Volume 7 - Who Protects the Consumer?
Do consumers need protection? Increasingly the public answer to this
question has been "yes." Increasingly, too, the Federal
government has been identified as the source of this protection. Milton
Friedman disputes the views that (1) consumers are in dire need of
governmental protection against the wiles of the business community
and that (2) governmental actions tend to make consumers better off.
He argues that consumers' problems more frequently than not can be
attributed to failures of government rather than to failures of free
markets. The best protection for the consumer, in Dr. Friedman's view,
is the free market. Despite popular mythology, business interests
do not have the power to make people purchase something they do not
want. Consider, for example, the failure of the highly touted Edsel,
a product that was heavily promoted by the best advertising brains
at the Ford Motor Company and its advertising agencies.
When people have alternatives, they will not accept products they
do not want. In a competitive market system, business people's recognition
that consumers have alternatives provides a powerful stimulus to keep
product quality high. Fear of losing business to competitors provides
a strong protective shield for the consumer. Armed with the protection
offered by the free market, the consumer, says Dr. Friedman, really
needs very little protection by the government. Indeed, many government
attempts to protect consumers have made them worse off than they were