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.
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.
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.