I can back JM up on this.
In the telemarketing world the discussion is already how to easily shift the calling over to India. India already handles a great deal of inbound telephone sales such as catalog ordering around the holidays.
If the TM firms can come up with a cheap solution to move the outbound calls overseas we’re back where we were.
Wouldn’t it be simpler and easier to have a “Call Me” list consisting of folks who do want to receive calls from telemarketers? That way the telemarketers can be sure the number they’re calling belongs to someone who won’t be annoyed from hearing from them.
I know you’re thinking, “But who the heck would sign up for a “Call Me” list?” I don’t know of anyone who would, yet (I can’t remember where I read this) some telemarketers claim that there ARE some people who don’t mind getting telemarketing calls and who do buy from them. Well, hey, if that’s true, then let’s have those people sign up for a “Call Me” list so that the telemarketers can leave the rest of us alone.
Well, caller ID hasn’t worked for me. It’s like paying the telephone company for protection, but still annoying as hell. And since most of the telemarketers I get are from a computer, the worst thing a cite said one could do is let the answering machine get it. It only tells the computer that no one is home, so it will continue to ring more. I have a biz line, and it’s important for me to have this caller ID. But I still have friends that call whose number doesn’t show up. It’s supposed to since both areas have the service. I pay about $80.00 a month for my telephone services on my biz line. There are days when one-third to one-half of my calls are telemarketers. Over half the time there is no one on the other line. I get as many as 10 a day. It’s like paying to hear salesman advertise their commericials on the line that you pay for. If they were paying all or a good portion of my phone bill, I suppose I couldn’t complain. But since we are paying the amount in full, what right do they have to advertise on a line that we pay for? If I want nearly continous infocommercials, I just turn on to network TV. Who wants it on their telephone line? It would have been a hell of a lot easier for the politicians to have had a Please do call list for those that wanted to hear the telemarketers. How many do you think would have been on it?
JZ
Yes, that is the wording of the OP. My point was that the question is irrelevant. We do not live in a society where private enterprise dictates every single facet of our lives. Perhaps you are confusing us with the Ferengi on Star Trek.
If businesses intrude on our privacy too much, I think it’s a legitimate function of government to set ground rules for marketing. If companies were parachuting salesmen into our backyards or dropping thousands of leaflets over neighborhoods by airplane, I wouldn’t want to wait around for the “market” to correct it.
You may be satisfied with those options, but I explained why most people are not.
Doesn’t matter if they blocked their number. I explained at least 2 instances where it would be necessary to accept a call from an unknown party. Not all unknown parties are telemarketers. Even if they do not block their number, if it’s a new employer calling to offer me work, for example, the number displayed will not be familiar to me. Besides which, do you really have ALL of your friends’ and acquaintences’ telephone numbers MEMORIZED so that you can instantly make a determination whether to pick up the phone? I don’t find that solution to be on a par with the do-not-call list solution.
We don’t want to block ALL calls from unknown parties, just the ones that are trying to sell something. It’s not that people want to be able to postively identify EVERY phone call before they answer; they just want to stop the incessant ringing of the phone all day from telemarketers. Really, all you have shown is that YOU are satisfied with the “technological” solution. I assure you, most people are not. If you don’t believe me, check out some news articles from the first few days of do-not-call registration, and see how they were overwhelmed with consumers wanting to sign up.
Sorry, LookitMe I was writing my post on-line while I seen you suggest the same thing about having a call me list. Anyway, glad we are on the same page. Hopefully this will get through this time. Last time the hamsters weren’t up to speed and my post didn’t show as getting through.
JZ
I suspect it was a compromise. You can be sure that the telemarketers HEAVILY lobbied while this law was being considered. Of course they know that virtually nobody actually wants to get calls from them, so they’re hoping they can still pester those who didn’t sign up for the list because of apathy or simply being uninformed. I’m sure they figured that more people would fail to sign up for a do-not-call list than would actively sign up for a please-call list. And as someone pointed out earlier (maybe in another thread?), get ready for some creative interpretations of what constitutes a “prior business relationship”.
The OP strikes me as an example of the common fallacy of describing every occasion when “the market doesn’t provide what I want at the (low) price I want to pay” as a “market failure”. I would love to have telemarketer-free telephone service, but it’s extraordinarily difficult to provide. My telephone is connected to a network which is shared by a billion customers and a gazillion other telephone companies. How can my telco distinguish a business telling me that my order has come in from one trying to sell me aluminum siding? We see exactly the same problem with ISP’s trying to fight spam.
With the “Do Not Call” list we are taking advantage of the coercive power of government to criminalize the offending conduct. This reflects a judgment that unwanted telemarketing is so intrusive as to constitute a violation of our liberty or property rights, much like a neighbor blasting overly loud music all night. This law may or may not be a good idea—personally, I don’t have any problem with it—but it doesn’t reflect a “market failure” any more than any other criminal law.
Darn, I think I misspoke. I just remembered that caller i.d. allows you to display the name of the calling party as well as the number, so I guess you wouldn’t have to have the number memorized. Sorry about that.
I think my other arguments still stand, though.
Quite a few cell phones won’t have a name attached to it though, unless you know this person’s phone number from other calls, and have programmed their name into your phone with the number.
JZ
Blowero: Actually, I don’t have a problem with the government setting standards for TM calls. As you pointed out, those guys have pretty much invited it on themselves by being such intrusive a-holes. But I don’t see it as a market failure and I don’t think the gov’t solution will work. You are going to have to rely on a tech solution whether you like it or not. There are a lot of exemptions already on the DNCL, and many will just relocate overseas, as has already been pointed out.
I can’t believe how long it took for caller ID to get implimented. I think it’s the greatest thing since sliced bread. Remember: Technology is your friend.
I don’t know, but it irritates me, too. I just let it go (sometimes I even turn the ringer or phone off) when I don’t want to talk. Now that I only have a cellular phone, my solution is to just not have it on me.
The other assumption the OP makes is that the Do Not Call list is a correction. I don’t think it will correct much at all.
It specifically exempts political institutions, surveys, non-profit organizations, financial institutions, business to business calls and companies that have existing business relationships with the customers they are calling.
Got a credit card? Then your credit card company can call you to offer life insurance, various credit guard programs, and anything else they feel like hawking at the moment. Shopped at Sears in the last 18 months? Don’t be surprised if they call you to market siding. The local policeman’s union can still call to sell magazine subscriptions. Sales agents will still be able to call your business and hawk toner. And of course Congress exempted themselves, so expect even more political polling come election time.
There were a couple of other elements to this legislation. It required telemarketers to send Caller ID, so you won’t see “UNAVAILABLE” or “PRIVATE” as often. It also limited the number of abandoned calls (calls where you answer and nobody’s there).
Quite the contrary, the OP is asking whether there is a market failure, not arguing that there is one.
Well, people like Hawthorne don’t assume it to be true. People like Hawthorne can prove that a competitive market is welfare maximizing. A competitive market is guaranteed to produce as much well-being as is possible and any government intervention that distorts incentives in the market place will lower the overall well-being that there is to go around. Since government involvement in the market is harmful, we should hesitate before using it.
Of course, nothing says that the market will come up with a solution that is acceptable. I’m all for property rights, but if the market solution is one where I’m filthy rich and you’re all on the brink of starvation, then I will lose all respect for you if you don’t revolt.
It might also happen that a competitive market fails to obtain. A good example is the used car market. Since the seller is privy to info that the buyer doesn’t have, the free-market solution is one that is bad for everybody. Buyers don’t want to enter the market because they might get a lemon; sellers of quality used-cars don’t want to enter the market because they have to subsidize all the lemons out there. Since, in this case, the free-market is a dog that won’t hunt, there is a role for the government to enter and (attempt) to engineer a change that will make the market competitive. In many U.S. states the governments did so by passing so-called lemon laws.
So the question is whether more-or-less unrestrained telemarketing is the product of some failure in the phone market. Perhaps not. How about a failure in the telemarketing market? Telemarketers are selling a service, after all. The price of a telemarketing call is what the firm charges to a business to make a call to you. The (marginal) cost is what it takes to make the (nth) call. In a competitive market, price equals marginal cost. But there’s a problem: as Hawthorne pointed out, the person receiving the call incurs a cost–the hassle/annoyance/etc. of the phone call. To be priced properly, this cost must be taken into account in the pricing of the call. But it isn’t, is it? Therefore, the telemarketer is not bearing the full cost and factoring that into the price. Since costs and benefits are not balanced for the actor, she will act suboptimally. Following that line of reasoning, one might conclude that there is indeed! a market failure going on in the telemarketing industry.
The failure may instead be on the other end, though, with the phone companies for failing to provide a service that, if implimented, would be utilized.
Suppose, for instance, that you could charge a rate set by the phone company for each call you did not request. Perhaps by hitting the * key then a password of five numbers or something. Or perhaps the problem lies with call waiting not being robust enough. I recall that I was able to make my number a special kind of forced private where if a person called from a private phone they had to authorize that, in fact, the call waiting information would be displayed to the receiving party. I know that this exists in some areas, but does it exist in all areas? Thus there is call screening available.
Ultimately a phone caller still has a cost associated with this since they must pay to have the service and still must take time out to screen calls. But I think it is a stretch to call this a market failure per se. I mean, is it a market failure that pedestrians bump into each other on the sidewalk on their way to work if they don’t want to?
I think I would like a clearer explanation of just what a market failure is.
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When I lived in Australia I attended a seminar sponsored by Telstra (the government phone company) where the Telstra rep said they do this as a matter of course. Telstra told us they sold caller ID technology as well as other blocking technology to ordinary subscribers. At the same time, Telstra was selling technology that overrides all that subscriber blocking to businesses.
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First of all, as has been noted by other posters, regulation (i.e. the government restricting certain activities) is completely consistent with a libertarian, free market ideology. Indeed, a free market depends on government intervention.
A free market depends on exchanges that are voluntarily entered into by all sides, and no one (well ok almost no one) doubts that the government can and should step in to prevent coercion, fraud, theft, murder, etc. When one party does not pay the full cost of its actions, i.e. externalizes those costs (or as the economists say, “imposes an externality”) then there is a good argument for government intervention.
So, people are not allowed to drive down my street blasting loud speakers (whether they are advertising or not), because while it may benefit them, it imposes costs on everybody else.
Ok, but enough of that, the interesting question is, should the government keep out of regulating telemarketers and see if the free market comes up with a better solution? I think there is a similar question regarding spam email.
One of many factors that makes this complicated is that, until very recently, phone service was a local monopoly (and still is in many areas.) It’s not as if there are 10 phone companies competing for your business. If there were, perhaps you would see them offering various creative means to block unwanted calls from telemarketers.
I wonder, for example, about a system that would let me set up the following contract: I will only take your call if (1) you are on a pre approved list (which would include government numbers, etc.) or (2) you put up a “bond” of 25 cents (or some other fairly small figure.) Then you as a telemarketer can decide whether it is worth it to call me and risk my forcing you to pay me 25 cents.
That’s pretty ironic, considering that the phone companies themselves are the most aggressive telemarketers of all.
I can’t offer a concise dictionary-type definition off hand. As I understand it, it is basically a situation where the market fails to act optimally. Suppose I own a factory that is upstream on a river from your bottled water plant. If I’m dumping my waste in the water, then your business is going to be affected by that. Your sales might be hurt, or you might have to install purification hardware. Whatever it is, there is a cost that you are bearing because of me. I should be the one bearing the costs of my activity (manufacturing) if we want my production decisions to be optimal. But since I’m passing some of the costs on to you, I’ll over produce. And since you are bearing some of my cost, you (may) underproduce. Since I’m not pricing properly as a result of not having to bear my full costs, the market has failed to be optimal.
The lemon example I gave above is another type of failure where information is not held equally or is incomplete. An example might be whether to put down a neighborhood sidewalk. Since you don’t know what a sidewalk is really worth to me, I can misrepresent myself by saying that I don’t wish to have sidewalk and will not pay. If enough people do this, then no sidewalk will be put in place even though the neighborhood actually does want it.
Another type might be where there are costs to coordinate. In the context of the OP, we might argue that the cost of coordination between telephone owners means that we don’t consume enough telemarketing blocking technology.
That’s all that I can think of off-hand, though there are more examples, to be sure, but also more types. Generally speaking, I think, a failure is when the market by itself fails to come to an optimal solution. That is, it doesn’t maximize well-being.
That’s really diaphanous, though. How do we know that we haven’t maximized well-being? I must admit a certain distaste for utilitarian perspectives, though.
Depends on who you talk to. I had a professor who told us about estimating the cost of a safety feature that was going to be required on mobile homes. The estimate he came up with was right on the money–that’s where the market price settled after the company he consulted for charged over twice the estimated value and couldn’t make it attractive to buyers.
I’m not going to suggest that assessing the welfare gains & losses from various policies isn’t a messy affair, and I really couldn’t give a schematic as to how it is done. But I think that it can be done to some extent.
I think it is more important to merely be cognizant of the fact that any distortion hurts somebody. Personally, I feel that fact puts at least a weak presumption to go with the competitive market solution. But as I mentioned, there is absolutely no reason to assume that because the market effects the distribution of goods & services the distribution must be morally or ethically acceptable. In theory the state can move to a more just equilibrium with non-distortionary methods; but, to the extent that such methods are even possible in the real world, they are completely unfeasible politically.
I don’t see it as utilitarian to give the market that weak presumption of superiority. I would certainly be willing to forfeit some of society’s well-being in an attempt to make the world more just. I would think twice about doing business with anybody who wouldn’t.