In a market economy, when there is complete competition and consumers and producers are well

informed of each other’s needs, for example, producers know very well what consumers are looking for
in a product and consumers knows what constitutes product quality, government intervention is not
needed, this is purely the Hayekian view or Hayekian market. Because, markets and consumers are in
harmony, if a product is not producing its promised quality and attributes, consumers won’t buy that
product, hence, no sales for it and eventually, manufacturer will be bankrupt and left the market.
Modern markets make consumers king, gone are the days when “caveat emptor” or the buyers assumes
the risks. This is when few information is available to the consumer. Now, the age of information
technology, it is so easy to look for product use information and product use reviews in the internet.

However, access to technology such as the internet does not always result into informed consumers or
having a strict regulation to protect consumer rights will always serve its purpose, now this is the
Keynesian view. Like for example in the financial market, Mark Calabria of the Cato institute said that
“as designed, it [i.e. the Consumer Protection Agency] would increase the likelihood of future crises
rather than reduce them.” This is when he called out then President Obama’s intention to put stricter
regulation on banking lending practices after the financial crisis in the US which has rippled in the Asian
market. Consumer indifference in the area of banking practices is somehow amplified by the over
protective government regulation of insured depositors and consumers no longer critical of where to
bank and what are their lending practices, whether it is risky or not.

But on the other end, in a market that is soo inefficient wherein market failure is inevitable, government
must step in to ensure protection of the consumers rights. In the Philippines, we have weak regulation
when it comes to protecting consumer’s rights. First, we have a weak infrastructure towards smuggling
wherein goods can enter the market without proper papers from the DTI or from the FDA. Our market is
flooded with untested medicines from China and from neighboring Asian country, we also have a weak
custom protection from substandard consumer goods and construction materials entering the country.

Ronald Coase is correct when he said that when people are well informed, when there is an abundance
of information for the consuming public, and when consumers are rational when it comes to
consumption, government regulation is not needed because markets will always find its equilibrium,
poor quality products will be overtaken by its superior counterpart or when it is expensive, consumers
always has a substitute, based on their revealed preference.

I do not believe that consumer protection is about the poor consuming cheap products. What I do
believe is that when there is market failure, like when there is monopoly or information asymmetry,
government must step in. Consumer protection is for the benefit of the general consuming public.
Consumers has the right to information, that is why, for food and drugs products, it is important that
consumers must be aware that government requires all manufacturers to put labels to inform
consumers, we have advertising regulation to make sure that advertising agencies do not make false
claims to get customers attention of their product. So, consumer protection really is beyond social class,
it is a very important layer of protection for the consuming public whether you are poor or rich.