someone attempts to deprive us of our property rights. Who cares if some people were stupid enough to sign contracts that took away their right to speak out? I have to live with my mistakes, that's called being responsible, they should have read the contracts carefully before they signed them. They were obviously weak-minded liberal morons (I guess that goes without saying) that deserved what they got.

How about this: How woul... (Below threshold)
bullwinkle:

How about this: How would you address companies that fail to honor their contracts? Should they be held to their contracts in court? That's a form of regulation, after all. What about a company that's negligent and harms a customer tangibly? Would the "free market" correct that business by shutting it down, or should the tangibly harmed customer have some recourse against the bsuiness?

You seem to think that the people who signed a contract that barred them from discussing their homes should not be forced to comply with the terms of that contract while at the same time you seem think that a contract exists between a business owner and anyone who wants to do business with him when no such contract exists. Would you force wholesalers to sell to the general public at the same price they sell to merchants by using the same reasoning, or lack of?

"You seem to think that the... (Below threshold)
Toby928:

"You seem to think that the people who signed a contract that barred them from discussing their homes should not be forced to comply with the terms of that contract while at the same time you seem think that a contract exists between a business owner and anyone who wants to do business with him when no such contract exists."

You strike to the heart here BullW! The problem with the old style discrimination Pennywit cited is that it was discrimination enforced under the color or law. That made it, in fact, a business regulation. In Birmingham during the bus boycott, the bus lines were being ruined and would have willing changed their 'coloreds to the back' policy but the local laws would not permit it. The sovereign consumer, of any stripe, rules when the playing field is level.

Tob

Damn ... it was discrimina... (Below threshold)
Toby928:

Damn ... it was discrimination enforced under the color of law

All thumbs this morning.

Tob

I missed you offer to but m... (Below threshold)
bullwinkle:

I missed you offer to but me a drink mesa, that would be cool but I'm leaving for Nevada if I can ever find a piece of land I like to build a new home there. As far as you driving down, you'd have to rent a 4-WD and probably one with a winch to get in since Emily washed out the road. I had to raise my suburban another 8" just to clear the boulders in the road. Since this is the Land of Mañana the government won't be fixing the road anytime soon. I came down here with the common misconception that mañana means tomorrow, it really just means "not today", leaving open the possibility that something will happen sometime in the future, just not the following day after it's said.

Almost forgot, I'll take yo... (Below threshold)
bullwinkle:

Almost forgot, I'll take you up on that offer if you get here before I go to Nevada or if you are here when I come back, hopefully by June of 2006. I'm not leaving here permanently, just long enough to build a house or two and establish legal residency in Nevada and do my share to vote that idiot Harry Reid out of office.

Bullwinkle, start bloggi... (Below threshold)

Bullwinkle, start blogging -- now. Not like you don't have the time....
...Too many times you've made my needing to post a comment irrelevant by being right on point.

bullwinkle: You can apply HERE
;)
Back on topic:
Toby has it pretty much on the mark. the biggest barrier to civil rights was not the lack of laws outlawing discriminatory practices, it was the existence of laws requiring them. Those barriers exist still, albeit in different form. Affirmative action enshrines the concept of racial inferiority in law today. For instance, Condi Rice "benefitted" from AA because she could not avoid it. The result is that some people (particularly liberals) discount what she has to say because they honestly believe she could not have made it where she is without such practices, therefore she is not as smart as she seems, due to affirmative action.

Whoa! My eyes are glazing ... (Below threshold)
Mark:

Whoa! My eyes are glazing over.

Pennywit:

The tort system, contract law and property law are not synonymous with "regulation" of a would-be free market. "Regulation" is an entirely different animal. "Regulation" is government intrusion into how one conducts their business.

One can have a totally free market place in the midst of our common law system of torts, contracts and property.

Random Numbers said, Aff... (Below threshold)

Random Numbers said, Affirmative action enshrines the concept of racial inferiority in law today. For instance, Condi Rice "benefitted" from AA because she could not avoid it. The result is that some people (particularly liberals) discount what she has to say because they honestly believe she could not have made it where she is without such practices, therefore she is not as smart as she seems, due to affirmative action.

Agreed and thanks for the posting material. Much obliged.

Bullwinkle,I go to... (Below threshold)
mesablue:

Bullwinkle,

I go to PDC about four times a year and drive my Ram 3500 4wd. Think I could make it. Have to stop at my buddy's place in Morelia first, though.

I was wondering how you guys survived the hurricane.

If you do ever get up to PDC please check out my friends at "Chicago Joe's". Great people, who are Cubs fans, so forever in my heart. But, they also have one of the best Mayan chefs in town and turn out much better food than most of the so called "local" places.




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