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Our Government is Anti-Consumer

October 10, 2009, 12:02 am

Forget all the BS political posturing about the consumer -- the fact is that in the vast majority of its actions, the government is anti-consumer.  How else can one explain Administration officials criticizing China for selling goods to the US below cost.  "We're sorry, consumers, that you have been burdened with product choices that have had their prices subsidized by the Chinese.   We're working hard to fix this and make sure prices go back up where they should be."

Licensing, trade law, anti-trust, even consumer products laws -- its all become protection of politically connected corporations against smaller and upstart rivals.  Just look at how Mattel, whose sloppy due diligence forced a number of toy recalls last year, became the big winner of the new "consumer" law these recalls spawned.

Google voice is one of the more exciting communication products I have seen in years.  I have a phone number for free, I can have that number ring multiple different numbers while retaining a single voice mail -- with a free transcription service.  Awesome.

So, of course, the FCC is probably going to kill it.  They will find some way to justify it on nominally consumer grounds, but they are really just doing AT&T a favor.  The argument is that Google voice blocks calls to certain high-access rural areas.  So what?  Heck, I use it mostly to receive calls but if I made calls, do I really want my phone bill to go up by four or five times just so I can call some phone numbers I am never going to call.

Tags: , , , , ,
Category: Regulation
  • http://dullgeek.blogspot.com dullgeek

    And more to the point, why are we, the consumer, not capable of deciding if that's important to us? Why must the gov come in and tell us what we need? Those of us who do need it, won't use google voice. Those of us who don't will.

    And left alone, who knows what other competitor to google voice will emerge?

  • LoneSnark

    I see a bigger problem. Why is AT&T being forced to pay these exorbitant rates? It is fine that Google does not, but why are we forcing anyone to pay them? If long distance carriers were free to refuse such connections, then the local phone company would lower their connection fees to prevent being dropped by the likes of AT&T and Sprint, with the happy coincidence that it would also have prevented them from being dropped by Google.

    True, without this rule the pressure would not just be to make their fees competitive, but almost zero, as the threat of being disconnected is fatal for the local company insignificant for the long distance carriers. But such a world would still be better than this one, as there is competition between long distance carriers and therefore they would compete this surplus away. Small phone companies are more expensive than they should be and long distance is cheaper than it should be, on average consumers would be unharmed.

  • Uncle Bill

    I'm disappointed in your comments on the Chinese tire case. Ask yourself: why would the Chinese sell tires for less than it costs to produce them? (If indeed they are - that is another question.) The obvious answer is that, since non-subsidized producers cannot possibly compete with them them, they intend to put them out of business. That is, the Chinese government has decided to use its resources to destroy another segment of US industry. Once there is no US tire industry, we will have no choice but to buy tires from the Chinese, or other overseas producers. It is an entirely appropriate action for the US government to protect US producers, operating under free enterprise, from predatory foreign governments that have no such constraints.

    By the way, another way to do this is via exchange rate manipulations. If you don't care about your own consumers, setting an artificially high exchange rate makes prices for your products artificially low, and prices from your competitors artificially high. Your consumers suffer because they can't buy what should be low-cost goods from the US, but your industries thrive and grow because they can easily sell their goods.

    The Japanese used to use this very effectively. I remember Lee Iacocca complaining that, no matter what the dollar did, the yen went up and down in lockstep, and the exchange rate was always 230 yen/dollar. When the US put enough pressure on them, and they finally let the yen equilibrate naturally, it fell to the vicinity of 100 yen/dollar. The vaunted Japanese manufacturing efficiency magically vanished, and they started building car plants in the US.

    I used to travel to Malaysia on business occasionally. They didn't even pretend to let their currency float - it was rigidly fixed at 3.76 ringits/dollar. Manufacturing in Malaysia is still very backwards and inefficient, extremely frustrating for an engineer like me trying to work with them. But the artificial exchange rate makes US goods so expensive there that almost nothing made in the US is sold in Malaysian stores. But, you will notice lots of Malaysian goods on US store counters, and there are more industrial products and intermediates sold that you don't even know about because they are not consumer products. Almost all of the cars on the road over there were locally manufactured Protons, which were really not very good cars, but were the only thing people could afford because of the exchange rate. And, it kept the car-makers in business, and gave them a chance to develop.

    We are being very naive if we do not think that foreign governments will use their power, in one way or another, to destroy our own manufacturing base. And once its gone, it will never come back. Witness the TV industry...

  • perlhaqr

    Uncle Bill: It won't come back, as long as those prices remain low.

    If China destroys American tire production, then raises prices, we'll just start making them again. In the meantime, we're getting a free subsidy from the Chinese government. In what way is this a bad thing?

  • spiro

    uncle bill,

    While much of what you posted is true, and is sad for U.S. manufacturing, the truth is that we are NOT a manufacturing nation anymore. Union rule, EPA restrictions, over-regulation and taxation, have made manufacturing much cheaper in other parts of the world, especially Asia (where there are seemingly no environmental regulations and people work for a 1/2 cup of rice/day (or to stay out of dissident prison).
    We have evolved into a service/professional/ingenuity based economy in the past 50 years -- which is just one more reason why nationalized healthcare is so damaging. Once that passes and doctor's wages in the U.S. drop WAY below the Obama $200,000 "rich" line, those jobs will migrate elsewhere faster than you can say "Nobel Prize Winner." Soon to follow will be the great reputations of U.S. medical schools, drug innovations, medical research funding.....

  • Dr. T

    "Google voice is one of the more exciting communication products I have seen in years....

    So, of course, the FCC is probably going to kill it. They will find some way to justify it on nominally consumer grounds, but they are really just doing AT&T a favor."

    This probably explains why AT&T just agreed to support voice-over-internet protocol on its cell phone network. AT&T and the FCC are horse trading.

  • Allen

    Google wants to use AT&T's infrastructure, but doesnt want to pay for it. AT&T must have a return on investment for its shareholders (why build phone lines if customers refuse to pay for it but still want to use it?)

  • Allen

    Allen --> Don't forget that consumers want to use AT&T's infrastructure and are paying for it. If it's not enough to cover their costs, ATT should charge more.

  • http://www.tarheelred.wordpress.com pino

    The answer would be to allow the phone companies to drop service to those outlying areas [like the authors ranch home?] where they don't make money. But because they can't do that, connecting charges apply. And that means anyone using the phone lines and the infrastructure associated with them, "Ought" pay that same fee.

    Now, if Google were connecting two people without the use of the phone numbers, this would be different.

  • Henry Bowman

    I have never used Google voice, but I am intrigued by it, having used Vonage for a few years as well as Skype. Vonage is basic VOiP, whereas Skype uses an interesting peer-to-peer network. In either case, though, for virtually nothing (in the case of Skype) I get decent voice comm largely free from the onerous taxes imposed on traditional telephone service, such as the notorious Al Gore tax. I still have a land line (my wife insists on such), but I literally pay more tax on it than the service costs!

    Some of these solutions (Vonage in particular) use the upload channel for speech and the download channel for listen. Inasmuch as most consumer-type internet services are asynchronous (i.e.,upload speed being much less than download speed), I cannot talk on the Vonage line if uploading lots of data. This may be more-or-less a problem with many VOiP services.

    Interestingly, I recently learned that for Skype-to-Skype calls (that is, no actual telephone lines or cell phone services being used), all data transmission is encrypted, and apparently Skype refuses to provide decryption info to the U.S. NSA (Skype is not a U.S. company; otherwise, it would have to do so). Makes it quite useful for a number of applications.

  • Uncle Bill

    perlhaqr said: "It won’t come back, as long as those prices remain low.

    If China destroys American tire production, then raises prices, we’ll just start making them again. In the meantime, we’re getting a free subsidy from the Chinese government. In what way is this a bad thing?"

    Sorry to be so long replying, I got caught up in other things. The problem is that starting up a manufacturing facility in this country is incredibly difficult and expensive. I worked for 32 years in the chemical industry. Occasionally we would shut down a manufacturing plant due to "lack of demand" (usually this actually meant foreign competitors were killing us). Sometimes we would mothball the facility, instead of just shutting it down or demo-ing it. This was supposed to mean that the equipment would be preserved in a state such that it would not be too difficult to restart it. Even then, it was extraordinarily difficult to restart it.

    There were lots of problems. Environmental regs were very burdensome. Once it was running, you were grandfathered in, but to start a new unit, or restart an old one, you had to jump through ridiculous hoops. People who knew how to run the unit retired or died. You could no longer get parts for older equipment, and the capital costs to build new equipment was high. You had to find new sources for raw materials, and new marketing campaigns to sell the product.

    If you have government support to help do all these things, and you don't have to show a real profit, you can make it happen. If you have to demonstrate a positive NPV to management, it is much harder.

    For those chemists out there, there is a very high activation energy to starting up a new manufacturing plant in the US...