Squashing Phone Pests

Squashing Phone Pests

Singleton Op-Ed in The Washington Post
February 10, 2002

When will pundits learn that jargon does not sound economic analysis make? Robert Kuttner offers a laundry list of alleged "collective action" problems, including the annoyance of telemarketing, accounting fraud, clean food and reliable drugs. But markets do produce good food, accountants and drugs better than any other economic system. In the market, entrepreneurs propose solutions, and consumers try them out, with resources directed to the highest priority problems first. To call for regulation beyond basic laws against theft and fraud for occasional problems is to short-circuit the process of trial and error that makes markets yield better long-run results than regulation.

Mr. Kuttner likes the Federal Trade Commission's proposal to create a national "opt-out" list of people who don't want telemarketing calls, with stiff penalties for violations. This is not the most heavy-handed regulatory proposal ever made, but it is overkill. Telemarketers are annoying, but calls from legitimate businesses do no harm and may yield enough sales or donations to launch a new product or charity. Penalties that would strike a death blow to an unwitting small business or charity are no more appropriate a response to mere annoyance than flogging. Telemarketers have incentives to strike opt-outs off their call lists, because calls to them are a waste of time. More sophisticated technology to screen telemarketing calls is being developed, including filters that screen out any caller with caller ID turned off. If these haven't caught on in the mass market, it's because consumers would rather spend their dollars on music, theater tickets, virus-protection software or a nice dinner out than on addressing a momentary annoyance.

Bringing in the feds for such a trivial problem creates the kind of slow bureaucracy and business-strangling environment that has given regulators a bad name.