Rhetoric of Markets - Consumers and Choice

Another of my favorite economic-moral connections is choice. I recently talked with a friend about health care and choice and was treated to the full-on Republican explanation that as long as people have choices they will do fine. Choice becomes the most important value and making bad choices becomes the fault of the individual. The organizations and social structures that force a particular choice are glossed over or completely ignored. It all fits into the Randian argument of the economic overman.

Lawrence Glickman wrote an article about the defeat of consumer protection in the 1960s and 1970s at Baseline Scenario. He argues that the main conservative argument during the 1960s and 1970s was against government bureaucrats controlling the choices of consumers. Conservatives marched out the standard slippery slope arguments about how the creation of one agency to protect consumers would lead to catastrophe for all businesses. Government could never solve a problem because they were always captured by special interests. Glickman calls this the triumph of conservative populism.

I’m particularly interested in the next rhetorical move that Glickman describes.

The flip-side of bureaucratic arrogance and over-reach, according to the critics of the consumer movement, was the assumption of incompetence on the part of ordinary consumers. The very call for an agency on behalf of consumers was an expression of the bureaucrats’ lack of faith in the abilities of their countrymen and women.  Ronald Reagan, the ex-Governor of California, criticized the consumerists–whom he compared to Orwell’s “Big Brother,” in several op-ed pieces and radio commentaries in 1975–for “promoting the notion that people are too dumb to buy a box of corn flakes without being cheated.”  Reagan concluded that “professional consumerists are, in reality, elitists who think they know better than you do what’s good for you.”  A group of Senators who opposed the CPA also rejected the view, which they claimed was implicit in CPA legislation, “that all consumers are mental midgets who must look to Washington to find out how to manage their personal lives from some bureaucratic consumer `representative’ who will have neither the time nor the knowledge to shop for and cook a decent supper.”  According to the advertising executive, Arthur Fatt, the consumer movement sees “the typical consumer as a moron.” The celebration of the intelligence of ordinary Americans became a component of conservative anti-elitism and an element of its populism.  If consumer advocates were snobs condescending toward those they claimed to protect, it was easy to dismiss their proposal as tainted since, as the business journalist Mary Bennett Peterson wrote, “those the Movement is designed to protect can actually wind up as its victims.”

In time such dismissals of liberal proposals became rote but in the 1970s this was a new line of criticism, one that successfully consolidated conservative ideology.  As the CPA bill languished after its final defeat in 1978, conservative groups correctly foresaw the opportunity for what Jeffrey H. Joseph, of the U.S. Chamber of Commerce called a political and legislative “bonanza.”  And indeed the terms of that victory foreshadow the rhetorical (and electoral) victories of Reaganism and the concomitant delegitimation of liberalism.  The Wall Street Journal did not exaggerate when it noted that the CPA bill was “killed by words” and those words continued to resonate long after the once-popular federal consumer protection idea  faded from public memory.

The rhetoric ties into the “rugged individualist” cliches that have been a mainstay of American culture. I think promoting choice is valuable, but the consumerist view of choice described by the opponents of regulation is a stunted view of choice. In this view the only real choices made by people are choices made on the market.

The current health care debate plays out the same argument. There are some conservatives who argue that giving money to individuals so they can buy their own insurance will automagically reduce the cost of health care because consumer’s will be able to search for the best bargains on drugs, hospitals, doctors, and insurance. But the virtue of consumer choice is being oversold. The problem is that different people will need different amounts of health care during their lifetimes. Is there any just reason for a poor person to get less care than a rich person?

James Kwak at Baseline Scenario finishes the argument

People start out in different economic circumstances, and they suffer different fates in their lives. Without redistribution in some form, the ones who are poor and get sick will simply not be able to afford health care. Cashing out their employer health benefits and giving them “choice” won’t change that – especially if they don’t have employer health benefits to begin with. Yes, insurance can play a redistributive role on its own, but it only works if poor people can afford to buy insurance that will cover them against serious illness. And once they have that insurance, then the price signals so beloved of conservatives won’t function anymore. The problem is really very simple: for price signals to work, you have to be willing to let consumers run out of money, since no one can predict his future health care needs. And then they die.

So what really frustrates me about this whole “consumer choice” fraud is the premise it begins with. It starts out by framing health care as a problem of consumer incentives – health care is too cheap. This is a factually accurate framing that leads you to a dead end (unless you think people who underestimate their future sickness should die).