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Sunday, 8 January 2012

Consumers empowered by social media


There is something going on in this country that needs a name. For lack of a better phrase, let's call it the Consumer Autumn.
The Consumer Autumn of 2011 wasn't as earthshaking a movement as the Arab Spring that preceded it. Governments aren't going to topple. But it has certainly shaken up some very large corporations and it has done so using the same social media as the Arab Spring. Twitter, Facebook, text messaging, blogs, and plain old-fashioned email have been essential to the Consumer Autumn's success.
What makes the possibility of a Consumer Autumn movement intriguing is that, until very recently, there seemed to be fewer and fewer ways for ordinary people to fight back against powerful corporations.
Some of their old adversaries are not what they used to be.
The private-sector union movement is hardly in any shape to stand up to them effectively. According to the Bureau of Labor statistics, workers belonging to unions made up just 6.9 percent of the private-sector workforce. That's the lowest percentage since 1912, when Teddy Roosevelt and his Bull Moose party campaigned against the influence corrupt corporations had on government.
The Supreme Court's 5-4 decision in the 2010 Citizen's United versus Federal Election Commission case gave corporations another big edge. For the first time, they are now able anonymously to pour limitless amounts of money into federal political campaigns.
If you are a candidate who does not agree with our megabanks about regulations, a barrage of expensive negative ads against you will almost certainly diminish your chances of election.
Finally, recent moves by both Congress and the courts have effectively diluted shareholders' rights.
All in all, if you believe as I do that capitalism is by far the best of all economic systems, but that corporate power must be regulated for its own good and the welfare of the people, things haven't been looking up. Until 2011's Consumer Autumn.
Remember the battle with Netflix in October? My wife and I are subscribers, and it was fascinating to watch what happened when it summarily announced it was going to increase prices and split off its DVD service from streaming. Not so fast, customers screamed all over the Internet. Within three weeks, Netflix backed down.
Then, in November, yielding to an even greater outcry in our social media, Bank of America reversed its decision to charge a monthly $5 fee to customers who used their debit cards. When I first heard the bank's defense of the charge, it was clear that bank management had fallen for its own public-relations campaign.
All during the debate on the Dodd-Frank Wall Street Reform Bill, BofA and the other megabanks maintained a constant drumbeat, the message being that any new regulatory costs incurred by the banks would automatically be passed on to consumers.
I never quite understood that. We all learned in our first basic economics course that, in a free market, prices are determined by supply and demand. The only market where costs could automatically be passed on to customers was a monopolistic one. Well, BofA learned from its customers that banking is not a monopoly -- at least not yet.
Most recently, I watched Verizon scramble to undo what it ridiculously called a "convenience" fee. I almost laughed out loud when I read how the company thought it could justify a $2 fee for online or telephone single payments. It took just one day for the social media to organize a massive protest.
Individually, none of these small, successful protests may be very meaningful. But I don't think any of them could have happened at all just a short time ago. And, together, they send a message that people do have a voice and they now have a way to be heard -- loud and clear.
This democracy of ours has always worked best when there are countervailing pressures, when management, employees, shareholders and customers all have the means to articulate a message and push back against too much power on any side.
Though social media may prove to be a mixed blessing, I am thankful for, and hopeful about, the effective new tool consumers now have.



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