Tories No Longer Trust Consumers, and We Will All Be Worse off for It

This article appeared on UK Telegraph on August 6, 2020.
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Conservative politicians are probably mid‐​way through their summer reading lists. I suggest they cast their books aside for 30 minutes to study one short piece urgently: Jeff Bezos’s opening statement to the US congressional hearing on Big Tech.

The Amazon boss’s remarks were an unfashionable ode to consumer‐​led capitalism. Customers, he said, “are always beautifully, wonderfully dissatisfied, even when they report being happy.” It is that pressure that animates businesses to improve services, add features, invent products, lower prices and speed up shipping. “Perceptive and smart”, the customers’ trust is hard won and easily lost, Bezos argued — their loyalty only guaranteed through good service, until someone else produces something better.

Conservatives used to understand this economic truth — that the best economic regulator is consumer power. After the Thatcher revolution, Tories believed that customers’ revealed purchasing preferences represented what was best for them given the circumstances faced. They thought the best “consumer protection” policy was to facilitate more buying options at varying prices, through free trade and lightly regulated product markets.

A raft of recent activity, however, suggests that plenty of modern Tories have junked or forgotten this outlook. Not only do they appear to think politicians know better than us what we really want, but their arguments imply we simply cannot be trusted to judge any trade‐​offs between quality and price, despite this age of extensive, readily available information.
Behind the embrace of “industrial policy” and “regional rebalancing” lies an assumption that a consumer‐​led economy brings inadequate outcomes. Perhaps the clearest example of government attempts to buck consumer‐​led trends is the constant battle to “revive the high street”.

A member of Boris Johnson’s inner circle said after the general election: “If Darlington high street isn’t visibly better in four years’ time, we’ll be in trouble.” Nowhere in that sentiment existed the possibility that consumers might just prefer the convenience of home delivery and online shopping, making trends away from high streets indicative of progress. After yet more customers flocked to online suppliers through lockdown, the policy implications of rejecting consumer sovereignty became clearer.

Money was already being pumped into high streets through the Towns Fund. Now ministers are contemplating an online sales tax or delivery charge to “level the playing field” between online and bricks‐​and‐​mortar sellers.

Whatever ministers claim, an online business choosing to forgo expensive inner‐​city properties and the higher business rates they bring is not some unfair advantage. If politicians really thought the tax system was tilting the deck against the high street, they could revise business rates. The truth is, this policy to hurt online sellers is being contemplated because politicians think they know better than us what retail should look like. However much we value online delivery, they are convinced we want or need the return of bustling Fifties‐​style town centres.

Though it might seem pro‐​consumer — given it subsidises consumption — a similar sentiment underpins the recent “Eat Out To Help Out” initiative. No doubt we will see a big spike in restaurant footfall on Mondays to Wednesday as a result. Customers are not known to look the gift horse of free money in the mouth. But at its core, the policy says that customers alone can’t be trusted to make decisions about their social spending habits.

In the name of preserving the March 2020 economy, the Government is now actively subsidising indoor dining during a respiratory viral pandemic. Where once Conservatives thought consumers’ choices were synonymous with what was best for them, now Rishi Sunak, the Chancellor, sees his role to nudge our consumption to fit the Government’s pre‐​conceived ideas of which industries should survive.

It is on trade policy, however, where this consumer‐​nudging Toryism could be most consequential. Those who recognise that liberalising markets enables consumers to better show what practices, quality and products they want are under relentless assault from Tories representing protectionist interests and inherent snobbishness.

In a recent article, Conservative MP Danny Kruger claimed a free‐​trading agenda post‐​Brexit risked “a two‐​tier market in the UK: lovely sustainably farmed British food for the rich, and cheap foreign muck for the masses”. Aside from the incredible parochialism of this sentiment, note the implication: free trade in food was undesirable in part because consumers might make ghastly decisions about what to buy.

Behind much opposition to free consumer choice lays this view that the proles might purchase things of qualities our betters disapprove of. Kruger masks this with arguments for why agriculture is different, in the same way his Tory communitarian friends say high streets are different, or the modern industrial strategists say manufacturing is different.

Yet strip away all the filler about things markets cannot provide or the need for better consumer information, none of which requires protectionism, and you see the simple desire to “stop our farmers being too badly undercut by inferior cheap imports”.

Not only would Kruger ban chlorinated chicken from the US, the bête noire of upper‐​middle class lore, but he would use tariffs to “drive up the prices of imports on food made with practices we don’t use here”. In other words, he rejects the idea consumers are best placed to decide what to eat.

There have always been tensions within the Conservative Party about free trade and the degree to which consumers need regulatory protection from rogue sellers. But what we are seeing here is something deeper.

Conservatives increasingly reject the idea of the sovereign consumer shaping economic life. Whether it be subsidies, taxes, regulations, or tariffs, more and more Tories reject our free choices in favour of them deciding for us, or nudging us in their preferred direction.

Ryan Bourne

Ryan Bourne is the R Evan Scharf Chair for the Public Understanding of Economics at the Cato Institute.