The loss for big tobacco in the plain packaging case is a win for consumers. So how can that be – aren’t consumers rational, sovereign, and responsible for their own choices? Well I’m afraid I no longer believe that. Individuals make bad choices for a number of reasons – lack of information or pure irrationality being most common – and so it is sensible to restrict choice in some circumstances. Aside from public policy actions that try to limit cigarette consumption what other goods and services ought to be the subject of consumption limiting actions?
Of course we already have legislation around illicit drugs, and some limits to alcohol. Advertising to children is limited (though in my view not enough). Financial services seems to me to be an area where there is nowhere near enough consumer protection legislation, despite some recent improvements. Here are a few products that come to mind that ought to be restricted.
CFDs. If you don’t know what they are and how risky they are that doesn’t stop you from trading them.
ARMs. At least on these type of “sophisticated” mortgage products there have been actions to limit issuance.
Mortgages with loan to valuation ratios greater than 90% (or maybe 80%). Bring back the 3-6-3 banking world when bank managers would want mortgagees to have a piece of their property rather than trying to suck people into purchasing with zero equity and flogging the mortgage to some other sucker.
Forex trading. Those who read my posts would know my views on forex trading – it is a mugs game when “professionals” do it, and worse for private investors. Why are companies still able to advertise on TV for mug punters?
Waterproof mobile phones! Huh? In Singapore I have seen new mobile phone ads for the Xperia, which is now waterproof. Apparently 1 in 5 people (maybe only in Singapore?) drop their mobile phone down the loo. So the waterproof phone will solve the problem of thus losing your phone. So what are people doing with their phone on the loo? Phoning their broker it seems. Ban waterproof phones, reduce some of these crazy trades. OK, that one is a bit of a longshot I know.