National Consumer Protection Week: It’s Up to You (Sorry!)
Once again National Consumer Protection Week falls smack in the middle of Lent. Is this yet another coincidence, or rather a celestial reminder of the benefits of occasional restraint?
[Free Resource: Check your credit for free before applying for a credit card]
This year, in particular, no one really wants a restrained consumer; and by no one I mean not your Occupy Wall Street-friendly local small business, nor the largest of American corporations, nor the government, nor the underpaid factory workers in China. NO ONE.
Consider this: The most recent data shows US GDP growing 3 percent during the last quarter, and consumer spending up 2.1 percent. Shoppers were emboldened by the biggest wage increases since March 2007, a combined $197.3 billion in the third and fourth quarters. Consumer spending is 70 percent of GDP, so the individual decisions consumers make are a big factor in lifting our economy. But as we slowly loosen the grip on our wallets, we have to make sure that this time around we spend our dollars mindfully. If the myth of the rational consumer is dead, then let us raise a new ideal in its place and make it real: the conscious consumer.
This means taking into account how our purchasing decisions affect the world. As we rebuild our economy we have a chance to get it right and make sure it is on a stable and sustainable foundation. We have as much a responsibility to our communities and ourselves as we would demand that corporations respect our rights and that government protects them. And that’s what National Consumer Protection Week is all about. It’s an adult moment for all of us: consumers, corporations, and regulators.
CHECK YOUR CREDIT
Credit.com’s Credit Report Card
Check your credit bureau profile for free with this great tool. See your detailed credit evaluation, expert advice on managing your credit, and unlimited free updates every 30 days.
Get Started Here »
American consumers represent the perhaps most powerful economic force ever known to man. 18th century economist Adam Smith, author of “The Wealth of Nations,” himself foresaw this when he said, “Consumption is the sole end and consumers are often seen to be on the lowest link of a very long economic food chain. Why is that? Imagine if we were organized and well-informed. There is no business or economy that could withstand the truly organized wrath of the American consumer. And one thing we should be more organized about is buying American.
Now, “Buy American” and its advocates have generally been discredited for several very good reasons. First, all things being equal, consumers will buy the best product at the lowest possible price at all times, and that intelligence fosters competition, which in turn lowers consumer prices. Second, in the globalized economic ecosystem of the 21st-century, it has become increasingly more difficult to determine exactly which products are “American.” For example, the average GM, Ford or Chrysler car may contain parts manufactured in literally dozens of foreign jurisdictions, and lots of Toyotas and BMWs are now manufactured in this country.
I’m not suggesting anyone purchase an inferior product just because it was made in the USA, nor would I suggest that someone overpay for an expensive American- made product when a cheaper foreign-made equivalent is available. But if it’s a tossup between two products of comparable price and quality, one American and one not, buy American. Here’s why.
[Credit Check Tool: Try Credit.com's Free Credit Report Card]
After years of decline, American manufacturing has picked up consistently for the past four months. Many economists believe that the long-term health of the American economy depends in significant part on the revitalization of our manufacturing sector. This is particularly true because, again in the case of automobiles, the oversized, sub-par, gas-guzzlers that were produced by Detroit for more than a decade gave American cars–and American manufacturers as a whole–a very well-deserved bad name. Many American companies became so fat, dumb and happy in the post-World War II era that they routinely produced unreliable products of very low quality, and thus a generation or two of consumers around the world perceived American goods to be inferior to those produced abroad. Today, our products have improved dramatically but the perception lingers, and we all need to do something about that.
Moreover, despite the fact that iPhones are made in China and Toyota Highlanders are made in the valleys south of the Mason Dixon line, buying American still has a salutary effect. Unfortunately, America in recent decades has been exporting the wrong things–like jobs and currency. When you buy a product from an American company, even if that product is manufactured partially or completely overseas, the profits are much more likely to stay here, in the form of employee bonuses, increased spending on marketing through US media, and so on.
Forgetting for the moment the “get government out of our lives crowd,” even as a former consumer regulator I accept the concept that the ultimate guardian of the consumer is the consumer; and doubtless, consumer protection begins at home. We have the greatest interest in protecting our own economic well-being and are in the best-position to protect it. As a consumer, we owe it to ourselves to become better informed. Financial illiteracy damn near destroyed us in the past few years, and as consumers, we owe it to ourselves to get better organized.
[Related Article: The CFPB Wants Your Ideas]
Happily, and finally, the US government is stepping up its efforts to help consumers know more about what they need to know. An important goal of National Consumer Protection Week is to promote better consumer education and awareness, and the newly minted Consumer Financial Protection Bureau has a strong mandate to ensure that Americans become more financially literate as quickly as possible. This doesn’t just mean reading all the disclosures before signing on the dotted line. It means considering the ramifications of your purchase before making it. If you’re being offered more house than you can afford at a deal that only make sense because you “will” be able sell it off to the next guy two years later… you know that’s wrong. It’s wrong for you and it’s wrong for society to mint an economy out of such thin dreams.
Even if all corporations were in perfect compliance and had the most clear and comprehensive disclosures in the world, if you don’t read them, what good are they? This is not about individual responsibility versus corporate responsibility, this is individual responsibility AND corporate responsibility.
Sooner or later, people will figure out that in a capitalist system, information and transparency are as valuable if not more valuable than all the regulation of business that Washington can produce. There is a middle ground. You can have intelligent regulation and economic innovation by forcing bad players away from the table.
National Consumer Protection Week starts with you. What will you buy?
Image: Astragony, via Flickr
