SM Oliva Mises.org Blog Post: Searching for Lost Value
Paul Wakfer
sent to the author with an invitation to respond here. Please recall
from the description of this group: "The aim is not to criticize/blame,
but rather to discover/elucidate a consistent/complete philosophical
basis for a fully self-ordered free society."
At: http://blog.mises.org/12137/searching-for-lost-value/ SM Oliva wrote:
> The Associated Press reports
> that Toyota faces a plethora of class action lawsuits from its
> customers - not because people suffered physical injuries from
> defective cars, but because the cars have "lost" value:
[Deleted quote from Associated Press, which introduced this commentary
article]
> The idea that a customer has "rights" in the value of a good - as
> opposed to the right to simply _posses_ a good - is a tent-pole of
> modern consumerist philosophy. We see this same reasoning in
> antitrust, where customers have a "right" to expect a certain price
> level. And it's a key component of the real estate cycle, as consumers
> are told not to merely purchase housing, but to "invest" in "building
> equity" via 30-year mortgages. The customer is taught to look at value
> as tangible, objective, and an entitlement.
In the context of any reasonable meaning of the "rights" word, Oliva is
quite correct here. Most certainly no one should ever assume that any
good will necessarily have any particular value at some time in the
future, since correct economic thinking (particularly the Austrian
School) shows that exchange value (as opposed to subjective value to the
owner) is always determined by the marketplace.
> The state has embraced consumerist thinking because it's an excellent
> vehicle for decoupling judicial power from the traditional concept of
> fraud. Libertarians acknowledge fraud as a form of theft. But it's a
> constrained definition. The victim must show he has been deprived of
> his property without consent. Certainly, consent may be conditioned on
> certain warranties as to a good's condition and usability.
This libertarian approach is inconsistent with their view that adherence
only to the Non-Aggression Principle is the essence of being
libertarian. In fact there is no use of physical force at all when fraud
is committed. Rather all that occurs is factual dishonestly about an
exchanged good or service. Thus the responsible harm of fraud is not due
to any use of physical force, but is instead rooted in the contract that
exists between those exchanging the values - or should always exist if
they are rational people. Moreover once seen that the violational
character of fraud comes from the contract governing the exchange, it is
only a short step to also incorporate the violational character of
"buyer beware", to the greatest extent possible (note that many
libertarians even go so far as to insist that it is perfectly correct
for one exchanging party to use "buyer beware" *against* the other).
Such inclusion could be done by use of a general contract clause stating
something like: "the seller agrees that s/he does not have current
knowledge of any factor that might reduce the value of [the product or
service being exchanged] beyond those listed in this contract".
> But the indeterminate _future_ value of a good is not a normal
> condition or warranty. That is precisely because value is always
> subjective, and as the immediate seller, I cannot "guarantee" you will
> be able to resell the good _x_ years in the future for _y_ dollars.
>
> But what if a seller did make such a "guarantee"? He would still not
> have committed fraud in the ordinary sense, because the customer still
> cannot reasonably rely on such a promise. The customer who feels
> entitled to a future resale value is, quite frankly, an imbecile. "A"
> cannot hold "B" liable because at some future point, there is no "C"
> who will agree to pay a certain amount for a good that "B" previously
> sold to "A."
This is logically incorrect. The seller certainly could warrant
contractually that the good would be able to be resold for $y in x
years, since such warranty can be realized by the seller purchasing back
the good for $y in x years, if no one else is willing to do so. So there
is nothing "imbecilic" in a purchaser both wanting such a sales contract
clause and holding the seller liable if s/he does not make good on hir
contractual promise. Actually it would be more "imbecilic" for the
seller to agree to any such contract clause, although this would greatly
vary with the type of product or service involved.
It should be noted that not fulfilling a contractual responsibility is
just as much a violation of the other contract party as is using
physical force against hir. This is made clear from a foundational point
of view by my treatise: "Social Meta-Needs: A New Basis for Optimal
Interaction" <http://www.selfsip.org/fundamentals/socialmetaneeds.html>
and the formal portion of its implementation as the Natural Social
Contract: http://selfsip.org/solutions/NSC.html
> Of course, the cases against Toyota are unlikely to alleged the
> company itself made any such claims about resale value.
Actually within their advertising literature at the time, Toyota likely
*did* make such claims, although they were never contractually binding
statements.
> As the AP article notes, the principle "evidence" of lost value to
> date is the Kelley Blue Book's decision to lower its own estimates of
> resale prices. But the Blue Book is nothing more than a third party's
> opinion: "A" cannot hold "B" liable just because "C" states an opinion
> that the good B sold A _might be_ worth less than B assumed.
It is correct that that the Blue Book resale price is a mere opinion.
However that would not prevent a Toyota purchaser from rightfully suing
Toyota for violation of contract *if* such promised resale value had
been included in the sales contract *and if* the purchaser could not
actually find any buyer who was willing to pay the promised price.
--Paul Wakfer
MoreLife for the rational - http://morelife.org
Reality based tools for more life in quantity and quality
The Self-Sovereign Individual Project - http://selfsip.org
Self-sovereignty, rational pursuit of optimal lifetime happiness,
individual responsibility, social preferencing & social contracting
Paul Antonik Wakfer
should have been a preface to this entry:
"This critique has been posted as a comment to the original article
and
sent to the author with an invitation to respond here."
So far SM (Skip) Oliva has not responded to either posting.
--Paul Wakfer
MoreLife for the rational -http://morelife.org
Reality based tools for more life in quantity and quality
The Self-Sovereign Individual Project -http://selfsip.org