Topic: The Regulated Consumer Presentation by Leon Louw Date: 29 July 2014 The Regulated Consumer - South African consumer rights under threat “If we don’t speak up now, the erosion of consumer rights will not stop until everything with health risks, from salt to sex, will be regulated, and all products with health implications, will either be banned or bland, where consumers will be denied information imparted by advertising, marketing, packaging and display, and where everything they like will warn them against doing so. Health Puritans have a bleak future in mind for consumers. “If the government respects consumers and voters, it should resist self-serving anti-consumer activists, and reconsider existing proposals. Consumers should formulate a Consumer Bill of Rights,” says Louw. He says it should include, for instance: - The right to information through advertising, marketing and labelling. - The right to appropriate health and safety warnings. - The right to appealing packaging. - The right to free competition and innovation amongst suppliers. - The right to seek support, funding and sponsorships from all lawful enterprises. - The right to government education, advice, encouragement and assistance, rather than control. - The right to be treated like emancipated and empowered adults with dignity and respect. - The right to make informed choices regarding risk-benefits trade-offs. - The right to choose between a wide range of products, services, outlets and payment options.

2. Leon Louw
The Regulated Consumer
Media Briefing

3. Content
Principles: basic consumer rights

Nanny state: cost-benefit trade-offs;
unintended consequences

Implications: freedom, dignity, satisfaction

Specifics: Health, safety

Specifics: Finance, gambling

General: Conclusions, way forward

4. Puritanical mindset
‘Sin’ tax is health and
satisfaction tax
Freedom, pleasure,
satisfaction,
happiness
have zero value
Benefit denialism

5. 10 basic consumer rights
1. Freedom of choice
2. Information (advertising, marketing, labelling).
3. Warnings (known risks)
4. Attractive packaging, display
5. Free competition, innovation
6. Funds, sponsorships from lawful enterprises
7. Education, advice, persuasion
8. Empowerment, dignity, respect
9. Informed choices regarding trade-offs
10.Accessibility, product range, payment
options.

6. Always subject to:
3rd party protection
Education, persuasion

7. Which consumers are affected?
‘The poor’ / ‘vulnerable’ consumers are by far:
 most in need of protection
 most harmed by controls/taxes
‘The poor’:
 are more easily cheated
 pay more tax because they consume more
‘sin’
 pay ‘regressive’ tax because their money
has higher ‘marginal value’
 have less access to outlets/facilities
 have more ‘unhealthy’ habits
 are less informed by labels, warnings, ads

8. Legitimate consumer choices
Pleasure/satisfaction/happiness
Convictions (prayer, no surgery, no medication, CAMS)
Unhealthy lifestyle (eg lazy, sedentary, obese, risky)
Junk food (sugar, carbs, salt, preservatives, flovourants)
Red meat, fat, dairy products
Carcinogenic cooking
Refrigeration (versus fresh; promotes bacteria)
Gambling (including entrepreneurship, speculation)
Liquor, tobacco (subject to 3rd party protection)
Alternative health (CAMS, meditition, traditional)

9. Legitimate limitations
3rd party rights
Food/equipment (disclosure / warnings)
Externalities (public offense, environment)
Children (protection, age restrictions)
Weapons (not weapon-specific eg criminal record)
Liquor (not liquor-specific eg driving, abuse, occupation)
Tobacco (not tobacco-specific eg 2nd hand smoke, fire)
Occupations (not substance-specific eg liquor,
drugs)

10. Lifestyle
Health care (costs, options)
Diet
Exercise
Sex
Information (marketing, packaging, display)
Competition (ditto)
Access (outlets, licensing)
Appealing (ditto)
Non-legitimate limitations

11. Inevitability of domino effect
Bread, biscuits, cakes
Flour, wheat
Dairy products (especially cream, butter, fatty cheese)
Rice, potatoes
Exercise
Sex
Values, ethics
Big Brother social engineering
What’s next?

12. Anti-consumer proposals
Demarcation
Medical schemes
 Minimum benefits = maximum cos
 Community rating/social solidarity =
discrimination against healthy people
 Supermarket solidarity
 Uniform commissions = denial for poor
Insurance
 No health cover
 Cash payments on ‘event’ regardless of
cost
 Maxima R3000/m + R50000/a

13. Junk food:
 Age restriction
 Advertising / marketing bans
 Product controls:
 Cold drink size
 Sales to ‘fat’ children
Salt (food/flavour limits, tax)
Sugar (tax, age restriction on sweets, cold drinks etc)
Tobacco (packaging, graphics, display)
Liquor (ads, age to 21)
Anti-consumer proposals

14. Assume unhealthy living imposes net costs:
 No excuse for limiting consumer rights
 Thin edge of the wedge problem
Assume net surpluses:
 Tax versus spending
 Unhealthy people subsidise healthy
 Early mortality saves social spending
 Senior citizen discounts
 Sponsorships, subsidies etc
Health care costs

15. The salami technique
3rd party protection
Warnings
Taxes
Controls
Prohibition (‘tobacco-free planet by 2040’)
It started with tobacco

16. Tobacco proposals:
 ‘Public’ (ie private) place ban
 forces smokers from ‘private’ to ‘public’’ places
 productivity?
 children; domestic workers?
 10m ban?
 Implications for poor/high density areas
Display ban
Beach ban
Plain packaging; graphic iamages
Current concerns - tobacco

17. There are no tobacco controls or taxes!
All controls/taxes are people controls/taxes
Once principle conceded on tobacco
consumers, no rational defence against total
control
World closing-in on consumers:
 Liquor, salt, fast food, sugar (‘new tobacco’),
 CAMS, health cover
 Credit, low prices
 Tax discrimination
Tobacco specifics

18. WHO exceeding mandate/expertise
Recommendations are ‘obligations’
Fiscal policy
Regressive tax
Budgetary policy
Criminal law and procedure
Social engineering/behaviour modification
Erosion of consumer rights
Erosion of property rights

19. Concerns
One-size-fits-all
Compromising separation of functions
Legitimising discrimination
Legitimising authoritarianism –
no mention of lifestyle rights, consumer rights, property
rights, freedom of association, civil liberties, due process
etc

20. Economics of ‘sin’ tax
No such thing as a free lunch (TANSTAAFL)!
Elasticity determines tax impact
Only marginal consumers have elasticity
Tax diverted from?:
 Known high elasticity (vegetables, health care!)
 Time preference (short vs long term)
WHO wants it both ways, higher tax:
 Reduces smoking
 Increases revenue
WHO’s factual and logical errors (eg ITIC critique)

21. (Un)intended consequences
Tax evasion
Illicit trade
Victimising the vulnerable:
 Psychological aspects
 Social aspects
 Anti-poor discrimination

22. Social costs
Who ‘subsidises’ who?
 Tobacco, liquor etc revenue vs social health
spend
 Consumer spending funds facilities
 Life expectancy vs old-age costs

23. Misleading terminology
‘Tobacco tax’ = consumer tax
‘Tobacco control’ = consumer control
‘Ant-tobacco’ = anti-smoker
‘Public place’ = private place

24. Conclusions and recommendations
Require WHO to honour mandate/expertise
Recognise/resist WHO anti-consumer ideology
Disregard non-health adventurism
Adopt country-specific policies
Consider implications:
 Other contexts
 Counter-productive effects

25. Rights must be ‘balanced’ (seduction vs rape)
Unhealthy choices have ‘no benefits’
Net social costs
Consumer stupidity
Red herrings/lies

26. Separation of powers (§1; law by decree)
Dignity (§1)
Rationality (§1)
Association (§8)
Fair and reasonable (§32)
Public participation (§195)
General application (§25)
(equality between products and risks)
Constitutionality

27. Way forward?
Consumer movement mobilisation
Workshops, meetings, conferences
Media information
Regulatory Policy Unit in FMF?

28. No more heads in the sand?

29. No more following the crowd

30. End
The Regulated ConsumerThe Liberated Consumer