​The EPA’s Assault Against Consumer Sovereignty

Traffic comes to a standstill on the northbound and the southbound lanes of the Interstate 405 freeway near Los Angeles International Airport in Los Angeles on Nov. 23, 2011. (Kevork Djansezian/Getty Images)

Commentary

If the term “consumer sovereignty” is unfamiliar to you, don’t feel bad; you have a lot of company. Writing seven or eight decades ago, the great Austrian economist Ludwig von Mises (1881–1973) used the phrase “consumer sovereignty” as a synonym for “free enterprise” or “free-market economy.” In some ways, “consumer sovereignty” is superior to its synonyms. It provides a more precise sense of how a market economy works.

Consumer sovereignty means, as the phrase implies, that the consumer is the boss of economic affairs. In a market economy, entrepreneurs and businesses compete with each other to see who can best satisfy consumer demands.

The producers who succeed in providing what consumers want at a price that consumers are willing to pay—that is, those who provide the greatest value to consumers—will profit and prosper. Producers who fail to satisfy consumer demands will sustain losses and eventually go out of business.

The consumer sits in the catbird seat. He’s at the top of the economic food chain, so to speak. He (that is, all of us, including people who are themselves producers) determines a society’s economic winners and losers on the producer side of the economy.

On the consumer side, all are winners, because producers are compelled by the market force of competition to improve the quality and, if possible, lower the price of what they’re selling.

At the opposite end of the economic spectrum from consumer sovereignty are socialism and fascism, in which the state, not the population as a whole, dictates what’s produced. Under socialism, the state owns the factories, etc. Under fascism, the titular owners of factories may be private individuals, but the state controls what they manufacture. It’s astounding that people still fall for the myth that “the people” will be much better off under the centralized economic planning of socialism or fascism.

Popular susceptibility to the allurements of socialism’s false promises of “economic justice” is possible only because of widespread ignorance of history and a failure of common sense. People seem blind to the abundant empirical evidence that prosperity diminishes under socialist regimes. Exhibit A: At the time of the demise of the late, unlamented Soviet Union, as much as 70 percent of consumer goods there were produced in the black market. The socialist planners never bothered to find out (or care) how to provide for the wants of its citizens.

But even if people are tragically ignorant of the history of the past century, simple common sense should make it plain why a market economy leads to greater prosperity for the people than socialism. In the market economy, the only way for a business to succeed is to excel at providing maximum value by producing what consumers want at a competitive market price. When the consumer is sovereign, all the economic incentives spur producers to serve consumer demands.

By contrast, under socialism, an elite cadre of planners holding political power dictates what must be produced. In the Soviet Union, that was nuclear weapons and other armaments, with consumer goods having a lower priority. In today’s United States, the self-professed “democratic socialists” in our midst want to prioritize a central plan called the “Green New Deal” over what consumers want.

Historically, the consumer has been the undisputed sovereign over the American economy. Over the past century, however, as government has intervened and asserted more and more control over production through law and regulation, consumer sovereignty has been eroding. Nevertheless, consumer sovereignty remains a potent force. Two recent examples illustrate this point.

A few weeks ago, Anheuser-Busch introduced a transgender theme into its marketing for Bud Light. Consumer backlash was severe. Many Americans who drink Bud Light found the transgender association off-putting. Sales of Bud Light dropped by 17 percent compared to the year-earlier figure. Budweiser got the message loud and clear and attempted to rectify the situation. The consumer had spoken.

Similarly, the stock of Fox News took a dive and viewership of the Fox News Network plummeted by almost half as viewers (i.e., Fox’s consumers) protested the dismissal of the popular Tucker Carlson from the network.

It should be clear that private businesses must bow before the will of consumer sovereignty. The only force that’s powerful enough to overrule the sovereignty of the consumer is government.

A vivid current example of government attempts to overrule and suppress consumer sovereignty is the Biden administration’s attempt to force American drivers to buy electric vehicles (EVs) rather than letting consumers decide for themselves whether to drive EVs or cars with internal combustion engines.

Ignoring last summer’s Supreme Court decision in West Virginia v. EPA, in which the Court held that the Environmental Protection Agency (EPA) had exceeded its statutory authority in trying to compel electric utilities to use renewable fuels, the EPA is employing the exact same tactic in regard to automobiles. The EPA is trying to radically transform a major industry via regulatory edict.

The EPA has proposed limiting carbon dioxide and other emissions from automobile tailpipes to such a degree that it will be impossible for auto manufacturers to meet those standards unless 67 percent of new cars sold in 2032 are EVs. Last year, EVs were less than 6 percent of car sales in the United States, so it may not even be physically possible to effect such a massive transformation of the auto industry by the target date.

The larger question, however, is: What right does the EPA have to tamper with Americans’ long-lived love affair with cars and coerce American automobile manufacturers to produce the kind of cars that government wants instead of what individual consumers want?

The ongoing progressive/elitist assault against consumer sovereignty is one of the major ideological and political battles taking place in our country today. It’s a contest between freedom and prosperity or impoverishment and regimentation. Which side are you on?

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.