The American consumer’s impotent rage

People sense that service providers pay more attention to regulators than to disaffected customers
 
Matt Kenyon illustration, consumers©Matt Kenyon
 
 
Ask any American if they have lost their temper recently and there is a good chance it was on the phone to one of their service providers. Whether they were venting their spleen at a cable service company, a cell-phone operator, an airline or a health insurer hardly matters. What unites them is the impotent rage that comes from knowing how little you can do to punish the company in question.
 
There was a time when the US consumer was still king. In most service markets, however, those days are over. If you are looking for a key to the American voter’s rage, keep in mind that the consumer is the same person. Most consumers — a steadily rising share according to surveys — are prone to moments of Trumpian rage nowadays. Lashing out usually makes things worse.
 
But that is what people who feel powerless are liable to do.
 
Many people’s instinct is to blame free markets for their sense of consumer impotence. In fact, the problem stems from lack of competition. Much like in politics, where congressional boundaries are rigged in favour of incumbents, most large US service sectors are dominated by a shrinking handful of players.

Sectors where the top four companies have markedly increased their market share in the past decade — and thus their scope to treat consumers with impunity — include telecoms, information technology, transport, retail services and banking, according to a survey by The Economist. If you are still wondering why Bernie Sanders and Donald Trump did so well — taking more than 40 per cent of the two parties’ primary votes between them — both talked of how US politics is rigged. It is no accident that most Americans think the same about their economy.
 
They have sound reasons to do so. The last people to grasp that things have gone wrong are the wealthy, the well-connected and the cognitive elites, which includes half the denizens of Washington. The wealthy’s share of the economy has risen sharply since the start of the century. The share of corporate profits in the economy has also soared.
 
If you are rich you can afford what used to be normal for everyone — the privilege of interacting with human beings. Thus, high net worth individuals receive personalised banking, where your bank manager knows your name and needs. The wealthy also benefit from so-called concierge health services, which come with a human face. Many oligopolistic service providers keep clandestine lists of VIP customers who need not wade through robotic software before reaching a customer service agent. When they pick up the phone, a human answers.

Ordinary consumers, much like most voters, know there are different rules for them. They also sense that the big service providers pay more attention to Washington regulators than to their disaffected customers. It is a perfectly rational thing to do. America’s capital is where the markets are rigged, after all.

Politicians rank their priorities in much the same order. Voters come low on their list. Lawmakers devote chunks of their schedules to raising money from donors. In most districts, the voter barely matters since gerrymandering has rigged the election in favour of one or other party. Politicians with large war chests are far less likely to be challenged for their party’s nomination. The same logic leads companies to keep a strong lobbying presence in Washington.

So what can people do? As consumers very little. If United Airlines keeps bumping you off flights, you might shift your mileage account to Delta or American. But your chances of mistreatment will not fall. Ditto for those who switch their health insurance from Cigna to Aetna, or their broadband from Comcast to Verizon. Perhaps you can start a new company?
 
Alas, what goes in Silicon Valley for people seeking funding for social media start-ups does not apply to markets with high barriers to entry. America’s big four airlines might provide dismal service to most customers. But they are Olympic champions at stopping “open skies” competition.
 
Maybe you should just shout at customer representatives? That is what many people do. But it usually backfires. Besides, on the rare occasions you reach a human, they are the last people you should berate. America’s mostly outsourced contact services industry is staffed by people reading instructions from a software manual. Every minute of their time is monitored. Consumers are not just voters — they are employees too.

There are no easy ways to reduce market concentration, just as there are no easy fixes for corporate America’s grip on politics. But there are two simple ones. The first is to metastasise your consumer rage by voting for Mr Trump. This is the man who is best known to most Americans for saying “you’re fired” on television. For every problem America faces, he has a solution that is clear, simple and wrong. The second is to support aggressive antitrust action.

Since Theodore Roosevelt’s presidency, trustbusting has a great history. It could also have a great future.

Alas, no presidential nominee has yet found the conviction to champion breaking up the monopolies.

The more is the pity. Taking on the titans would not just be great populism. It would also be smart policy.

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