It’s such a good idea to offer
returns and refunds that off the cuff, it might seem a good idea to prevent
stores from refusing the return of an item, as is stipulated in Philippine legislation.
The morals of it
But morally speaking, to do so
is inconsistent to the idea of ‘fair trade,’ because this would mean denying
the same ‘right’ to vendors, even though the vendor is just on the other side,
and not at some advantage, of the property exchange. The money used to pay vendors
has no vaunted status above any other good or service, apart from its easier exchangeability.
If a return policy is made
mandatory, why not allow vendors to return a buyer’s money and recall an item,
even if a customer is fully satisfied with his purchase?
But morals aside, what are the
economic considerations of prohibiting a ‘no return’ policy?
The economics of it
First, we ask, does a return
policy encourage consumer purchases? Is it a profitable policy to implement?
The example of pirated purchases seems an answer in the affirmative. So why don’t
we see businesses doing more of this?
We also notice how stores in
the first world are more accommodating when it comes to returning and refunding
items. Wouldn’t it then be good to implement the same policy, via legislation?
The problem of focusing on symptoms
We ask, what’s different about these
bigger economies? Well, they’re richer, for one thing.
Is the inability to offer a return
policy a cause, or a symptom, of insufficient resources for satisfying
consumers? And would addressing a symptom directly via government do anything
to increase the wealth necessary to sustain the desired services?
By asking this, we soon
realize that it isn’t better governance nor regulations, but rather more wealth
and more capital by which a return policy becomes feasible.
The costs of government intervention
When implemented via the
state, there is opportunity cost, wherein what is ceded to a customer is denied
another customer. This is because returns and refunds that are beyond a company’s
ability to offer would reduce profits that would otherwise allow for a gradual
accumulation of capital, and without this capital, we have lower productivity
and lower real incomes for all in the long run.
Conclusion
By distinguishing between
cause and effect in an economy, we can determine what actually works. And it
isn’t legislation, which does nothing to increase net wealth and productivity.
Just as low interest rates can
only be arrived at by saving and not mere monetary easing, with implementation
of the latter perpetrating bubbles and redistribution of wealth in favor of the
politically connected, intervention via force is no substitute to freer
movement of capital, including the right for one party to declare beforehand
for a transaction to be final at the time of exchange. There are no shortcuts
to prosperity.
Addendum:
This is not to say that
companies as they are now, especially the cronies who are at an advantage when
it comes to capitalization of projects, are to be condoned. But such problems
should be addressed directly, and lead to abolition of all state-sponsored charters
and franchises, including of the central banking system, to increase
competition and make it so much harder for a crony enterprise to maintain
funding in spite of a lack of responsiveness to consumer feedback.





