The financial support by the Swiss government to consumers groups, such as the Fédération Romande des Consommateurs, is central for consumers to be able to make informed decisions.
The deep cuts proposed by some members of Parliament in this support are thus a concern. In addition to cut this funds in half, the cuts would lead to the shutting down of the Federal Consumption Office.
Competition needs information to work
Economic analysis shows that competition is an excellent approach to steer economic resources where they are most useful. But any good economics course also stresses that this requires a serie of essential conditions, including the absence of monopoly and transparent information. With partial information competition does not work well, if at all.
To a large extent information is hard to get. I can easily assess whether the food I buy is to my taste or not. On the other hand, it is very difficult for me to know whether the conditions under which it is produced match what I look for. The tests conducted by the consumers groups allow me to take informed decisions.
While the government already provides some protection to consumers, its activity focuses on legal requirement, particularly regarding the safety of consumer products. But consumers’ preferences cover a broader range of aspects, and thus require additional information.
Being pro-market is not being pro-business
Competition allows for a better use of resources, and this translates into constraints for firms. It is always tempting for a producer to take some shortcuts and deliver a service that is not what the consumer expects, hoping that he will not notice. Nothing new here: Adam Smith, the father of market economics, was already concerned by this problem.
Firms that play by the rules are also adversely affected by lack of transparency. Without information consumers have a hard time telling them apart from firms offering substandard services. This can lead to a race to the bottom.
Providing consumers with detailed information is thus not at the expense of the economy, but at the expense of provider that cut corners. All in all, competition naturally fits in a liberal vision of society as it amounts to giving a meaningful decision power to individual. A well-informed consumer is a demanding consumer. In the end, isn’t that what makes some uncomfortable?
