Is Profit-Seeking At Odds With Consumer Value?

found online by Raymond

From Michael A. LaFerrara at Principled Perspectives:

In the comments section of Linda Stamato’s for-profit hit piece The predatory for-profit college industry and its enablers in Congress, which I covered in my post of 5/19/16, a correspondent ironically calling himself thinkerbell wrote,

. . . once you’ve gone for-profit, it’s pretty much axiomatic that your final concern will be the generating profit rather than the development of wise and committed citizens who can envision and enact a better future.

I left this reply:

This makes no sense. The idea that the path to profitability is to disregard the good of or do bad things to your own customers can be easily debunked by a little personal introspection: When was the last time you sought out the lowest quality, highest price, worst service, or most dishonest provider in deciding how you spend your own money?

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1 thought on “Is Profit-Seeking At Odds With Consumer Value?”

  1. “When was the last time you sought out the lowest quality, highest price, worst service, or most dishonest provider in deciding how you spend your own money?”

    You don’t have to seek it out to get it.

    Some industries totally lack competition, at least on a local level. You don’t get to shop around; you get what you’re given. This can also occur in the presence of competition, as in a case where your area has three hospitals, but you can only go to one because that is the only one that accepts your insurance.

    “OK,” LaFerrara might say. “There are some exceptions, but it’s still generally true that businesses strive to behave in a principled manner and satisfy their customers.” (I also imagine that he would dispute cases like the one above by arguing that they only exist because of the government’s meddling.)

    But satisfying customers and doing right by them are two different things. For example: a car manufacturer finds that it can make its vehicle safer, but doesn’t because it (1) sees that consumers don’t want to pay more money for that and (2) isn’t willing to sacrifice some of its own profit for the sake of its customers’ safety. In this case, doing right by the customer might mean building safer cars, but satisfying the customer is as simple as changing nothing. Competition doesn’t change anything either, as other manufacturers will reach the same conclusions.

    Businesses can and do take advantage of consumers’ low expectations and the absence of regulations. (We wouldn’t need the regulations in the first place if they didn’t.) But they can also manipulate expectations for their own benefit. Sometimes it’s cheaper to convince people to accept less than to make a better product. Unfortunately for the libertarian, we are not all rational and we do not all accurately identify what is in our own best interests, so strategies that get consumers to equate personal satisfaction with self-interest do work. That LaFerrara does this himself suggests to me that libertarianism might not be the right fit for him either.

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