Great Expectations

In a recent panel discussion of privacy issues, I outlined how contracts can help people control the use of information about themselves. A credit-card applicant, for example, can seek assurances of confidentiality from his bank, which would then extract similar promises from the credit bureaus it deals with.

During the question-and-answer period, a member of the audience scoffed at the idea that his bank would ever agree to such conditions. I responded that banks would supply privacy protection if there was enough demand for it, since that added feature would help attract business. But I agreed that a bank is unlikely to change its policy for the sake of one customer. In that case, he would be free to decline the credit card. He did not, however, have an a priori right to a credit card on his own terms.

After the session, an observer complained that my answer was too negative. I should have emphasized market solutions more. I should have suggested ways that like-minded credit-card applicants could organize and thereby increase their clout as consumers, perhaps offering to pay a somewhat higher fee or interest rate in exchange for a privacy guarantee.

Maybe this critic was right. But his reaction illustrates a problem that free-market advocates face whenever they address consumer issues. If they emphasize that you can't always get what you want, they may be accused of taking a negative approach. But if they emphasize the wondrous bounty of the market, they may encourage unreasonable expectations. When the market is supposed to solve all problems, every unmet desire becomes a "market failure"—and an excuse for state intervention.

According to a recent New York Times/CBS News poll, Americans want a high-quality health-care system that costs less, covers more, and excludes no one. The market cannot provide that. Nor can the government, but it's going to try. This is the predictable result of unreasonable expectations, coupled with loose talk about "a right to health care."

Such talk is not limited to vital goods and services. Rep. Edward Markey (D-Mass.), for example, speaks of a right to free, over-the-air television. Many viewers, seem to think they are also entitled to TV programming that is carefully tailored to their preferences. Hence the demands for regulation to ensure educational content or control sex and violence.

Now, market forces do work to meet a least some of these concerns. Even without the FCC's regulation of broadcast indecency, for example, the networks are unlikely to air Little Anal Annie, or ever Richard Pryor Live on the Sunset Strip, in prime time. (Indeed, some critics would argue that network "censorship" is itself a market failure.) People with delicate sensibilities nevertheless take a risk when they turn on a TV or radio.

Consumers also take a risk when they enter a restaurant that permits smoking: They may be irritated by unpleasant fumes. Rather than accept this possibility, many people now insist they have a right to enjoy smoke-free dining in the restaurant of their choice.

Again, even without anti-smoking ordinances, the profit motive would lead restaurants to create non-smoking sections. Some, catering to the especially sensitive, would ban smoking entirely. But suppose you are allergic to cigarette smoke, and you live in a small town with just one restaurant, Smokin' Joe's Diner and Tobacco Parlor. Worse, what if there's no restaurant at all? Shouldn't the government force a restaurateur to open one? Otherwise, you won't be able to exercise your right.

At some point, we have to say, "Tough." These are the constraints of reality. The market provides goods and services better than any other arrangement, but it does not provide everything to everyone. The best solution is not the perfect solution. I'm sorry if that sounds too negative.