Hacker News Reader

Comment by bioh42_2 | Hacker News Reader

With no consumer protection or standards, this is what happens.

Not always, some times a wild market eventually results in some of the strictest standards which also happen to be self enforced.

I say sometimes but some economists believe, in the long term, this will always happen. I think reality is a bit more complicated, and in the very long term we're all dead. So for the duration of any one human life time, amazing self enforced standards sometimes arise form chaos. Those send to be far superior to anything government can do. But government is often quicker to come up with enforced standards.

View on HN

> some times a wild market eventually results in some of the strictest standards which also happen to be self enforced.

I've seen that in works of fiction, where it seems to function pretty well.

I have yet to come up with any real-life example that stands up to scrutiny.

When I was growing up in Taiwan, there was a private consumer-protection agency that actually seemed to work. It all came about after a rash of food poisonings, and a private organization came up with a certification stamp, and somehow (I'm not sure how) convinced most consumers to look for and demand the stamp on packages.

All in all, not at all unlike how government protection agencies work, but in this case entirely private and independent. The neat part is that, IIRC, their safety standards were mostly stricter than the US.

Probably the exception to the rule though.

I believe Underwriters Laboratories and the Insurance Institute for Highway Safety would be US examples of similar private agencies.

Funny, I haven't thought about UL since I was a kid. Do many consumers look for a UL stamp, or is it used more for legal defense if the device actually does malfunction?

The American Dental Association is another example. I do look for ADA-approved toothpastes.

I believe it ends up getting enforced at the retailer level; most major chains will refuse to purchase Christmas lights that are not UL listed, so you can be reasonably sure that the cheaply manufactured lights you purchase at Walmart don't burn your house down. They also seem to be providing education [1] and revising their standards [2] to discourage particularly ill-advised appliances such as electric turkey fryers.

[1]: http://www.ul.com/global/eng/pages/offerings/perspectives/co... [2]: http://ulstandardsinfonet.ul.com/scopes/1083.html

Somewhat related:

Apparently laundry detergent manufacturers kept on increasing the size of their standard detergent bottle without increasing the washing power in order to make it look more impressive on a shelf. This caused an "arms" race in detergents.

WalMart stepped in and refused to stock detergent bottles past a certain size. At that point, the manufacturers stopped making the large size bottles.

If there's a player with as much power as WalMart then they can dictate pretty much whatever they want - and sometimes their interests are aligned with the customer.

Real-life example: The EU allows vegetable oil (instead of cocoa butter) in chocolate. In Germany, nearly all chocolates still contain no vegetable oil.

This is interesting, and it makes sense to me that markets would work this way, but I am not sure I can think of any real examples. Something like Bar Associations comes close, but AFAIK they are legally mandated? Do you have any better recent or historical examples in mind?

How about the standard of putting the name of the product on the outside of the packaging?

How about the gold standard?

Also- http://en.wikipedia.org/wiki/Open_standard#Examples_of_open_...

http://media.mises.org/mp3/interviews/murphy1.mp3

The best example I could find is about non-profits: http://nvs.sagepub.com/content/39/6/1057.abstract

But I think the same principles would apply to for-profits. The only other examples I have are anecdotal.

non-profits ==> competition is not exactly red in tooth and claw ==> not a real "market"

> The only other examples I have are anecdotal.

Agreed.

non-profits ==> competition is not exactly red in tooth and claw

Are you serious? Competition for donations between non-profits in my experience is often even more extreme then between for-profits. Do you have any evidence for softer competition among non-profits?

Besides some non-profits are really phenomenally well functioning for-profits, which happen to have chosen a non-profit tax status.

For example, in the US the non-profit AAA will quickly drop any pick-up truck company known not up to its standards. Mind you, all that's needed if for the truck to show up roughly on time and be reasonably courteous. Still that is quite something when you're in a bad spot and need those kind of services.

And the AAA is popular enough that being on their shit list will cause sever financial pain to any pick-up truck services provider.

But to join the AAA you have to pay a regular fee and they have all kinds of tie-ins with piles and piles of 3rd party service and goods providers.

I don't begrudge them their non-profit tax status, but they are a damn well run and huge business.

Idealism aside, do you have real-life examples of such "emergent standards" that are pertinent to this discussion?

Various textile industry associations have labeling standards and trademarks for materials, like Supima®, Seal Of Cotton, Woolmark, etc. These actually give some useful assurance of the quality or type of fiber, and they are private standards rather than government ones.

Nice try, but it doesn't get to my point. How are these "emergent standards"?

Are you arguing that the trademarks are standards? They are completely owned by the company and follow no rule other than arbitrary decisions by one entity (Nintendo could sell Mario toilet paper tomorrow and it would be a Mario(r) product).

Well, like I said, typically they are owned by not by individual companies but by industry associations or coalitions. These consist of member companies which individually compete with each other, but have worked together to define a standard and market it to consumers. For example, Supima is a non-profit organization run by a coalition of cotton growers, which licenses its trademarks to textile manufacturers.

It's a fair point that there is a private entity that owns the trademark and can technically do whatever it wants with it. It doesn't just magically "emerge" from the market without any coordination - but then, nothing does. Market actors come up with mechanisms to communicate standards. Some of these mechanisms happen to be voluntary and reputation-based rather than enforced by law.

Reply on news.ycombinator.com