by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor | John Locke Foundation
“Consider this,” John Stossel writes:
An entire sector of the economy operates almost entirely without government controls. Complete strangers exchange big money there every day.
It’s the Internet. It does have regulation, just not government regulation.
Stossel goes on to explain how PayPal, eBay, Wikipedia, and other sites managed to create effective fraud-detection and other private means of self-regulation without government. “Years of consumer reporting,” he writes, “have taught me that such private regulation is better for consumers than the piles of rules produced by our bloated government.”
A good business reputation, especially for a small firm or self-employed entrepreneur, is vital. Consumers want to know who they can trust. This clear demand for information is an invitation for entrepreneurs to fill that void, and they will do so provided they aren’t blocked by the government. Good Housekeeping, Underwriters Laboratories, and the Better Business Bureau are all privately offered sources of certification of product or service quality (or lack of quality: the Better Business Bureau recently released its “Dirty Dozen” list of 12 Charlotte-area businesses with the most unanswered customer complaints in 2012). The strength of their endorsement lies in the strength of their own reputations; because they have established themselves as reputable, trustworthy sources, their recommendations transfer their good reputations on to the endorsed services. Likewise, Consumer Reports, CNET, etc. offer product comparisons and reviews backed by their own reliable reputations. Also, the Internet has made it far easier to provide and acquire such information, thanks to such sites as Angie’s List, Amazon.com, Yelp!, and many, many more that allow consumers to log their experiences with vendors for the educational benefit of future consumers. Social media sites such as Facebook and Twitter have given that reliable tool, word-of-mouth, even greater amplification backed by consumers who are your friends and family.
Stossel ends his column by promoting what he calls “the Stossel Law: For every new rule, repeal two old ones.” As a rule of thumb, that’s not bad.