Protection of Workers and Consumers
Consumer protection has recently grown to become a major issue in any business environment. As the business environment becomes more competitive, complex and dynamic, most business are faced with low rates of returns and poor profits margins. This has forced such firms to invent unethical business practices and techniques of exploiting the citizens and the poor consumers in order to earn additional profits that would cover up for their losses. Certain businesses also exploit consumers due to existence of various loopholes in the management, control and governing of business activities by the government.
Milton Friedman: The Free Market Provides Protection from Exploitation Purely By the Existence of Choice
In my opinion, Milton Friedman’s statement on protection of workers and customers through the existence of choice is narrow and can only be applied in a purely or perfect competitive market. This is because such perfect competition markets give the consumers options of choosing from a variety of producers or sellers. In contrast, in monopoly and monopolistic competition markets, for instance, such rule may not work because the customers have no choice other than to purchase what is provided to them by the single producer or seller. It is, thus, easy for the monopolist to exploit the citizens and consumers through various business malpractices such as provision of low quality goods and charging exorbitantly high prices. It, therefore, implies that protection from exploitation that is determined by the existence of consumers choices will depend on the market structure.
Need For Governments Protection on Citizens and Consumers from Exploitation
In my opinion, it is important for the government to protect and guard its citizens and the consumers from exploitation by businesspersons and trading firms. This protection can be exercised in various levels. At corporate level, those citizens who start and operate their medium-size firms locally or those who run their businesses within the country should be protected from unhealthy, harsh and stiff competition from foreign and international companies. The government should be responsible for ensuring that local businesses are licensed accordingly and also that such infant businesses pay reasonable license fees. The government should further regulate the buying and selling of goods and services within the market to ensure that demand and supply of goods and services are met according to market requirements (Cseres 31).
The government has the responsibility to protect its citizens from exploitation by employers. It should set the minimum wage that workers should be paid. However, it is important to note that such legislation may drive away potential investors, who will opt for cheap labor elsewhere, especially in less developed countries.
Additionally, the government should be committed to development, adoption and implementation of laws and legislations that aim at protecting citizens and consumers. It should carry out investigations regularly to identify and pursue those firms and businesspersons who violate consumers’ rights. The government should come up with laws that prohibit and make illegal business activities that may produce harmful goods and services that may hurt the consumers. It should make sure that businesses do not exploit consumers and those that do so through violation of any of the Consumer Protection Laws are either heavily fine or denied their licenses to operate. The government should ensure that all businesses comply with the laid down rules and regulations that govern operations in the marketplace.
Similarly, it can empower consumers through provision of free information to help them make right decisions in their day to day business activities. This information can also be used by the consumers to exercise their rights and in pinpointing and avoiding frauds, swindles and deceptions within the marketplace. There should be civic education programs to inform and educate citizens and consumers on their rights against exploitations by greedy businesspersons.
Through government intervention in business activities, it is easy for the government to address market failure problems. This is because it shall be able to control and coordinate the flow of goods and services within the market. It will be able to influence the demand and supply of goods in the marketplace.
The government should provide and make available resources that are required for full protection of the citizens and consumers. It should provide consumers with relevant information and any assistance they may require to guard them from exploitation. Such information is very vital since it helps consumers make better choices in the market. Similarly, the government should make available all the necessary resources that may be needed to drive the consumer empowerment process. These can be financial resources, technical and professional personnel or good infrastructure.
The government can also set certain minimum trading standards that must be met by the providers of goods and services. For example, all consumer goods must have standardization marks from a government agency. This will ensure that citizens are not deceived and exploited by the traders through provision of low quality and low quantity goods.
Appropriate Level of Government Protection
The level, at which a government can be involved in the protection of citizens and consumers against exploitation, varies from one country to another. It also depends on the market structure and its characteristics, for example, products that have rigid or less flexible demand curve may require more government intervention to protect the consumers due to high price inelasticity.
In my opinion, the government should help in detection and prevention of business malpractices such as fraud and deception in the marketplace. It should aim at combating all unfair business practices within the marketplace.
Similarly, the government can help business firms and consumers settle disputes that may arise in the process of buying and selling of goods and services. This goal can be achieved through setting of commercial and industrial law courts. According to Cseres, the government is responsible for enhancing consumer confidence by enforcing laws that protect consumers from exploitation (Cseres 49).
The government should ensure that full information, relating to certain products, such as foodstuffs are disclosed. Accordingly, government protection on citizens and consumers increases, as the issue of concern becomes a national concern, for example, public health. Such protection would ensure that its citizens do not consume harmful products.
According to Kleinschmidt, the interests of consumers can be further protected by the government through promotion of fair and free competition within the marketplace (Kleinschmidt 173). Furthermore, consumer protection can also be implemented by non-governmental organizations such as Consumer Advocacy groups.
The government can offer advice to the consumers, provide funds for consumer advocacy and education. Through various educational strategies and program such as awareness campaigns, the government will be able to enlighten consumers on their rights to non-exploitation.
However, the consumers should also be able to communicate their wants and preferences openly to the suppliers. Similarly, they should be able to negotiate for better treatment. They should not excessively rely on government support in each and every transaction they carry out. They must take adequate precautions before entering into contracts. They should demand for full explanation and disclosure of any condition and information, relating to such contracts. Consumers and citizens should take enough precaution and should make informed choices on their own without influence from the businesspersons.
In my view, excessive protection and regulation of consumers and the markets as a whole may limit consumer choices and competition. This may result into additional costs, incurred by businesses, which are, then, indirectly passed on to the consumers in form of high prices. The people should be given more power and control over their choices. Strict or rigid regulation alone is not enough. Excessive government intervention may be unhealthy, may prevent competition and slow down innovation in the market. It can also prove dangerous and may damage the economy.
Services such as internet shopping, as stated by Howells and Veartherill, demand a lot of precaution and care. Consumers should, thus, be aware of the trading company, its integrity and ability to deliver the required goods and services at reasonable prices (Howells &Veartherill 319). They should seek information and assistance from relevant government authorities and have full knowledge on various statutes such as the Electronic Commerce Regulations Act of 2002.
Moreover, it is worth noting that the level of government intervention in business activities and its capability to protect the citizens and consumers from exploitation may be hindered by global factors such as technological development, market globalization, signing of international treaties and agreements that allow free trade, especially in the import-export market. Certain factors such as the great financial recession may result into a fragile market, when the government intervenes too much in its control, economic activities are severely affected. Just as Kleinschmidt notes down, excessive protection of the consumers and over control of the market may not be a good stimulus for inflow of investors from other countries (Kleinschmidt 196). It is important, therefore, that government involvement in economic activities are moderate and should aim at attracting more investors, rather than pushing them away. As it was said earlier, excessive protection of consumers may turn out to be a burden to them if not effectively managed.
Finally, the government must find the best ways to address this problem of citizen and consumer exploitation. Appropriate measures should be taken as well as corrective initiatives. It should be able to address the broken link between competition and consumer market analysis and enforcement of consumer law.