Friday, August 22, 2003

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Libertarian smackdown

Radley Balko and Pejman Yousefzadeh have dueling articles in Tech Central Station over whether the Do Not Call registry -- about which I've posted here -- is consistent with the libertarian credo.

Start off with Yousefzadeh's original TCS essay. Then move onto Balko's rejoinder essay. Then check out Pejman's response to Radley, and Radley's responses to his critics.

If you checked my original post, you'll see I'm torn on this one. I'll post my thoughts after reading everything I just assigned.

UPDATE: OK, I've read everything, including this Julian Sanchez post, and Yousefzadeh wins by KO. I'll explain why sometime this weekend. Hint: it has something to do with Ronald Coase.

ANOTHER UPDATE: Well, this is what I get for procrastinating -- "pj"'s comment below summarizes what I was going to say in a more pithy way than I could have devised. The problem here is that because of the absence of well-defined property rights, the issue is a distributional one. Either the telemarketers are assigned the property right of being able to make automated calls, or the individual consumer is assigned the property right of blocking unwanted calls. I have no problem whatsoever with the consumer receiving this particular property right, particularly given the blackmail problems associated with allocating the property right to producers.

Another fact, which neither Balko or Yousefzadeh mention, tips me in favor of the registry: unless one believes that consumers are irrational or have time-inconsistent preferences, the registry should be a Pareto-optimizing move. The consumers who don't want the service of unsolicited offers don't get it by signing up. The producers, are also provided valuable information. They are told which calls would be completely unproductive. Even if the cost of making the calls is minimal, it's still greater than zero -- ergo, a profit-maximizing producer should be glad to receive this information as a way to cut costs.

Of course, this raises an interesting theoretical question: if the government merely informed the telemarketing industry who had signed up for the do-not-call registry, but provided no sanctions for making calls to those individuals, would the telemarketers still comply? I suspect not, because the telemarketers believe they could still extract a high-enough yield to warrant the costs. That action, however, suggests that these firms believe they could override an individual's prior choice -- and that bothers the hell out of me.

In the end, any theory of libertarianism must place great confidence in the ability of individuals to make choices that will maximize their self-interest. Balko's argument regarding the nanny state violates that assumption for me.

LAST UPDATE: A final hat tip to Balko for linking to all of the negative reaction he's got while still sticking to his guns.

posted by Dan on 08.22.03 at 12:48 PM




Comments:

I don't get the conundrum. Does Balko have any ideas worth taking seriously? Seems like one red-herring argument after another:

  • The most obvious reason proponents of limited government and constitutional originalists should oppose the do-not-call list is the very reason we oppose virtually every other piece of legislation that comes out of Congress -- it isn't authorized by the Constitution.

  • Telemarketing works. It has to. Or telemarketers wouldn't telemarket.
  • "Do not call" proponents have asked the federal government to save them from themselves.
  • I haven't had a telemarketing phone call in the eight months since I ditched my land line and started to rely exclusively on my cell phone.


So, nearly every action of the federal government is illigitimate? Try taking that to court.

Telemarketing is OK because it works? You could make the same claim about armed robbery.

Most people can't restrain themselves from buying from telemarketers and need the feds to save them from himself? puh-leeese.

No telemarketing calls on your cell phone? Could that be because they're illegal?

Sheesh. Who can take this crap seriously?

Telemarketing is a classic case of the "problem of the commons". Unfortunately, strict simplistic libertaranism doesn't handle these sorts of problems very well. Which is why I outgrew simplistic libertarianism in my early 20's.

posted by: uh_clem on 08.22.03 at 12:48 PM [permalink]



Gee, I am awestruck by the preceding comment - I thought I didn't like Balko's piece. Oh, I say that, actually I loved it, I just didn't know that The Onion had a Libertarian edition.

Let me propose that we consider telecom regulations, including the "Do Not Call" law, as a clarification of property and privacy rights. Although it is obvious to Mr. Balko, it is far from obvious to the rest of us that, simply by plugging into the phone network, I have agreed to accept all calls at all hours from anyone.

As the technology changes, the rules covering use will change. It is unlikely that the first telephone regulations covered telemarketing phone banks, since none existed.

Ok, I will rebut one excerpt from Mr. Balko:

Some libertarians have likened the "do not call" registry to putting a "no trespassing" sign on your front lawn.

But there are some important differences. A "no trespassing" sign isn't enforced by the federal government. If at all, it's enforced at the local level, and even then, only if someone violates your sign to the point of harassing you. Cops aren't likely to arrest someone, for example, for cutting across your lawn a time or two, or a Jehovah's Witness who ventures to your door for a one-time attempt at conversion.

First, we applaud his auto-rebuttal feature. We the people were not clamoring for tighter regulation of telemarketers when the calls were infrequent. However, we have evidently gotten beyond "cutting across your lawn a time or two".

Secondly, we already have laws throughout the country regulating telemarketing. Apparently, over 20 states have do-not-call registries, and more were working on them. I'm a big fan of states-rights, but since telemarketers often call interstate, a Federal role is not an absurd stretch.

Finally, he notes the parallel to door to door solicitation. Well, such peddling is often regulated - but it wasn't always! The Supreme Court first ruled on such a case in 1934 - my guess is, the law was a response to depression-era peddlers and "bums", but who knows.

When such laws were passed, might we picture Mr. Balko at the barricades, explaining that door-to-door peddling works, and anyway, what sort of privacy rights did people expect when they bought a house with a front door?

OK, there are free speech issues involved in the peddling regs, and a balance must be struck. My point is, laws change as people's sense of appropriate boundaries changes, and (perhaps) as those boundaries are abused. Clarification of property rights and enforcement responsibilities is something "we the people" do, often acting through our government.


posted by: Tom Maguire on 08.22.03 at 12:48 PM [permalink]



I'll boil this down as simply as possible:

Someone else paid for the phone lines, the telephone polls and the switchboards. Someone else pays for their maintenance. The people who own the telephone service infrastructure ought to be able to use their property as they please. When you hook up your phone, you're tapping in to their property. They're allowing you to do it.

Why do we all assume that there is a federal right to telephone service? It isn't a right. It's a service. Someone has to provide it. And using the federal government to force the company that provides you with that service to do it on *your* terms (that is, commercial free) is no different than using the federal government to force broadcasters to give us three hours of family programing every night, or to limit spam, or to cut out pop-up Internet ads.

posted by: Radley Balko on 08.22.03 at 12:48 PM [permalink]



When you hook up your phone, you're tapping in to their property. They're allowing you to do it.

My recent phone bill was over $140; my recent cable TV bill, with many commercial free channels, (and internet access!) was about $100; my recent bills from ABC, CBS, NBC and Fox - zero (although the news is priceless).

I am pretty sure the analogy to commercial-free television doesn't work.

The idea that this is some sort of a federal cram-down disadvantaging the phone companies would be stronger if the phone companies were screaming, presumably about the lost revenue from telemarketers. However, it seems to be the telemarketers that are upset. Any evidence to the contrary would be welcome, of course.

As far as I can tell, the phone companies may simply view this as a clarification and simplification of the privacy and property rights of their (valued, paying) customers.

As an example, Hertz does not provide me with a personal security service when I rent a car from them - they expect me to rely on the police, if circumstances require. Do you have any evidence that the phone companies feel differently?

posted by: Tom Maguire on 08.22.03 at 12:48 PM [permalink]



Well the phone companies do sell your number to telemarketing lists all the time, so you have to think that they'd rather continue to have that option than not, wouldn't you?

But you're right, they haven't raised a public stink about the DNC list, and I suspect that's because they don't want their customers to know that they're part of the reason why telemarketers call.

I don't claim that telemarketers or the phone companies are wondeful citizens. I'm only saying that this is a problem best resolved with private remedies, or, if there must be state involvement, then at the state level.

Bringing the federal government in makes it very difficult to for those of us who favor limited government to then object when Congress finds other justification to interfere with private contracts.

posted by: Radley Balko on 08.22.03 at 12:48 PM [permalink]



Tom M. wrote:
> I just didn't know that The Onion had a Libertarian edition.

Ya know, you actually had me going there for a minute. A momentary dread came over me: "Gulp, I just rebutted an article from The Onion. Boy do I feel stupid."

I read it again, and it could be from The Onion. It's actually quite funny, but somebody needs to tell Radldy that the joke's over.

posted by: uh_clem on 08.22.03 at 12:48 PM [permalink]




Much economic progress has come through the creation of tradable property rights, which enables beneficial actions to be taken and non-beneficial actions to be blocked. The Do Not Call registry creates a simple version of such property rights. The telemarketers can pay people to accept their phone call, if it's really so valuable to them.

I suggest a modified Do Not Call directory, in which people can name a price and a bank account. A telemarketer can call, but only after depositing the named price into the named bank account.

This, it seems to me, is the sort of institutional solution Coase would approve of.

posted by: pj on 08.22.03 at 12:48 PM [permalink]



The producers, are also provided valuable information. They are told which calls would be completely unproductive. Even if the cost of making the calls is minimal, it's still greater than zero -- ergo, a profit-maximizing producer should be glad to receive this information as a way to cut costs.

I believe that in practice many of those who sign up for DNC lists are precisely those who find it difficult to resist telemarketing pitches - such as the weak-willed and the elderly.

As far as creating markets in privacy are concerned, can I draw your attention to this paper, which is quite a good attempt at justifying the notion. I'm not sure the authors succeed in defending their position against Margaret Jane Radin's arguments, however.

posted by: antirealist on 08.22.03 at 12:48 PM [permalink]



Even if the cost of making the calls is minimal, it's still greater than zero -- ergo, a profit-maximizing producer should be glad to receive this information as a way to cut costs.

Theory intersects reality - the Direct Marketing Association has maintained do-not-call lists for years. Consumers contact DMA, and DMA sells the lists to telemarketers, with the pitch that this should avoid unproductive calls.

All made somewhat passe by recent developments, of course...

posted by: Tom Maguire on 08.22.03 at 12:48 PM [permalink]



I have read, but don't have time now to find a link to provide evidence, that there is in fact no difference between the rates of at which people on the DNC lists and people not on the DNC lists purchase products from telemarketers. If true, that would contradict the theory that "[The producers] are told which calls would be completely unproductive."

Indeed, whether you want a telemarketer to call you is a slightly different question than whether you would buy something from a telemarketer...

posted by: Al on 08.22.03 at 12:48 PM [permalink]



I believe that in practice many of those who sign up for DNC lists are precisely those who find it difficult to resist telemarketing pitches - such as the weak-willed and the elderly.

"Believe" as in "I've heard somewhere...", or "believe" as in "it seems likely me..."? I don't know a lot of of elderly people, and I know there's a big problem of outright fraud carried out by phone scammers, but I've never heard anyone in my circles complaining that the problem with telemarketers is "I keep buying stuff from them and then regretting it".

posted by: DonBoy on 08.22.03 at 12:48 PM [permalink]



I believe that in practice many of those who sign up for DNC lists are precisely those who find it difficult to resist telemarketing pitches - such as the weak-willed and the elderly.

DonBoy's comment is correct that this is not the primary reason for the DNC lists, but that doesn't mean that the point isn't valid. A house with a lonely, senile family member is just what a lot of these telemarketers are looking for.

For me, it's a lot like having the right to install filtering software on your internet service. If you have a 13-year-old son, your main worry isn't that he'll be annoyed by porn spam -- it's that he'll get sucked in.

posted by: on 08.22.03 at 12:48 PM [permalink]



annonymous wrote
>DonBoy's comment is correct that this is not the primary reason for the DNC lists, but that doesn't mean that the point isn't valid.

It also doesn't mean that it is valid. Antirealist offers no supporting evidence whatsoever for this assertion:

I believe many of those who sign up for DNC lists are precisely those who find it difficult to resist telemarketing pitches...

This is just made up. OK, he believes it, but that doesn't mean that it has any bearing on reality. Frankly, I find it too silly to believe, unless we're playing word games where "many" means a couple thousand out of the tens of millions who signed up.

P.S. Note to Tom M. : The DMA list has been around for years, but it's voluntary and works about as well as any other voluntary regulation. Until very recently the DMA's line has been that this voluntary system is enough to solve the problem, but telemarketing's gotten out of hand to the point where even industry flaks can't pretend that it works.

posted by: uh_clem on 08.22.03 at 12:48 PM [permalink]



It's a mistake in this debate to assume that those who do not want to be called also do not buy things from telemarketers. The DNC list is a list of people who have determined that the benefit of receiving the occasional attractive sales pitch is outweighed by the inconvenience of being called twenty times a day by autodialers.

If a store opened in my neighborhood that had a few nice things for sale but in which the sales staff harassed me to the point of rage whenever I went in, I would stop buying there. It wouldn't mean that I didn't want something they were selling. It would mean that the non-monetary cost of the merchandise was too high. In that scenario I could choose not to return, foregoing the possible advantages, but also avoiding the negatives. The DNC is an effort to give that sort of choice to residential telephone customers who do not otherwise have the option of terminating an unwelcome business relationship with the telemarketing borg.

Spammers and telemarketers survive and prosper because they do not bear the cost of angering their potential clientele. The DNC, by returning control of the decision to engage in a sales transaction to the customer, begins to restore some market balance to a badly distorted equation. Now we need to figure out how to do it in cyberspace, as well.

posted by: Ben Moeling on 08.22.03 at 12:48 PM [permalink]



See I was a Telemarketer. All you guys out there just just dont have any empathy. As a Telemarketer, I do know that none among us want to do the job, we are beggars hence we cant be choosers. I was in that job till I got a better job. Now, I am here in a good position because of that experience. It is a good one. I dont have any bad or hard feelings towards that job. It was an experience that I cherish, i had talked with wonderful people, people who were sweet, understanding, even rude or people who used to abuse me, which I do understand. I would never that stinge for any other job even that of Bill Gates.

posted by: Siva on 08.22.03 at 12:48 PM [permalink]






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