Freeman

ARTICLE

The Anatomy of Consumerism

FEBRUARY 01, 1973 by MAX E. BRUNK

Dr. Brunk is Professor of Marketing at Cornell University. This article is from a talk before the Annual Meeting of the Cooperative Extension Association of Livingston County, New York, November ¹º5, ¹º972.

There is perhaps no better subject than Consumerism on which to polarize an audience. For example, a conference of consumer organizations in Washington recently graded the two Senators from New York State on how they voted on eleven so-called major consumer bills during the last term of Congress. One Senator received a perfect score of 100, the other, a score of zero. Both the Senators probably received a majority vote from this audience and both probably feel that they properly represented the majority view of their constituents.

This, in itself, tells us something about the nature of consumer issues. It tells us that there is a wide divergence in our personal economic philosophies. It tells us that the issues of consumerism are relatively unimportant in our choice of political representation. But if we are to assume a rational position of advocacy or dissent on various issues we need to know much more about the general anatomy of consumerism.

Traditionally our economy has been built around the market mechanism. In a very real sense the market provides a voting place for the wants and needs of people. The uniqueness of this voting place is that it respects and responds to the will of minorities as well as majorities. And this is fortunate because not all people have the same wants, needs and desires. When we see others do things we ourselves would not do, we do not know whether they are being victimized, are expressing a value different from our own, or have been deprived of opportunities equal to our own. As a result, against this backdrop of a free market, we are gradually building up a set of socially determined restrictions and mandates having universal application to all people. These are restrictions imposed on people in their role as consumers. And we would not have it otherwise for we as a people, in attempting to find a way of living together, have decided to forego some of the material wealth provided by the free market in the interest of what we call the public welfare.

Third-Party Activists

On previous occasions, and in no derogatory sense, I have defined consumerism as a movement of third-party activists who champion causes which appear to them to be beneficial to consumers in general. It is not an organized movement of 210 million Americans speaking in common cause on their own behalf. It is a movement of many fragments with issues frequently championed by small minorities. While this is no indictment, it does raise certain questions about the leadership, how well informed it is, how well it truly represents the general consumer interest. The point I make is that consumerism is made up of a third-party involvement in a buyer-seller relationship.

It is not my function here to argue the case of the free market or how far down the road of socialism we should continue to go. But I do have some personal convictions about consumerism. In many instances the costs far exceed the social benefits. I do not like the negativism of consumerism — the constant search for scapegoats and things that are wrong. I do not like the sensationalism of consumerism which leads society to accept impulsively certain restrictions on our productive capacity. I do not like the emotional verbalism of consumerism — the "truth" issues, the consumer "protection" issues, and so on. I resent the hypocrisies of consumerism: the hypocrisy that someone is doing something on my behalf which in reality serves only to further someone else’s selfish political or social interests; the hypocrisy that consumerism is aimed at the business community when in reality it is only the consumer who is deprived or who pays the bill. We forget that the business community can operate and prosper under any given set of rules that society imposes on it. In final analysis the question is: how much production do we want out of our business community? In fact, within the business community itself many strong advocates can be found for almost any consumer issue simply because each issue serves to enhance the competitive advantage some business may have over another.

Waves of Consumerism

Consumerism is not a new phenomenon. We have always had it. But its identity becomes more apparent during certain periods of economic growth. Around 1900 we had the sensationalism of Upton Sinclair. Looking back we can see the transparency of the many fabrications and fantasies of this colorful writer. But in his day they were accepted by many unhappy people who felt they were being exploited by big business. For example, Sinclair wrote of packinghouse workers falling into vats of fat and not being fished out "until all but the bones of them had gone out to the world as Durham’s Pure Leaf Lard!" Very quickly we had our first Federal Meat Inspection Act and although this legislation was largely an emotional response to journalistic sensationalism I think most of us today would agree that it has served the consumer interest in a constructive way. Anyway, the consumerism of 1900 resulted, as you will recall, in considerable antitrust as well as labor-rights legislation. The teeth of our antitrust laws and the economic power of labor unions can be traced to the consumerism of that time. Then, consumerism declined with the build-up of international tension that culminated in World War I. Our need for productivity could no longer tolerate the false luxuries of consumerism, the false luxury of responding to every scrap of sensationalism. Toward the end of 1920 we hit another peak in industrial development. Again, displaced workers became disciples of Stuart Chase and the sensationalist writings of Kallet’s and Schlink’s 100,000,000 Guinea Pigs. Many New Deal programs had relevance to the charges set forth by these writers. Then, along came World War II followed by the Korean conflict and we forgot about consumerism for a while. Once again it has been brought to life, first through the writings of Vance Packard and then through the activities of Ralph Nader and his many disciples, who seem to know more about what the consumer needs or should have than do the consumers themselves.

The food industry is a prime target for the consumerist. Not only is food a major item of expenditure but also it has a direct bearing on health. Add to this the consideration of the changing nature of our food composition, necessitated by a dynamic market structure ever responding to consumer demands, technological developments and population demographics, and you have the makings of an industry highly vulnerable to the issues of consumerism.

To Gain Popular Support

Taking a closer clinical look at those consumer issues which have gained widespread public support in recent years, we can perhaps gain some appreciation of the characteristics of such issues and their applicability to our food supply. First, the social benefits of an issue must be easily rationalized usually by some grossly oversimplified cause and effect relationship: for example, the directed rationale in truth-in-lending, truth-in-packaging, informative labeling and so on. Benefits must be directed at a major proportion of consumers and the more such benefits have the appearance of being directed at health or economic welfare the more viable the issue. Typical of popular consumer issues is that costs of protection are hidden by dispersion throughout a complex production and distribution industry; or such costs are easily, though sometimes spuriously, rationalized as falling on large, concentrated or prosperous industries.

One of the remarkable features of the marketing system, as contrasted with the negativism involved in many consumer issues, is the way it has broadened choice in serving the specific and diverse needs of an almost endless number of consumer groups each having peculiar requirements. We must not make the mistake of assuming a universality of consumer values. Each of us, in terms of his own individual values, tends to rationalize what he considers appropriate universal values for others. We have difficulty understanding and respecting values other than our own.

The Food Labeling Panic: Does It Serve Consumers?

Looking back over the many consumer protection bills that have passed the Congress in recent years and more importantly the many administrative regulations that have been imposed on the consumers’ freedom of choice in the marketplace, one is at a loss to see where some of these actions have served the consumer well.

Take for example the current food labeling panic. Depending on particular interests, advocates want foods labeled as to ingredients. They want nutrient values indicated, weights, use directions, product count and number of servings, guarantees and warnings about misuse, prices per unit of content, open code dating, inspection stamps, identity of manufacturer, and many other kinds of information.

One can set forth very formidable arguments for the nutritive labeling of food products. And certainly no one with the consumer interest at heart would argue against the need for a better informed consumer. But is the problem really that simple? Do we really have a set of nutritive values universally applicable to all people? We have many sets of minimum daily requirements, but are they true values? Do people know how to use them? Do all persons have the same needs? Then there is the whole question of the availability of nutrients depending on the way food is prepared and used. Would such labeling lead to a false confidence by consumers that certain needs were being met? In what terms should the requirements be stated? What would be the cost of conforming to such labeling requirements and how many new bureaucrats would it require to police the program? Would consumers take such labeling into consideration in their buying decisions? How much digestible information can be provided on a label? And there are many other questions one could raise. Keep in mind, I am neither advocating nor condemning nutritive labeling. I raise these questions only to illustrate the kind of considerations which we have all too often neglected in establishing many of our regulations on the consumer.

Open Dating of Foods

For a moment along this line we might take a brief look at the proposed consumer protection legislation that would require the open dating of food products. If the manufacturer puts a bunch of funny numbers on a package to tell them when a product was made, why shouldn’t the consumer be entitled to know what all this means? With some products this may be appropriate; but the false inference really lies in the fact that the date code is not used by the manufacturer nearly so much as a time code as for lot identification. The suitability of a product for consumption depends far more on storage and handling conditions than on time. I’d much rather eat hot dogs kept under proper refrigeration for 30 days than those only 3 days old but not refrigerated. Require an open date on them and what would be the added cost of store stock rotation and returned merchandise which is perfectly suitable for consumption? And who do you think would pay that cost?

Are No Risks Worth Taking?

Permit me to comment on one other example. The Congress recently passed a law prohibiting the use of DES (Diethylstilbestrol) in animal feeds. Headlines reporting this issue could have read: "Congress votes to outlaw use of dangerous drug" or "Congress votes to increase annual beef cost $3.50 per capita and to make it a little tougher." Both headlines would be appropriate. In brief, these simple facts led to the action: First, direct dosages of DES to maternity cases in France were found to have caused cancer. Secondly, traces of DES were recently found in the livers of several animals. Consequently, the extremely remote risk that the use of DES in livestock feed might cause cancer was traded off against lowering the quality of beef and raising its price to the consumer. In testimony, the Food and Drug Administrator took the position that prohibiting the use of this feed additive will cause more fatalities through malnutrition than would result from the controlled use of DES.

I used these two examples of consumer protection because they seem to illustrate two distinct yet general types of measures. One prohibits a practice or service while the other creates a practice or service to which it is hoped consumers will respond. Seat belts, nutritive labeling, unit pricing are all added services prescribed under the guise of consumer protection. In this type of protection the cost is imposed on the consumer by law but the use by the consumer remains optional. On the other hand, prohibited practices are made mandatory on the consumer and the costs of the protection lie in the vague area of deprivation. As more and more regulations are imposed on the consumer, we need increasingly to recognize this distinction in making our individual judgments on each new issue.

Gradually Overwhelmed

Perhaps you do not feel strongly about any of the specific issues I have discussed here. The costs and benefits of any particular consumer issue are not great; and that is the nature of consumer issues — the importance of being unimportant. It is somewhat like the gradual encroachment of taxes. We passively accept each increment until suddenly we find ourselves overburdened.

Increasingly, I think we must recognize that consumer protection does not come free — that it must be paid for by the consumer either in terms of added costs or through suffering the consequences of deprivation. If we accept the idea that the consumer is to be fully protected in all his actions, he must by definition become nothing more than the ward, or prisoner if you will, of the State. Personally, I cherish the opportunity of making a mistake because I know with it I have economic and social freedom. With all its shortcomings, I like capitalism; and I resent all socialistic measures limiting my freedom.

It has been ten years since President Kennedy enunciated the now famous Consumer Bill of Rights: 1) the right to safety, 2) the right to be informed, 3) the right to choose, and 4) the right to be heard. These are rights with which we would not disagree. The question is really one of what we do in the name of these rights, for these are the rights only of a truly free society. What President Kennedy did not say, and which is more to the point, is that the right to safety is appropriate only in the exercise of reasonable and prudent judgment by the consumer. The right to be informed carries with it the responsibility of becoming better educated. The right to choose carries with it the opportunity of making the kind of choice which consumer protectionism prohibits. And the right to be heard carries with it a respect for the differing desires and wants of one’s fellow men.

 

***

How To Be Cheated

The same guards which protect us from disaster, defect and enmity, defend us, if we will, from selfishness and fraud. Bolts and bars are not the best of our institutions, nor is shrewdness in trade a mark of wisdom. Men suffer all their life long under the foolish superstition that they can be cheated. But it is as impossible for a man to be cheated by any one but himself, as for a thing to be and not to be at the same time.

RALPH WALDO EMERSON, Compensation 

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February 1973

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