One spring morning in 1972, I went to National Airport in Washington, D.C., to catch an Allegheny Airlines plane to Hartford, Connecticut. A large audience in downtown Hartford was gathering at noon to hear me and other speakers. Hurrying to the ticket counter by the jetway, I arrived in time with my confirmed reservation in hand. But the passenger clerk told me and the legislative aide to Connecticut Senator Abraham Ribicoff that we could not board because the plane was full.
“What?” I protested, “You can’t be serious. I have a reserved seat.”
“Sorry,” he said, “you can take a small plane to Philadelphia and change planes to Hartford arriving in several hours.”
Too late for my speaking engagement. Thanks a lot.
Attorney Reuben Robertson took my case all the way to the Supreme Court, which unanimously ruled that bumped consumers could sue an airline for illegal and deceptive practices. As a result, all the airlines changed their deliberate overbooking practices. Since then, when an airline overbooks, it offers seated passengers money to get off the plane and take the next flight, which allows overbooked passengers to get on board. This solution has worked well.
In this instance, I was able to make a difference. Unfortunately, we consumers are amateurs increasingly controlled by large vendors who are staggeringly skilled at relieving us of our dollars and our ability to fight back. They are remorseless and organized; consumers are voiceless, isolated, and unsupported by the supposed forces of law and order. Neither regulation nor litigation offers adequate protection. As I have pointed out, our state and federal legislators are making it more and more difficult for us to take corporate crooks to court no matter how serious our injuries, widespread the frauds, or unconscionable the conduct. The big business lobby (small business, having to face customers and larger competitors, is a different story) is so powerful that it writes and unwrites the legal rules. Large corporations have become the law unto themselves.
But, say the theoretical free enterprisers, it is the market that rules, not the big sellers. The market is king. Well, the market is only king when quality competition rules, and vendors get around it by destroying, attenuating, or avoiding competition and maintaining control of consumers. The nullification of authentic competition goes well beyond monopolistic practices; it is an immensely intricate artifice of the ingenious commercial mind. Ever see a television ad for a new car in congested traffic? Ever see an ad for a modern public transit system with comfortable commuting passengers reading, chatting, or snoozing while their super-rail zooms by a highway clogged with trucks, vans, and cars? Sixty years of automobile company propaganda, and of course we believe that mass transit is inefficient compared to the gas guzzling, polluting motor vehicles that fill up one seat out of five on expensive congested roadways. When we think of mass transit, we envision old-style buses, conventional trains, and their incomplete routes in suburbs designed for highways and motor vehicles.
Ever wonder what we mean when we say certain food is delicious? Is it the sugar added for our taste buds by the processors? What’s in the food may not delight our arteries, kidneys, liver, heart, or cells, but as unenlightened consumers, we figure that what doesn’t immediately pinch can’t possibly hurt. Meanwhile, our children pollute their bodies with the ominous fat and sugar from the McDonalds pumping machine.
See all those advertisement for double cheeseburgers, and those fat-immersed hot dogs that are the dietary equivalent of deadly pink missiles. Millions of ads everywhere, despite studies connecting fatty food to diet-related diseases costing over three hundred thousand lives a year. You never see an anti-ad that gives dietary cat-scans for the sake of real knowledge—that elusive thing that makes a market work. You’ve never seen one of these anti-ads on television, although it’s a sight I bet millions of physicians, dieticians, nutritionists, and vegetarians would welcome. You are surely not getting the other side of the story.
The market respects the consumer only to the extent that the consumer brings knowledge to the market. In the 1950s, the jukebox era of automotive design, GM would say “we’re giving the consumers what they want and that’s why we’re making our profit.” How can they say that’s what motorists wanted when they were selling them style, speed, and power but keeping them in the dark about seat belts and other safety devices, lower auto insurance rates, fuel efficiency, pollution control, protective bumpers, and ease of maintenance and repair? All those issues were off the boards because the other car companies copied the GM giant. Economists call this habit “protective imitation.” When many functional features became publicized by consumer and Congressional advocacy and became subject to regulation and European-Japanese competition, surveys showed an upward curve of consumer receptiveness. Things started to change. Before long, car companies were bragging about features they had opposed for years. Regulation and higher quality competition brought motorists more life-saving, money-saving, and lung-saving products.
One sees the same sequence of progress in the food market. When I was a teenager, my father’s restaurant had a Polish-American baker who made good, solid, fresh loaves of bread daily. Some people liked them, but they were never as popular as the Wonder and Tiptop breads in the grocery stores. You know it’s Wonder Bread without looking, because you can pick up a loaf, squeeze, and find your fingers colliding with your palm. There might have been a whole wheat loaf on the shelves, but, by and large, the choice back then was limited to bleached white flour bread. Then came knowledge—Senate hearings, articles in newspapers about nutrition, diet, weight, and disease citing independent experts, followed by national television shows like Phil Donahue’s showcasing nutritious whole foods. That knowledge was carried into the supermarkets as forty million Americans embraced diets more conducive to good health. The stores diversified their offering with more bread varieties and more fresh vegetables and fruits. Later, grocery shelves offered organic foods, low-fat foods, less sugared foods, and fewer empty calories. Not everyone, to be sure, but millions of eaters have gotten on the right track. Larger consumer frames of reference make markets tick, and smaller competitors can move into the markets ignored by obtuse vendors.
But not always. It depends whether the markets are truly open to competitors. Until the 1970s, cartel regulation froze out new airlines. The big airlines specifically demanded and received this regulation, called the Civil Aeronautics Board, in the late 1930s. When that barrier was finally removed, some new airlines (such as People’s) were created that offered cheap fares. The big airlines, with their greater reserves and credit lines, had several ways to fight back. They could merge with the smaller airlines, or drive out their limited-route competitors by predatory pricing. They also controlled the finite number of jetway slots at airports.
In a twenty-year span, more than twenty-five airline mergers were approved by the Department of Transportation. Many fares were outrageously high, especially on essentially monopoly or duopoly routes such as Washington to Pittsburgh, Hartford, and New York. Travelers adjusted, pacified in part by frequent flyer miles and senior packs. The business traveler, naturally not wanting a Saturday stay-over, paid dearly. Then came Herbert Kelleher’s Southwest Airlines and its methodical expansion out of Texas. Gradually, travelers came to see that they did not have to spend long minutes pressing recorded announcements one, two, three, four, and then waiting while music or advertisements assaulted their ears. Why, sometimes when I wanted to hear classical music while working late hours, I dialed United Airlines.
By contrast, most of the time after three or four rings one found a real person with real answers at the other end of the Southwest Airlines phone. We did not have to pay extra to change a ticket. Southwest’s employees went to work wanting to say yes to customers, not a variety of defiant no’s. In 2000, 2001, and 2002, this cheapest airline with the best service on the newest planes made more profits than its three biggest competitors combined—United, Delta, and American. At least while Southwest’s superiority lasts, the awful quality of big airline management, so addicted to self-pampering and rewarding itself with unmerited bonuses, is exposed. Kelleher has been receiving much lower pay than the heads of those diminishing companies.
Often, it takes a long time for a company like Southwest to break through and raise expectation levels of consumers and market to those levels. Typically, mimicry feeds the craving for control by businesses that like to avoid the uncertainties of competition. In addition to overt price-rigging, as has often occurred in the highway construction industry, there are endless ways to suppress competition. Signaling for parallel pricing (which avoids smoke-filled rooms that invite antitrust prosecutors) occurs throughout the economy right down to the local banking, repair, and medical-dental service markets.
Then there are all those unfair, fine-print contracts we dutifully sign on the dotted line with nary a glance at the oceans of words in their pages. Lawyers call these “contracts of adhesion” and, indeed, they stick it to you when you sign a lease, buy a car, purchase a home with a mortgage, obtain an insurance policy, purchase software, open a bank account, or end up in the hospital. Recall that one of the pillars of our presumed free economy is freedom of contract. Suppose you want to exercise this freedom. You are appalled by the fine-print sales contract at the GM dealer and stomp down the street to the Ford or Toyota dealership. Same fine print. You see the State Farm auto insurance policy and hop over to the Allstate office. Same fine print. You recoil from the Visa credit card application form with its stream of conditions and trundle over to Mastercard. Priceless, but find the same fine print!
These private corporate legislatures lock up consumers in a tighter and tighter vise. These fine print contracts, representing corporate regulation of consumers, are so unbalanced as to be comical—were they not so tragic. A spreading contract provision keeps you from going to court in a dispute, and restricts you to compulsory arbitration. Some of these so-called contracts contain a provision stating that the vendor reserves the right to change unilaterally the terms of the agreement. That is why the airlines, for instance, can decide arbitrarily to require more frequent-flyer miles and pile on more onerous restrictions than you initially were accepting with good faith.
A contract is a meeting of the minds with reciprocal obligations. When was the last time you met the mind of Microsoft Windows, Wal-Mart, Sears, or your HMO? The whole system is an outrageous farce with a noncompetitive corporate government taking away our constitutional rights (especially to a trial by jury) in ever more brazen fashion. Some courts uphold one-sided fine print by resorting to absurd legal fictions, such as the presumed consent of the buyer. When there are no choices, consent is effectively coerced. Some excellent judicial decisions in the 1960s invalidated certain “unconscionable” landlord leases. Such judicial wisdom is rare today.
Year after year, the pseudo-contract squeeze intensifies and tips the balance of negotiating power even further in favor of sellers. The more these vendors get away with, the more they seek to get away with, until the consumer becomes a contractual serf. This serfdom is illustrated in the inability of medical malpractice victims to sue their HMOs for the most serious injuries. In such cases, the fine print was not just in the contracts but also in an arcane provision in a federal law called Employment Retirement Income Security Act (ERISA), enacted in 1974.
The most egregious injustices are inflicted on the poor. They have always paid more because their powerlessness attracts predators. Thanks to fine-print contracts, pay-day loans, rent-to-own rackets, predatory lending, landlord abuses, and check-cashing gouges are legal and crushingly enforceable. The results? Four hundred percent cumulating interest rates on pay-day loans, forfeiture of one’s small home for missing payments on a television set, and countless other horror stories. Economic abuses in the inner city define the indifference or corruption of elected officials and their uninterested or underbudgeted prosecutors. Much financing of these rip-offs comes from Wall Street financial companies whose executives, not wanting to dirty their hands, act through intermediaries. The lawmakers are often their agents. In the 1970s, usury was illegal. What to do? Presto, repeal the state usury laws and watch interest rates on consumer loans skyrocket.
Another ticket to consumer serfdom is the blizzard of fees and penalties imposed on unconsenting customers by banks, credit card companies, airlines, and numerous other firms. These charges become profit centers, not just a way to unbundle general prices. You inadvertently bounce a check, which costs your bank under two dollars, and you’re charged thirty dollars. These and other bank charges—there are over three hundred different varieties—total over $29 billion a year. Plunder!
The smelly avarice takes many forms. Your series of checks that are presented for clearance are chosen so that the big one comes first—so you can bounce three smaller ones for three penalties instead of one. ATMs were introduced as a free service to help banks become more efficient and cut the cost of banking services. Now ATM fees are profit centers. All these charges breed less revolt or resistance because you do not have to write a check.
Your monies are in their hands so they can just debit them, thereby inducing passive nonresistance. (The government, by the way, does not include fees and penalties as part of its inflation index because they are not considered prices.)
Similar rip-offs abound. The computerized consumer credit and debit systems of charges and payments make possible unilateral impositions that would have been laughed out of the country not too many years ago. The coercive, often unannounced, packing of fees and charges during real estate settlements amount to $10 billion a year, according to Bush’s Secretary of Housing and Urban Development Mel Martinez. In the late 1990s, Advanta credit card company announced that as of July that year if any of its customers quit doing business with it, they would be charged twenty-five dollars. Now, imagine the year is 1950, and the only payment is by cash or check. A company says to its customers that anyone quitting it would be charged twenty-five dollars. How many customers would have rushed to make out the check?
A Chicago bank declared that any customers using a live teller would be assessed a fee. Another bank stated that calling the bank more than twice a month would incur a fee of two dollars a call. The same bank charged fifty cents for a deposit slip—the kind that used to be piled up for the asking under the glass tables. Similarly, General Electric (GE) Credit stated it would charge customers more if they paid their credit balance on time! How’s that for punishing prudence and punctuality? GE Credit makes its money from late payments. Perverse.
So much data on consumer purchases are in computer banks that one-stop banking can mean a one-stop octopus. Just try and leave for another bank once you have all your various financial transactions locked in a matrix of charges, credit ratings, credit scores whirling around the nation or the world to whomever without your consent. And this is just the beginning. Control over your financial transactions is a prime objective of financial institutions these days. That is why they oppose opt-in rights for consumers and why they are increasingly surcharging you if you pay or order the old fashioned ways. The power to debit is the power to control. It’s convenient to a shopper, and you just won’t feel a thing.
Some of the largest crimes and frauds are the ones you do not know about or feel, such as third-party payments. But all of us pay for them. Take the rapacious computerized billing fraud in the $1.6 trillion health care and pharmaceutical industry. In 1992, the General Accounting Office (GAO) estimated that 10 percent of health care spending is defrauded. Today, that would be $160 billion down the drain. The nation’s leading expert on this rake-off, Malcolm Sparrow, who teaches at the Kennedy School of Government at Harvard University, estimates that health care fraud costs could actually be three times that amount. With a doctorate in applied mathematics and experience in police law enforcement against fraud, Sparrow, author of License to Steal, asserts that the federal government is seriously under-investing in fraud control and doesn’t even want to know its scope. Under Bush, the Inspector General of the Department of Health and Human Services has stopped reporting the amount it is overpaying doctors, hospitals, and other health care sellers for Medicare. The audits themselves are not comprehensive. They exclude, for example, services not provided, and the auditors do not contact the patients to verify that the billed services were actually provided. Sparrow told the weekly Corporate Crime Reporter that “most kinds of fraud would go unnoticed by such an audit protocol.”
The savvy know the codes and know how to provide bogus documentation when they submit claims. Sparrow sees new legislation leading to bigger crimes, such as pharmacy-related frauds in the Medicaid programs. He believes that enforcement budgets are pitifully small—“one tenth of one percent of what is being spent on the program, or less. Multiply that budget ten or twenty fold and it will pay off handsomely. Typically, return rates are five to one, ten to one, in some cases 200 to one.” As for effective penalties that deter “corporate crime,” Sparrow sees two. “One is the threat of exclusion from major public programs like Medicare and Medicaid,” The other? “Personal criminal liability for executives. That does get their attention.”
Ever hear of Malcolm Sparrow? Ever see him on the television news or the network magazine shows? All he has is meticulous knowledge of how intricate gigantic frauds are perpetuated, and how to document and do something about them so that health care consumers get what they pay for. Think about it: $150 billion to $450 billion a year and growing. This is real money, enough to cover the tens of millions of Americans who lack health insurance. Sparrow toils in his office in Cambridge, rarely called by the media, very rarely consulted by members of Congress about enacting effective, funded fraud control systems. Law and order goes out the window when such corporations are involved, when scams are so rampant that they become the accepted way of doing business. A form of looting.
As taxpayers and consumers, we pay for this seamy kind of business. Stealth forms of fraud that escape the attention of regular people going about their lives is the mark of a complex, multitiered economy able to shift heavy costs onto innocent citizens. Consumers ultimately pay all the bills, because they are the path of least resistance.
The worst penalties consumers pay are death, injury, and sickness due to marketplace failures. The ultimate abuse consumers endure stems from hazardous products, toxic chemicals, and the compulsory consumption called “pollution.” The toll is terrible, though historically it is occasionally reduced by protests of those afflicted and their families and friends.
It is a reflection of our current powerlessness that politicians running for office rarely place these human casualties on their campaign agenda. According to OSHA, 58 thousand Americans die yearly from workplace-related disease and trauma. The Natural Resources Defense Council estimates 64 thousand people die every year from air pollution. The Harvard School of Public Health physicians put the number of deaths due to medical malpractice in hospitals, excluding emergency rooms, at 80 thousand a year. The Institute of Medicine reports an annual loss of about 18 thousand lives due to lack of health insurance coverage. Medical journal articles estimate 100 thousand Americans lose their lives each year due to adverse effects of medical drugs. The National Highway Traffic Safety Administration reports annual deaths of roughly 42 thousand (to either motorists or pedestrians) from motor vehicle crashes.
Most of these casualties are preventable, but this kind of violence doesn’t much interest legislators, governors, or presidents—except when the people rise up and protest. Imagine if all these preventable human losses together, occurring month after month with dismal predictability, produced the hue and cry that the September 11, 2001, terrorist attacks provoked. One, of course, is deliberate premeditated violence, the other usually results from incompetence, carelessness, crime or rationalized willfulness such as dirty electric generating plants and drug industry greed. But it hardly consoles a mother who loses her child to malpractice, to respiratory disease, or a reckless construction workplace cave-in to be told that the cause of death was not terrorism. The crux is the preventability of all styles of violence. Stopping preventable violence should be our cause.
Look at how the tobacco industry’s manipulation of youthful emotions and fantasies was challenged after millions of tobacco-related deaths in the United States. It started with the release by Dr. Luther Terry of the Surgeon General’s first report on tobacco and health in 1964. Our society was puffing away when this bomb-shell dropped on a population divided almost evenly between smokers and nonsmokers. Smokers were aggressive, blowing smoke in your face and superseding the rights of nonsmokers to breathe tobacco-free air. I recall in college, lecture hall after lecture hall filled with cigarette smoke. Most nonsmokers didn’t dare to demand that smokers refrain.
This first report was followed by annual reports, regularly adding to the evidence and findings. By the late 1960s, the nonsmoking movement was underway. My associates and I were in the vanguard of pressing for smoke-free airplanes, interstate buses, and railroads. Smokers were not pleased, but the tide was unstoppable, notwithstanding the tobacco industry’s hiring of scientists to deny repeatedly the connection between cigarettes and lung cancer and other ailments. Official reports led to breakthroughs in the hitherto self-censored media. Physicians began counseling more of their patients. The early, unsuccessful lawsuits that were filed against Big Tobacco were followed by more successful ones that uncovered incriminating internal company documents about the deliberate hooking of youngsters. Inside, whistleblowers came forward. Sixty Minutes and 20/20 commenced a series of exposés. The fight over tobacco became a more regular beat for newspapers and magazines. Accumulating medical research about the varieties of tobacco-related harms was reported on the evening news.
Word of mouth spread. Local antismoking groups were formed all over the country, their members trained in tobacco-control and tobacco-free areas strategies. Community health leaders began to meet and plan. The decisive blow came when trial lawyers and state attorneys general got together to file the now celebrated lawsuits against Big Tobacco. The resulting settlement of $206 billion over twenty-five years and disgorgement of millions of pages of internal company documents lifted the profile of a scourge that was taking well over 420 thousand American lives a year. (That’s more than the total number of American lives lost in World War II.)
Smoking adults now comprise less than 25 percent of the adult population, from 45 percent in 1965. This great, ongoing consumer health victory reflects the efforts of millions of people. Each time a person objected to smoking in public areas, it helped the cause. Each time the managers of a public institution declared a public space off-limits to smoking, it advanced the cause. The once all-powerful tobacco companies were thrown on the defensive, forced to acknowledge the harm of tobacco addiction that their century of clever ads helped foster. Now, Philip Morris asks Congress to give the Food and Drug Administration regulatory authority over tobacco, Maryland proposes a buyout of tobacco farms, and other states consider this approach.
In the midst of this activity, the trial lawyers were unfairly reviled. To be sure, they had an economic interest, but it was contingent on a verdict or settlement. Their investment in these costly cases reaps no fees when they lose. Without any regulation of the industry, the courts were the only fairly level playing field left. This instrument of justice must be preserved in the face of recurrent assaults by immunity-minded corporations.
Needless to say, tobacco is not the only addictive product dutifully proffered to young and adult alike. The liquor industry entices the young with its ads and sponsored events. Street drug dealers seduce the youth with their substances. The addicted bear some responsibility for sure, but so do the far more driven, calculating, and organized addictors. Legal or illegal, it is all about making money by preying on the vulnerable, the young, the impoverished.
Consumers, however, bear little responsibility when they are harmed by what they cannot see, smell, taste, or touch, such as radiation, carbon monoxide, pesticides, herbicides, toxic additives, leachings like lead, and contaminated foodstuffs. The recent hikes in gasoline, heating oil, and natural gas prices represent forces beyond the reach of individual consumers. With no change in supply and demand, the industry’s hikes will take billions of dollars from consumer pocketbooks while promoting fuel-guzzling vehicles. When it comes to tax cuts, George W. Bush tells us incessantly that the “people” should be able to keep more of their own money. Of course, those tax cuts go mostly to the wealthy. Why doesn’t he ever defend the consumer from his avaricious oil and gas buddies? Why doesn’t George W. say that consumers should be able to keep more of their own money?
What can the individual consumer do when corporate lobbies push for reduced regulations so that they can take the federal cop off the corporate beat? They succeeded in weakening banking and securities regulations. Hundreds of billions of lost dollars resulted from the savings and loan scandals of the early 1980s to the ongoing Wall Street scandals. Paid for by the people.
Regulation does matter! Government subsidizes costly synthetic fuel projects for companies to produce energy that is then given government price supports, illustrating Bush’s and the industry’s utter contempt for consumers and the marketplace. Without regulation or de facto deregulation, electric, gas, and telephone utilities are like private governments wherever they have monopoly. But even in deregulated industries, such as the price-competitive long-distance telephone area, the companies get on new rip-off tracks to trick consumers. “Competing by cheating, scams, and schemes,” was Connecticut Attorney General Richard Blumenthal’s explanation for his lawsuits against AT&T, MCI WorldCom, Sprint, and Quest. Complexity and latency are the nefarious modes of rolling shoppers. If food buyers want to know whether the supermarket food is irradiated, the industry arranges with the FDA for the least visible emblem. For genetically engineered foodstuffs, the industry has fought any labeling favored by over 90 percent of the people. Deregulation of the cable industry has sent cable rates higher as giant mergers leave viewers with less and less competition and choice of quality programming.
Powerlessness leads to paying ever-higher drug prices to an immensely profitable industry that consumers subsidize heavily through tax credits and free research and development from the National Institutes of Health. Five years ago, I received a letter from a woman with ovarian cancer who lost her $19-thousand-a-year job and her health insurance. Her doctor recommended Taxol sold by Bristol-Meyers-Squibb and a series of treatments that would cost $14 thousand. What she may not have known is that the National Institutes of Health programs discovered Taxol and tested it in human clinical trials. Then, under federal policy, the agency gave it to Bristol Meyers to sell under a monopoly marketing agreement with no royalty clause or reasonable pricing provision. What can an individual consumer do about this and many other medical discoveries that are developed by the taxpayer and handed off to the drug firms, who put out ads taking the credit?
What can consumers do when, even with a second breadwinner, a family can’t make ends meet and the debt trap creeps up on it? Consumer debt, including home mortgages, is nearing $8 trillion. There are record numbers of bankruptcy filings. The two major causes of personal bankruptcy are medical expenses and job loss. Still, the credit and financial industries press Congress to make it much harder to declare bankruptcy. These and other lobbying drives are part of a big business strategy to increase the corporate regulation of government to achieve corporate goals and not the goals of the American people our agencies are sworn to represent. A persistent testament to the short-sightedness of industry is that it never recognizes the future benefits of regulation even as it advertises the past benefits (like federal meat inspection) or boasts about the safety features of products (such as seat belts and air bags) brought about by previous regulatory standards.
The corporate propaganda machines, and those of the think tanks they fund, strive to get people to hate their system of protection—often exaggerating costs, ignoring benefits, and peddling cock and bull stories about the destruction of innovation and productivity. These corporate behemoths peddle the canard that health and safety regulations inhibit freedom, when, in fact, the opposite is true. Such regulations produce freedom from harm and fraud. Maybe they have been listening too much to President Ronald Reagan who, when campaigning in 1980 in Michigan, called air bags an impediment to freedom. Maybe in a narrow technical way, he was correct—air bags block the freedom to travel through the windshield.
Credit scores, debit charges, contracts of adhesion, collusion, refusals to sell (as in red-lining), latent defects, overwhelming complexity of goods and services, no outlets for grievances, little time for comparison shopping—it all amounts to a steady loss of consumer control in the marketplace, and it mandates development of a more rigorous consumer consciousness. Lying, cheating, and stealing from consumers is equivalent to a pay cut at the office or the plant. In the 1970s, Senator Philip Hart (D.-Mich.) estimated that 25 percent of consumer income is gobbled up by frauds and abuses. Customarily, a pay cut hurts a lot more than an equivalent depletion of the consumer dollars that a worker’s pay makes possible. An attitudinal upgrade is needed here. Workers will labor hundreds of hours to buy a new motor vehicle or pay for food, but spending three or four hours learning how to buy those products will save them far more dollars per hour than their pay per hour at work.
One radio talk show host read my book Winning the Insurance Game (coauthored with Wesley J. Smith), took the advice, called his brokers and saved $500 on his yearly insurance buys. Shoppers flock to Wal-Mart for a good deal. But these deals hurt shoppers in hidden ways. Wal-Mart’s low-wage policies, which also demand that suppliers cut costs by driving down wages and benefits, or exporting jobs to China, reduce purchasing power and increase dependency on governmental social service programs. Wal-Mart has crushed Main Street and replaced the community of family-owned small businesses that constitute community and pay local taxes. All this reduces the scope of the consumer’s supposed bargain. Polls have shown that American consumers are willing to pay more for improved conditions in foreign sweat-shops, which produce goods for export to the United States.
Consciousness grows when skills are acquired. During my final days as a senior at Princeton, we were visited by an insurance salesman trying to sell us life insurance. We never thought to ask the obvious question: “We have no dependents, so why life insurance?” When I mentioned this episode to my father, he replied: “Don’t confuse schooling with intelligence.”
The marketing madness and deceptive promotions and advertising have filled books (one of the best is by Michael F. Jacobson and Laurie Ann Mazur, Marketing Madness). Commercialism runs rampant, plastering logos and ads in schools, on public buses, on floors and ceilings, zoos, museums, operas, athletes’ uniforms, and lately, on some college student’s bodies. When commercialism reigns, everything is for sale, even civic sanctuaries and childhood itself. Its insidious energy and creativity undermine an independent consumer consciousness and the desire for consumer skills. Young students can learn more about our economy by acquiring consumer skills than by rote reading. How should they best fend for themselves? How should they shop for credit, for a car, for competent health care or clothing? Absent the assertive consumer, a dependency takes hold and the student grows up corporate, making what Pavlov called conditioned responses.
Sixty years ago, we could have graduated from our schools skilled consumers who would have placed a greater value on renewable, self-reliant, safe solar energy; more modern public transit; universal health insurance; and other positive transformations of our economy and environment. Skilled consumers are far less likely to be hoodwinked, to be denied information, to have their grievances ignored, and their horizons restricted from broader possibilities for consumer sovereignty. Smart consumers make the economy more efficient, more productive, and more competitive. They should be the quality control for sellers. They would be more likely to band together to negotiate terms of exchange with vendors—banks, insurance companies, real estate brokers, manufacturers, and other lines of industry and commerce. Companies are organized. Consumers need to be as well. The approaches to organization vary, including buying clubs, cooperatives, specialized consumer groups for complaint-handling, lobbying, their own media, negotiating the basic terms of trade from contracts to product specifications to pricing levels. The Internet can make this less expensive and quicker with ease of entry.
It is necessary for enough consumers to think of their role in broad terms, beyond their pocketbooks and immediate purchases. If motorists had thought big and organized to instruct their elected officials and the leaders of auto companies early on, motorists today would reach their destinations more safely, healthfully, economically, and inexpensively. Every day, motorists on congested highways pay the price of neglect. Since the true measure of a sustainable economic system is the health, safety, and economic well-being of consumers, buyers can properly see themselves organized as the shapers of such an economy. Otherwise, the rat race continues in a downward spiral of debt, depletion, and dependency. Not a nice prospect, given invasive new technologies, to hand down to defenseless children and grandchildren.
From: The Frugal Shopper Checklist Book: What You Need to Know to Win in the Marketplace (Washington, D.C.: Center for the Study of Responsive Law, 1995).