All Commentary
Tuesday, November 6, 2018

Consumers Should Be Voting Every Day—with Their Wallets

The next time you open your wallet, do so with intent, knowing that every dollar spent is an opportunity to voice your opinion.

Millions of Americans will be heading to the polls on Tuesday, exercising what many assume is their patriotic civic duty. If we are to believe the political ads and news commentary making the rounds this season, this election is the most important of our lifetimes, though this sentiment is hardly unique.

Every two years, it’s the same old song and dance. We are told that this year’s election is different and more important than all the others. But the truth of the matter is that these elections are never as pressing as lobbyists and political campaigns would have us believe, and each policy victory can be completely undone as soon as the next voting day rolls around and new measures are added to the ballot.

Casting your ballot might make you feel as though you are an active participant in the democratic process, but rest assured that voting is not strictly limited to the confines of the polling booth. In fact, it’s not even the most effective way to make a difference.

As individuals, the most impactful action we can take to be true catalysts for change occurs not every two years but every single time we open up our wallets and make a purchase. And unlike voting, the power of consumer sovereignty is available to us 365 days of the year.

Consumer Sovereignty

No matter how much evidence there is pointing to the contrary, there is a widespread misconception that politicians work to serve the people’s best interests, while capitalists—to the detriment of the people—work to serve themselves. However, human history has shown firsthand how easy it is for politicians to say one thing while running for office and then do the opposite once they are elected.

And once voters inevitably become disenchanted with the politicians who changed their views after assuming office, there is little recourse that can be taken. Instead, they must wait anywhere from two to six years before they can challenge the incumbent with another candidate. But there is no surefire way of making certain that this new candidate will not also disappoint his or her constituents. So the cycle repeats itself time and again.

The market works much differently. In the marketplace, the consumer is the boss. And if a business wants to make a profit and survive, they have to respond to the needs and demands of their consumer base. Each time an individual chooses to make a purchase, they are essentially casting a vote.

Explaining how this process works, AEI’s Mark Perry writes:

Consumers are the kings and queens of the market economy, and ultimately they reign supreme over corporations and their employees. In a market economy, it is consumers, not businesses, who ultimately make all of the decisions. When they vote in the marketplace with their dollars, consumers decide which products, businesses, and industries survive—and which ones fail. It is, therefore, consumers who indirectly but ultimately make the hiring and firing decisions, not corporations. After all, corporations can make no money, hire no people, and pay no taxes unless somebody, sooner or later, buys their products.

Taking Perry’s description to heart, this places a great deal of power in the hands (and wallets) of consumers. And in a very real sense, this power allows consumers to create more wealth and jobs than any politician ever could. It also allows consumers to determine which businesses survive and which do not. Economist Ludwig von Mises referred to this phenomenon as consumer sovereignty. In his book, Bureaucracy, Mises explained consumer sovereignty, writing:

The real bosses [under capitalism] are the consumers. They, by their buying and by their abstention from buying, decide who should own the capital and run the plants. They determine what should be produced and in what quantity and quality. Their attitudes result either in profit or in loss for the enterpriser. They make poor men rich and rich men poor. They are no easy bosses. They are full of whims and fancies, changeable and unpredictable. They do not care a whit for past merit. As soon as something is offered to them that they like better or is cheaper, they desert their old purveyors.

This might sound good in theory, but opponents of capitalism might be confused as to how it plays out in practice. After all, we are taught so often that greedy capitalists are keeping us enslaved by tempting us with the wiles of blind consumerism. But as Perry and Mises have alluded, consumers are not sheep manipulated by corporations, they are in fact masters of the marketplace. This is why Mises wrote in Human Action, “The market is a democracy in which every penny gives a right to vote.”

Explaining this further, economist Robert Murphy writes:

…every penny spent is a vote by the consumer indicating those products and services to which society’s resources should be devoted. If the great mass of consumers dislike purple cars with green polka dots, then a society based on private property will not waste resources in the production of such odd cars. Any eccentric producer who flouted the wishes of his customers and churned out vehicles to suit his idiosyncratic tastes, would soon go out of business. At that point, the decision of which types of cars to make would be in the hands of other producers, who were more attuned to the preferences of the masses.

But this principle is not one merely espoused by economists in complex texts. We see this play out in the market every day.

The Power of the Purse

One of the ways we see consumer sovereignty play out in the real world is through boycotts. While consumer boycotts have had varying success throughout history, they have given us the power to withhold our dollars from companies with whom we disagree.

During the 2016 election season, comments made by then-candidate Donald Trump sparked outrage. In response, his opponents launched a campaign aptly called #Grabyourwallet. This movement specifically targeted Ivanka Trump’s clothing line as protesters encouraged consumers to boycott the brand. And perhaps the most shocking aspect of this protest was that it worked.

Overwhelmed by the feedback they were each receiving from their customers, stores like Neiman Marcus, Nordstrom, and Gilt pulled the Ivanka Trump brand from their shelves. And the impact on the brand was significant.

Overwhelmed by the feedback they were each receiving from their customers, stores like Neiman Marcus, Nordstrom, and Gilt pulled the Ivanka Trump brand from their shelves. And the impact on the brand was significant. During the boycott, sales dropped by 32 percent. When the chaos of election season died down, sales went up again slightly, but they never returned to their pre-boycott levels, further proving the power consumers have.

However, sometimes boycotts work in surprising ways. When Colin Kaepernick’s Nike campaign debuted in September, conservatives were not happy. Outraged that Kaepernick’s refusal to stand for the national anthem had earned him a deal with Nike, activists called for boycotts. It didn’t take long before people were uploading pictures of themselves burning their Nike products in retaliation. But something quite peculiar happened.

Initially, Nike’s stock fell as news of the boycott spread. But the brand’s sales actually rose 31 percent in the midst of the controversy. Consumers who stood alongside Nike exercised their right to vote with their dollars. And as it turns out, their efforts were more powerful than those who were supporting the boycott.

But a boycott is just the most conspicuous example of how consumers use their power every day to influence the market process. While boycotts are usually politically motivated, an individual can simply choose not to give their business to a certain store or company based on its policies and practices.

Companies need your money to sustain themselves, so every single consumer matters.

If, for example, I am unhappy with the return policy of a department store, I can choose to take my business elsewhere, effectively sending the signal that I am not a happy consumer. And while this might seem like a smaller-scale version of a boycott, it still has far-reaching implications. Companies need your money to sustain themselves, so every single consumer matters.

It is so strange, then, that so many see voting as an honor and a duty but view money and consumerism as the root of all evil. Our hard-earned dollars are our most democratic resource, and they give us the ability to enact real change.

In Atlas Shrugged, Francisco d’Anconia says in his infamous money speech:

To trade by means of money is the code of the men of good will. Money rests on the axiom that every man is the owner of his mind and his effort. Money allows no power to prescribe the value of your effort except the voluntary choice of the man who is willing to trade you his effort in return.

In the market, if a consumer does not wish to exchange his money for your product, he does not have to. On the other hand, if a politician we disagree with is elected to office and helps to pass a law we disagree with, we must comply or face the threat of government force.

When all is said and done, our wallets offer us something that voting does not: the power of voice of exit. If we do not like something, we do not have to buy it. And in that voluntary decision rests more power than the polling booth will ever give to any of us. So the next time you open your wallet, do so with intent, knowing that every dollar spent is an opportunity to voice your opinion.

  • Brittany is a writer for the Pacific Legal Foundation. She is a co-host of “The Way The World Works,” a Tuttle Twins podcast for families.