If The Feds Regulate Mere Annoyances, What Will They Not Regulate?

Question: Should government protect your dinner hour from annoying telemarketers?
Answer: If the feds regulate mere annoyances, what will they not regulate?

Freedom means joy; we can marry and form a family with whomever we please, although not so long ago so-called "mixed" marriages were illegal. Freedom means risk; you can mortgage your house to start a small business selling ceramics or cleaning services and succeed or fail by your own efforts. Freedom means toleration; Buddhists and Baptists may live or work under the same roof. Most Americans cheerfully take the good with the bad and accept that law is too clumsy an instrument – and lawyers too imperfect as artisans – to regulate the world into perfection. Yet the annoyance of being called by telemarketers, it seems, we cannot endure. A wise camel looks askance at such legislative straws.

The Federal Trade Commission (FTC) has proposed the creation of a federal "do-not-call" list. Telemarketers would face stiff penalties for calling a consumer who placed his name on the list. The idea of a do-not-call list is wildly popular across the board; it first was championed by George W. Bush-appointed FTC chairman Tim Muris and lauded by the irrepressible Rep. Ed Markey (D-Mass.), his keen ear ever-attuned to the heartbeat of the nation. "You have a box- office, smash, runaway hit on your hands!" he said. Markey even staged a telemarketing call to his cell phone in the middle of his little speech to illustrate the issue, in case anyone in his audience did not know what telemarketing was, or needed a demonstration that it can be annoying to be interrupted.

But lawmaking is not a movie or a dance. The muse of the moment, the pulse of the populist, these are things our country and Constitution must endure. When Congress is attuned to the trivial, where does our freedom go? If we insist that the federal government step in to protect us from phone calls during dinner, when will we not ask them to intervene? Let’s get our priorities straight.

But wait a second. Does freedom really need to mean that other people have the right to call us at dinner? Isn’t that a kind of intrusion? Freedom doesn’t mean that your neighbor has the right to pump smoke into your house or blast music through the walls. Even an old-fashioned view of property rights says that the freedom of others stops when they create a nuisance. Point taken, but is telemarketing really that much of a nuisance? It only takes a second to pick up the phone and put it down and, particularly in these days of the cordless handset, one need not even get up. It doesn’t entail any disturbance that one might not reasonably foresee when one buys a phone. And regulation of telemarketing affects ordinary behavior (making a phone call) well outside the bounds of the household. Maybe it’s ultimately a matter of degree, but telemarketing ranks low on the list of seriously intrusive nuisances.

That annoyance and inconvenience do not make good grounds for federal regulation can be a hard point for people to accept. I was on a radio talk show once talking about this issue when someone called in to disagree. Telemarketing is more than just an annoyance, the caller insisted, and declared that telemarketing calls had driven her "literally crazy." But it became clear as she talked that in fact they had not. She was still perfectly rational, neither institutionalized, nor on Halcyon, nor even in need of counseling; by "literally crazy" she really meant "annoyed and occasionally inconvenienced." Which is my point exactly.

This does not mean that folks in a free country simply are stuck with annoyances. They are, of course, free to invent their way around the problem – and many have. Entrepreneurs have stepped in to offer a wide array of services and products that help block telemarketing calls. Caller ID works reasonably well for that purpose. As telemarketers usually show up as "unknown caller," one usually can assume that such calls come from telemarketers. Some phone companies offer services that block such calls. And there are devices such as the TeleZapper and the Phone Butler.

These devices don’t work perfectly, but they are bound to get better all the time. Here is why: They all compete with each other. Competition gives the consumer a choice of products – the consumer can look over the options to see which methods work best, which can be tailored to their preferences and which are the most cost- effective. By contrast, the FTC’s do-not-call list is a one-size- fits-all solution. The FTC has no profit motive to make it work better, to build in innovative technologies, to tailor it to individual customers, to bring the costs of operating it down over time. It will be hard for private businesses to compete with the FTC. Who will force telemarketers to pay for access to the all- important no-call list. So what will happen to the market for all the innovative services and devices that block telemarketing? Unless the FTC’s list is a flop, that market and the investment money available to innovators will shrink substantially. And consumers will lose another range of choices.

But there’s another objection to my line of argument. Won’t consumers be better off with the federal solution to the problem than with the private-sector solutions? After all, the federal solution is "free," but you have to pay extra for the various gizmos that block telemarketers in the private sector. That is a shortsighted view, though. Can it really cost us all less to solve a problem by getting lawyers involved? That is unlikely.

What it will do is create another regulatory tax. The FTC has asked Congress to authorize them to charge telemarketers to pay for the list. The charges ultimately would be reflected in higher costs for businesses and higher prices for consumers.

More importantly, the private-sector gizmos are only costly in the short run. In the long run, those prices would come down because of competition. And consumers who rarely are at home to be annoyed by unwanted callers need pay nothing at all. Finally, some private- sector offerings to telemarketing-sensitive consumers already are free. One credit-card company, for example, prominently advertises "no telemarketing," but charges nothing extra. But all these choices – what product to buy, how much to pay, whether to buy at all – are foreclosed by a federal solution.

Competition in other areas might be affected by the do-not-call list as well. The FTC has little authority to regulate calls from telephone companies, for example. The Federal Communications Commission (FCC), however, does have the legal authority to regulate telemarketing by phone companies. Now it makes little sense to regulate most businesses one way and the phone companies another way. So the FTC hopes that the FCC also will create do-not-call rules for phone companies. So far, so good. The problem is that telemarketing has played a big role in introducing competition between phone companies. Way back when AT&T was broken up in the 1980s, it took customers a long time to realize that they had a choice of phone companies. A lot of them learned about MCI and Sprint and switched when offered the option by telemarketing. The battle for more phone competition is not over yet, and limits on telemarketing might mean that consumers are slower to realize they have choices.

The do-not-call proposal also raises free-speech questions. Even business callers have free-speech rights, though the courts say that advertising and soliciting may be more closely regulated than other speech. (The courts may be wrong about this, as a matter of constitutional history. There is no evidence that the Constitution originally was intended to give businesses less constitutional protection than other human endeavors.)

And the ruling affects more than business callers. Some of the biggest users of telemarketing are charities such as the Red Cross. Political candidates also call to round up potential voters. Finally there are research companies and pollsters who may work with charities, political candidates or businesses, but who do not sell anything.

Of these groups, the FTC has no authority over charities and politicians. But the FTC can regulate the telemarketing firms that charities and political groups use. It still is not clear to what extent telemarketing firms would be exempted from do-not-call rules when they are calling on behalf of charities such as the Red Cross. So far it looks as though they would not be exempted. This does raise troubling free-speech questions. Regulation of the hours that telemarketers can call is one thing, but a flat ban on calling someone on the do-not-call list is another. It probably would not occur to many people that placing their names on the list also would result in their never hearing about a group that needs their support to which they might be quite sympathetic, whether it is a new animal shelter or a political cause.

All of this goes to a more fundamental point. It is easy to take freedom for granted. When we hear a message from a telemarketer, we do not think of the role that message plays in a larger landscape of competition and commerce, of civil society and political debate. A lot of our freedoms may at first glance appear tiny, insignificant, even annoying. The display of a million different kinds of toothbrushes momentarily may irritate a confused shopper just trying to pick one. But it is all part of a larger whole.

Americans are uneasy about the looming size of government. Tax bills are a part of that; this April, add together the amount you pay in taxes to the federal, state and local governments. Most people will be startled to find that even if their federal rate is below 30 percent, their total liability may amount to almost 50 percent. Another part of it is the difficulty of doing business without paying for a million lawyer-hours and bankrolling extensive liability insurance. In the face of this growth of government, the proposal to establish a federal do-not-call list for telemarketers seems insignificant. And so it is a reasonably practicable if not perfect solution to an unbelievably minor problem. But if we cannot resist inviting federal agencies in to regulate this issue, when will we not invite them in?