Quote of the Day – Alan Greenspan on “Consumer Protection”

Here is another of the many quotes I accumulated while reading Ayn Rand’s “Capitalism: The Unknown Ideal.”  This particular quote is from Alan Greenspan’s essay “The Assualt on Integrity.”   While this was originally written in 1963, it is still applicable today.  Anytime you hear that the government is regulating companies in order to “protect consumers” you should think of this quote and then ask yourself if you are truly better off.

The attempt to protect the consumer by force undercuts the protection he gets from incentive.  First, it undercuts the value of reputation by placing the reputable company on the same basis as the unknown, the newcomer, or the fly-by-nighter.  It declares, in effect, that all are equally suspect and that years of evidence to the contrary do not free a man from that suspicion.  Second, it grants an automatic (though, in fact, unachievable) guarantee of safety to the products of any company that complies with its arbitrarily set minimum standards.  The value of reputation rested on the fact that it was necessary for the consumers to exercise judgement in the choice of the goods and services they purchased.  The government’s “guarantee” undermines this necessity; it declares to the consumers, in effect, that no choice or judgement is required-and that a company’s record, its years of achievement, is irrelevant.