And (2) if so, does it indicate that there may be other areas where the government could usefully significantly intervene?
I’ll give a position first, then some possible counters. Please correct me if I’m mistaken on matters of fact.
Yes, the do not call list is a correction of a market failure. The market has failed to offer a service that people want and is feasible at modest cost. Phone companies could offer contracts with home users at a higher cost that exclude certain callers. They could interconnect with other networks according to different rules for different classes of users. Firms have not offered such services.
2.Yes, this indicates that there may be other areas where the government could usefully significantly intervene. Whilst there are government programmes that are counterproductive, and areas where there is too much government intervention, the “Do Not Call” list shows that the notion that government generally is interfering too much is overstated.
This is a large intervention in a huge industry that has failed to deliver what tens of millions of customers clearly want. In an economy with imperfect competition, imperfect capital markets, increasing returns, informational asymmetries, missing markets, agency problems and externalities, there are likely to be many more intrusive government interventions that would be efficiency enhancing. That’s not to say that any proposals for a new intervention should be presumed to be a good idea, just that the mantra that government is too big and should just let markets get on with the job is not justified. Potential exists for large, intrusive new government schemes which would enhance efficiency and choice for consumers.
Some possible objections to this position:[ul][]Consumers are not really willing to pay for this service. Sure, tens of millions have signed up, but they wouldn’t really be willing to pay extra for their phone service. I don’t think this is very plausible. []Entrepreneurial phone companies would like to try this, but can’t get into the market due to the dominance of existing players. This is not really an argument against my position, since it itself suggests market failure - unless:[]The reason phone companies cannot offer such contracts is that there is too little competition in the market and that is caused by government policies. Possible, though my impression is that your government has been trying (off and on) to increase competition in the telecommunications market. I’d be interested in people’s thoughts on this.[]Phone companies would be precluded from offering such contracts because they would be seen as a restraint of trade. Possible, and interesting.The market would have come up with a solution to this problem, given time. I guess there’s new technology in the telemarketing business, but how long should we wait to see signs that this seemingly huge demand elicits a market response?[/ul]
I’m not sure why you think it’s a market failure. I see the words but they’re not adding up for me.
The telemarketing market works as currently designed. Telemarketers call and make more than their costs in return. Bingo, market efficiency.
If you’re talking about the market not responding to consumer demand that telemarketing stop that’s another matter. In your scenario above you postulate a cheap ‘lock out’ method that could be offered to consumers.
But where’s the motivation for local phone companies to offer it? To make it worthwhile it would have to be pricey enough to offset the money the phone companies are making from the telemarketing firms. And that, I suspect, would be high enough that the average consumer wouldn’t purchase the service. Thus the market works again.
(Let’s not forget that telecom firms will take a profit hit when DNC kicks in later this year. Sell that stock, kids!)
There already is a cheap solution: Caller ID. I pay a few bucks a month for this and I never answer the phone unless I recognize the number. I also believe there is an additional service you can buy that won’t let the phone ring unless the number is available (almost all telemarketer calls don’t have the number available). I don’t know how much this costs, but a few of my friends have signed up and they love it.
Have to agree with JC. The process works and makes money or telemarketing companies would not abound like maggots infesting a corpse.
The DNC list is a product of the telemarketing companies failing to meet the demand of a portion of thier consumer base, that is, not calling people who don’t want to be called. Even those few companies that maintain thier own internal “hey this guy got pissed and said not to call” lists don’t always follow the spirit of the request, much less the letter.
An example:
My brother managed a telemarketing firm for several years that kept an internal DNC list. But the DNC list was applied only to the specific products, not to the phone number itself. If a TM employee called a number to sell siding and was told “don’t call me anymore” then the TME would make a note that the person at that phone number didn’t want siding, and no more calls from siding clients would be sent to that number. However, this particular TM business also did credit card, vacation, special offer, and literally dozens of other TM services. Therefore, telling them not to call didn’t actually help you.
The TM companies are now whining, claiming that jobs will be lost, etcetera, and I really don’t care. If these companies had maintained a DNC list and stuck with it there wouldn’t be an issue.
Not bingo. People who do not wish to receive calls incur costs. Telemarketers are not paying the full marginal costs of producing their service. That’s clearly inefficient. Efficiency is about producing what consumers want, not about profits. In an efficient market, the pursuit of profit directs firms as if by an invisible tentacle to produce what consumers want at the least cost to society. Telemarketers are imposing costs on others. Their activities are therefore inefficiently excessive.
I do not understand why any kind of regulation is considered to be necessary only as a result of “market” failure. A western capitalist society is a regulated society and that does not detract from it being a free society. You have to stop at the red light so the guy on the cross street can move. Food is required to carry information which allows the consumer to better choose. It may be more productive for me to park my car illegally but society as a whole prohibits that because it harms the rest of us. Same thing with telemarketing. The fact that a person or company can benefit does not mean they are automatically allowed to do it.
It’s an example of the “market” and “costs” being defined too narrowly. The telemarketing company does not have to bear the entire cost of its operation - a cost that includes the intangible effects on society (and tangible ones as well). That’s where a broader, higher power has to consider if it should be involved, as has happened here.
Compare a telemarketing company to a manufacturing company that simply dumps pollution into the river, calculates that its revenues exceed its costs, and concludes the arrangement to be economically efficient. That ignores the costs to others outside the company who have to deal with polluted water. Telemarketing call receivers have to deal with the negative effects on their own lives, but the company doesn’t. Only government can address the issue on a holistic basis - by enacting water pollution control laws, or telephone pollution control laws.
Why do I keep hearing this argument that the “market” must be allowed to take care of everything? The OP appears to be arguing against this notion, but why does the notion exist at all, and why is it so often merely assumed a priori to be true? This may be a capitalist society, but it is not a libertarian society. The government can and does regulate what businesses can and cannot do all the time if it is in the interest of the greater public good.
Besides which, it’s impossible for private phone companies to eliminate telemarketing. It requires enforcement, with some sort of penalty for those who violate the rules. How would private phone companies do this? And simply blocking ALL calls from unknown parties is not a workable solution. There could be any number of reasons why an unfamiliar person might call me. I am self employed, and rely on employers calling me for jobs. Or let’s say my best buddy from high school, who I haven’t heard from in 20 years, decides to look me up. I don’t want to block ALL unknown calls, just the telemarketers.
Blowero: In addition to caller ID, one call also subscribe to voicemail. Or an old-fashioned answering machine lets you hear the message as it’s being recorded and to pick up if it’s someone you need or want to talk to.
But you’re right, this isn’t a libertarian society. However, we’re often not debating about what will happen, but what should happen. If someone supports a libertarian philosophy, he or she will argue in that way.
Why should I be forced to purchase a third party item/option for my phone line just to keep telemarkeering calls at bay?
If the Direct Marketing Association were true to its word, I should be able to lodge a complaint with them, have my phone number on their do not call list and not be burdened in the first place. That the the leading markeering lobbying group cannot/will not/is unable to take care of its own, I see no problem that a govrnment agency steps in and forces the issues, especially after the thousands of complaints.
The amusing thing is that several phone companies for a while offered an expensive service that blocked most telemarketing calls. But, at the same time, they were selling customer information to the telemarketers in order to encourage them to pester you… thus not only making them money, but making their own service necessary.
It’s a clear example of market failure when TM are allowed to waste your time without incurring any costs. However, I’m not sure a blacklist is the right answer. At the very least, they should allow TM consortiums to be able to offer to pay you to recieve their calls.
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Why should I be forced to purchase a third party item/option for my phone line just to keep telemarkeering calls at bay?
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Because when you signed up for your phone service, it didn’t guarantee that the only calls you would get would be from people you wanted to talk to. Just like you have to pay to have an unlisted number, you can pay more for more privacy. If the gov’t is not enforcing laws (such as a no call list) then it’s not a market failure, it’s a law enforcement failure.
I don’t want to be forced to be rude to all my friends and business acquaintances by screening all my calls. Besides that, I don’t want the intrusion of having my phone ring 5-10 times per day, even if I didn’t answer it. And I think virtually every citizen in the country agrees with me. There is almost nobody who actually wants to get telemarketing calls, and even if they do, they can simply not sign up for the do-not-call list.
Well debate away, but I disagree with such a philosophy, especially if it means pushy salesmen can pester me night and day in my own home. Some people may indeed envision a society without regulations, where businesses are simply allowed to do what they please. But last time I checked, the Libertarian Party was doing pretty lousy at the polls.
First: The DMA (Direct Marketers Association)(Disclaimer: I am a member) can try to police its members among the telemarketers but by far most of the TM firms aren’t members. Not much to be done there.
Second: Why is it rude to screen your calls? You screen your email, your snail mail, etc. I’ve never quite gotten the culture that’s evolved around telephone communication in the United States. What is it about a ringing phone that makes people jump up to answer it right away? Whomever is calling is doing it at their convenience, not yours. And that applies whether it’s a telemarketer or grandpa calling to chat.
This is all true. But the question is whether or not there is a market failure. The market is not intended to provide for your every wish, without any payment. I pointed out that there are quite a few technolgical options you have for getting rid of telemarketing calls. I use them effectively, and I can assure you I hate the TM calls as much as anybody.
As for rudeness, I agree with JC. I think it is rude to expect me to answer the phone without knowing who it is. Anyone who blocks their outgoing caller ID is being “rude”. I wouldn’t answer the doorbell if I looked out the peephole and saw someone on my porch wearing a mask. Same thing with the phone.
I find it unnecesary. I suspect that a lot of TM efforts will go out of the country to bypass the law. I think the technological solution is a better one.
You nailed it right there. If the government asked us to vote on a tax increase to pay for this service, I’d be willing to bet we’d vote no. IMO, the attitude is ‘the government is going to waste our money anyway, so at least they’re blowing it on something postive’. So activists that lobby against excess government spending and tax increases shoulder the soft-spoken market voice on this one.
