Government intervention in a somewhat free market usually requires a logical reason and public support. The $1 trillion intervention that the American government made in 2008, whether it has worked or not, was done with the intention of helping the American economy. However, sometimes interventionist bans come from very different backgrounds, and are purported to help citizens and the environment, or to create a law that reflects the values of a community. These laws can affect the way that citizens live, and which products and services are available to them. From Happy Meals to chewing gum, we'll look at some of the more extreme consumer-affecting government interventions. In Pictures: Top 7 Biggest Bank Failures
Happy Meal Regulation
Let's start with a recent case of consumer-market interventionism: the banning of Happy Meals in Santa Clara, California. In parts of this county, officials are voting to ban toys and other child-focused promotions that accompany fast food. The logic behind this is simple: you don't want to reward children for eating unhealthy food. However, some council members have brought up how this can infringe on individual rights: shouldn't a parent be able to have the say over what food their children can eat, and is taking away the toy getting at the problem, or it is just a surface-level solution?
The Chain Ban
Something even more extreme than Santa Clara's Happy Meal ban is currently being discussed in the surfing community of Tofino, British Columbia, Canada. In Tofino, city council is working on banning all chain stores – with a focus on fast food franchises- from setting up shop in the seaside community. According to the Canadian Broadcasting Corporation (CBC), District Councilman Stephen Ashton says the motion is to protect Tofino's uniqueness, but as always, arguments have flared up regarding how this law could violate Canada's Charter of Rights and Freedoms. (For more on how the government's actions affect consumer behavior, check out Taxes Are Controlling You.)
A common debate that has popped up over the past few years is with regards to water bottles; why do we need bottled water when we can get from the tap without causing waste? A question for the ages, but it all comes down to the markets supplying what people want. If people really don't want bottled water then they wouldn't buy it, and the bottled-water companies would have no reason to produce. However, that's obviously not the case, so in certain areas, governments have taken to removing the consumers' choice altogether. In Concord, Massachusetts, the town is banning all bottled water starting in 2011. However, at this time the ban is an intended action, as the town may need the approval of the state to make it legal. A similar ban was proposed and defeated in Ontario, Canada in 2008.
When it comes to plastic bans, San Francisco was ahead of the pack in 2007 when it outlawed plastic bags at grocery stores and pharmacies. Like the plastic bottles, San Francisco officials were worried by the unsustainability of the petroleum-based bags, and the waste that it added to landfills and city streets. San Francisco joins cities and countries from around the world in enforcing a plastic bag ban.
Chewing gum is another oft-regulated consumer good. In Singapore, for instance, chewing gum is not allowed in the entire country – although exceptions are made for medicinal chewing gum. There are also chewing gum bans in the U.S.; it was banned for 20 years at the Palm Beach airport, and was re-allowed in 2009 due to complaints by local shops who were losing out on the income generated by airport chewing gum sales. The reasons are obvious for the airport management, as gum is hard to clean up and not a necessity. At the Honolulu airport, chewing gum is still not allowed to be sold.
The laws above seem to serve some sort of purpose, whether for hygiene or the perceived protection of citizens and the environment. Though these laws often infringe upon a person's or company's freedom to consume and produce, the basis of the laws lie in some form of "greater good" theory espoused by the law-making authority. Sometimes, however, these intervening laws are based on a different set of values. This is the case for many of the "blue laws" - laws in the U.S. that are related to upholding Christian ideals, such as Sunday being the day of rest.
In many states and cities, selling alcohol and other goods is illegal on Sundays and holidays, and in dry counties and towns across the U.S. (from Suwannee, Florida to Bridgewater, Connecticut), selling alcohol is altogether prohibited. In many states, like Minnesota and Illinois and Pennsylvania, the sales of cars on a Sunday is also prohibited – but in Texas, car dealers get the freedom to choose to take off either a Saturday or a Sunday. There are many more blue laws across the U.S. that limit when, where and what can be sold.
The Bottom Line
Across the world, there are strange laws made when governments decide to regulate what consumers are allowed to buy and what producers are allowed to sell. For the lawmakers, it may make sense to regulate selling and buying for a perceived "greater good," but I bet if you talked to convenience store owners in Concord, Mass or hopeful franchisees in Tofino, there'd be a different side of the story.
Feeling uninformed? Check out the financial news highlights in Water Cooler Finance: Greece Is Burning And Buffett's Under Fire.