Why the no ‘no return’ policy is anti-consumer

Anyone who’s bought anything knows how reassuring it is to be able to refund or replace an item. Even ‘illegitimate’ pirated ‘dibidi’ sellers succeed in making a sale by telling a buyer “Kung may problema, pwede niyong isauli.” And they are true to their word.

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.

Philippines 2013: Least annoying elections ever

Better as a ‘Wanted’ poster

The best election is still no election. If I were to look among  brands of sour cream n’ onion chips in the grocery, and none fit my fancy, I could elect to buy nothing at all. Elections are different. I can see through the inanities of candidates’ platforms, but even in my abstention, I’m still going to be screwed over by these smiling posters.

Having said that, I’m rather pleased that I haven’t been too exposed to all the campaigning. Earlier, I heard for the first and only time radio ads tailor-made for morons from Bam Aquino and Grace Poe, both running for senator. The moving campaign jingles that modify ‘Call me maybe’ are annoying, but don’t pass by too often. The posters don’t cover as much space on the road as before.

But to say that this is the least annoying elections ever is not condoning it at all. It’s still embarrassing to see people on my Facebook News Feed selecting candidates seriously and not seeing elections for the needless game of dangerous clowns that it is.

The monopoly mindset

Awhile ago, in a shopping center, I saw five or six PNP officers in uniform with their guns, strutting around. Apparently, it’s no problem to the shopping center’s security office to let these people through, even though they have those scary guns which seem to instill fear among those who think gun restrictions are insufficient.

But why trust these PNP officers? Because apparently, they’re assigned a duty to serve and protect, to the exclusion of all other would-be protectors. Funny though, how this monopolization of security is seen to make for greater accountability. But this is an illusion.

How could the concentration of police power among a select ‘government’ entity not be conducive to abuse? Wouldn’t private, competitive wielders of arms be more inclined to affirm people’s property rights, since none would have the untouchability of a government monopoly, which itself breeds criminals by rendering law abiders helpless via firearm regulations?

As it is, the PNP officers can only get away with so much, and the PNP can only get by for as long as public opinion, as stupid as it may be, is with them. This does not make monopolies right, nor does it mean there is no room for improvement.

Government and markets: It’s one or the other

The above serves as a means of understanding people’s tolerance, or naïvete, regarding elections. Little do they know that there is more to choice than is provided in a ballot’s blank spaces.

Just as the provision of security is not something to be entrusted to any one entity, neither should ‘doing something’ about social problems be left to any one ‘representative’ entity. Contrary to what we often take for granted, government is not society, or even representative of it. In fact, it is counterproductive to the social processes that do make people better off.

Government is vastly inferior as a representative of people’s preferences in comparison to the market, which does not require coercion, that is, the thwarting of ‘the people’s will,’ to function. And if you find yourself disagreeing, I would be glad to expound on this; just mail your questions.

Don’t vote. It only encourages these idiots.

Markets apply to ALL human action

Ludwig von Mises, for all his genius, failed to take the concept of free markets to its logical conclusion, to include a competitive judicial system and security.

Here are excerpts from his ‘Omnipotent government,’ followed by my snotty comments in bold.

The state can be and has often been in the course of history the main source of mischief and disaster.

— So how can the alternative of anarchy be not worth trying?

Anarchism believes that a social order could be established in which all men would recognize the advantages to be derived from cooperation and be prepared to do voluntarily everything which the maintenance of society requires and to renounce voluntarily all actions detrimental to society. But the anarchists overlook two facts. There are people whose mental abilities are so limited that they cannot grasp the full benefits that society brings to them. And there are people whose flesh is so weak that they cannot resist the temptation of striving for selfish disadvantage through actions detrimental to society.

— The fact that such types of people could be mere exceptions makes general lawfulness possible. Or will entrepreneurs in an anarchist society somehow be blind to the opportunities that lie in security provision?

The essential teaching of liberalism is that social cooperation and the division of labor can be achieved only in a system of private ownership of the means of production…

— If anarchism is so naïve a notion on account of possible deviants, isn’t a free-market philosophy just as naïve on account of business failures? In fact, neither are naïve because they recognize that people respond to such deviations or failures, thus making for accountability within the system.

Liberalism assigns to the state the task of protecting the lives, health, freedom, and property of its subjects against violent or fraudulent aggression.

— In spite of it being THE main aggressor.

Outside of the market stands the social apparatus of compulsion and coercion, and its steersmen, the government. To state and government the duty is assigned of maintaining peace both at home and abroad.

— The provision of security is not necessarily “outside of the market.” If people can somehow assign such a duty to a monopoly, why could it not be “assigned” among more competitive forces? Are monopolies more responsive somehow to the security needs of people than competitive entities, as they are not in other sectors? Or are they more responsive than competitive entities in general? Why not give to government control of the market? Oh that’s right, the economic calculation problem, which for no reason should not apply to security.

It is one of the fundamental insights of liberal thought that government is based on opinion, and that therefore in the long run it cannot subsist if the men who form it and the methods they apply are not accepted by the majority of those ruled. If the conduct of political affairs does not suit them, the citizens will finally succeed in overthrowing the government by violent action and in replacing the rulers by men deemed more competent.

— Why is this electoral system not feasible with overall trade but feasible with maintaining peace and order?

The population of every territory is free to determine to which state it wishes to belong, or whether it prefers to establish a state of its own.

— What good reason is there that matters of security need be geographically dependent, unlike ‘public utilities’ or chairs? As it is, the “population” Mises refers to could only act collectively or by majority — rendering elections adverse to individual choice — and with violent revolution.

Whoever wants lastingly to establish good government must start by trying to persuade his fellow citizens and offering them sound ideologies. He is only demonstrating his own incapacity when he resorts to violence, coercion, and compulsion.

— Like in demanding taxes (Blank out!).

The establishment of a supernational world government is an old idea of pacifists.

Such a world government is not needed for the maintenance of peace, however, if democracy and an unhampered market economy prevail everywhere.

— If a world government is a bad idea on account of “an unhampered market economy prevail[ing] everywhere,” why the need for national governments still, since order is still possible without a singular maintainer of peace? It might be argued that governments would be the one coming up with ‘laws,’ but this could not presume justness of such laws.

‘Law’ is an after-the-fact concept established among peoples by their study of what works; just law could not be something written down by appointees for the sake of universal application; otherwise, world government would be a good idea.

So if we were to choose between competition and monopoly to maintain order, why would we go with the latter, i.e. government?

But will all men rightly understand their own interests? What if they do not?

— If they don’t, no government alternative could be an improvement anyway.

Understanding worker 'exploitation' — Labor Day Philippines 2013

Ignorance as to what makes for happier workers
(It’s not government)

How much of ‘exploitation’ is mere bitching, as opposed to an attempt to better understand the woes of laborers?

Let’s distinguish between means and ends. It should be a given in any serious discussion that worker conditions ought to be better. The next and separate step is to determine how. Do you go about using the same means — government intervention through labor laws — which so far has proved ineffective or perhaps even counterproductive? 

I’d maintain the reason such conditions persist is the cause-effect aspect is not understood by voters, who then support more of the same.

In fact, employee regulations reduce the total amount in salaries and benefits that employers can provide while remaining profitable (Interventionists also have no alternative to the profit incentive as a means of allocating resources efficiently to some extent). This means formerly high-paying jobs become less available, thus shifting skilled workers to jobs that pay less. Employees then have to put up with harsher working conditions, including being treated as disposable by employers who have greater leverage, with more lowly-paid workers bidding for the same job*. 

Unless people wise up to politicians who use economic ignorance or if not are ignorant themselves but well-meaning, such conditions will persist.

I just provided the framework needed to understand these phenomena, a framework that makes more sense than assuming the legislation of increased benefits and employment regulations actually makes for better working conditions, in spite of the scarcity of capital and the absence of any other system besides the market that makes for capital accumulation.

_____________

* In itself, high demand for jobs and lower nominal salaries are not harmful to the worker, as more cheap employment also means cheaper and greater productivity, where each unit of money can buy more consumer goods. But this rise in purchasing power could not happen as a result of labor regulations, because there is no corresponding increase in productivity, which would have otherwise come about from the sectors whose workers are not shifted to less favorable environments.  

Thoughts on the Philippine Elections 2013

Ignorance, i.e. the false premise
of elections being just.

How many times do we hear that squabbles between candidates are “all about politics?” Of course it's politics, it’s a political process.

***

If you see how rotten dynasties are;

If you see how even in the most ideal conditions of the electoral system that the well-meaning people get excluded;

If you see how, if somehow elected, well-meaners have only the political means to act, rendering them ineffective and counterproductive to prosperity at best and corrupted as a rule (give me one exception to counter this premise);

Why subscribe to the electoral process at all?

***

Why trust these clowns whose only merit is posing for posters? Why not trust their absence instead, and thereby learn what freedom is?

(If you do your homework, you will find that the sins of ‘free markets’ are really those of government entities and their cronies.)

Not voting is the only principled act on election day. This is not to say that those who do not vote are doing so out of principle. But we need more people to recognize that government does not equal society.

'After capitalism'? What capitalism?

Ignorance.

It’s 1984 and people don’t even know it. This Guardian video refers to the current system as ‘capitalism,’ where an elite few control the world’s resources. Notice how nothing is said of how things are done in this system; columnist George Manbiot merely provides a vague description. No attention is drawn to the fact that it is through the political means that such resources are concentrated.

If the present system is ‘capitalism,’ then I wouldn’t want any part of it; but it would be wrong to consider present income disparities a result of economic freedom; in fact, today’s system more closely resembles the interventionism desired by the likes of Monbiot.  

·  We already do have high rates of taxation: of incomes, of sales, of estates, you name it, for the sake of so-called ‘public spending’;

·  Quality-ensuring competition is stifled by the government’s handing of franchises to what are rightly labeled as cronies, the monopolies of which result in poor services;

·  Companies and their goods are screened by monopoly regulators, as though private assessment of quality and brand recognition do not raise standards;

·  Banking is controlled by central authorities who shrink the value of people’s savings in favor of ‘the big guys’ who get to borrow at below-market rates of interest;

·   Labor regulations result in a glut in low-paying jobs and worse working conditions, not to mention higher rates of employment;

·    Etcetera.

And when all these don’t work, some other interventionism by any other name is used, such as “an advanced form of social democracy.” And so continues the illusion that it is through the political means that ‘the little people’ will get their say as to how run things.

In fact, it is free enterprise where the consumer wins out. Something we have far too little of.

After capitalism? If by capitalism, economic freedom is meant... we should try it sometime!

The pro-market legacy of Margaret Thatcher

Margaret Thatcher, like her US counterpart Ronald Reagan, is part of the reason why capitalism and free markets are seen as earlier stages of modernity yet to be succeeded by a more enlightened and equitable socialism. For all their lip service to voluntary exchange, for all the Hayek invoking, they protected their cronies, gradually increased national budgets, and ultimately expanded state power, an expansion that is still ongoing.

(I say “part of the reason.” Yet another part is the general ignorance of the booboisie when it comes to political economy)

It remains ingrained in people’s minds that ‘good government’ represents people’s interests better than actual transactions among free individuals. And if one were to back such a false claim, they would cite the ‘privatisation’ and union busting of supposed free-market advocates such as Thatcher.

Contrary to prevalent belief, government intervention is not to be opposed out of some glorification of money and dog-eat-dog selfishness. Studying economics, in particular the works of Austrians such as Ludwig von Mises, allows us to see that the free market is about maximization of utility, monetary or otherwise.

The threat of violence onto another person, which by definition the state monopolizes, serves as a hindrance to the attainment of such psychic profit. This is done in various ways, whether by channeling privatized funds into more government programs, protecting chambers of commerce from labor strikes, perpetuating the existence of central banking, etc. Worse is to frame such interventions as part of a ‘pro-market’ or ‘capitalist’ platform.

Rhetoric can only go so far.