Jewish World Review Jan. 5, 2005 / 24 Teves, 5765

Robert Robb

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Consumer Reports


Why is this any of the government's business?


http://www.jewishworldreview.com | A sign of the diminished spirit of liberty is how rarely the question is asked: Why is this any of the government's business?


Take the issue of cell phones on airplanes.


The Federal Communications Commission has been widely condemned for considering the elimination of its ban on the in-flight use of cell phones.


None of the outcry, however, seems to be about safety. No one is asserting that planes will start falling from the sky.


Moreover, the FCC won't be making the safety determination anyway. That will be made by the Federal Aviation Administration. The FCC is just trying to get out of the way in case the FAA decides there is no safety concern.


Instead of safety, the condemnation of the FCC is rooted in concerns about etiquette and customer comity. Simply put, the critics find cell phones annoying and don't want to be seated next to their use on a flight.


In our flaccid age, perhaps there should be a federal Department of Etiquette and Customer Comity, with a Division of Anti-Annoyance. But a government in the business of protecting people against annoying social behavior isn't in the business of protecting liberty.


From the reaction, you'd think the FCC was contemplating a regulation requiring the use of cell phones on airplanes. Instead, it's only thinking about getting out of the regulation business.


Whether in-flight cell phone use were permitted would be up to the airlines. Some might permit it, others might not.


Airlines that permitted use might come up with their own rules of engagement. Or that might be left to evolving social customs. Whatever the rules, formal or informal, some would violate them, and some would find what is permitted to be annoying.


But unless there is a safety issue, it's none of the government's business. Annoying social behavior is something a free people control or cope with on their own.

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Closer to home, Arizona has discovered, along with many other states, that some retail gift cards come with fees, expiration dates, or balances that decline over time even if not used.


Initially, Democratic Attorney General Terry Goddard, who has put this issue on the public agenda, seemed respectful of private markets and the appropriate role for government. He told the Arizona Republic editorial board he would push for legislation requiring disclosure of any such conditions on gift cards.


Economic libertarians would argue that even this is unnecessary. Cards without such conditions, which are most of them, have an obvious advantage over those with them. Retailers without restrictions have an incentive to make consumers aware of this advantage, thus no need for government intervention.


But a case compatible with liberty can be made in favor of such disclosure requirements. Government is simply accelerating and facilitating the exercise of informed consumer preferences.


The problem is that regulatory mission creep is almost inevitable. Sure enough, Barbara Leff, the incoming Republican chairwoman of the state Senate's Commerce and Economic Development Committee, promptly wanted to ban gift card fees and expiration dates upon learning about them.


Democrats don't like to be outflanked by Republicans on consumer protection. So, not much later, Goddard's legislative lobbyist, Richard Travis, was beating on his chest in favor of a ban to the Phoenix Business Journal, describing disclosure requirements as only a fallback position. Travis asserted that retailers make a great deal of profit on the float from gift cards.


Of course, there are also increased inventory carrying costs associated with such deferred purchases. And then there are the accounting issues. Gift cards illustrate the inanity that has become corporate accounting.


Although retailers receive the cash upfront, they cannot book the income until the gift cards are redeemed. The cash, however, is reflected on their balance sheets, with a corresponding liability for the purchases yet to be made. Tracking large volumes of such small liabilities is, at a minimum, a nuisance.


In a free society, the judgment of politicians shouldn't be substituted for that of retailers trying to make it in a competitive marketplace about what sort of conditions to attach to gift cards.


And surely no one, even in this indolent era, would argue that gift cards are a necessity, requiring government to dictate the terms and conditions under which they are offered.


If some retailers want to recover costs associated with gift cards, or simply make more money on them, it's none of the government's business. So, what are consumers to do without the protection of government, at least beyond disclosure requirements?


Here's a suggestion: If you find fees and expiration dates on gift cards objectionable, don't buy one with them.



JWR contributor Robert Robb is a columnist for The Arizona Republic. Comment by clicking here.

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