Thousands of doctors have signed up for a service that, among other things, they can use to try to prohibit patients from posting reviews. You can read a bit about it here.

In Iowa, in a surprisingly similar move, the state government is moving ahead with a law that will make it a crime to take or possess videotapes of factory farming that might harm the commercial interests of the farmer.

In both cases, an organization is trying to maintain power by hiding information from the public. Can you imagine being arrested for possession of a photo of a pig?

It's easy to argue that from the public's point of view, laws like this are a bad idea. The public certainly benefits from the outing of bad doctors and from the improved hygeine of factory farms. In that sense, it's unethical for doctors and legislators to subvert their responsibilities by ordering the unempowered to shut up.

I think it's interesting to think about from the doc's point of view (and the chicken farmer), as well. The temptation is for those in charge to defend the status quo by fighting transparency. This ignores a simple truth:

When book reviews are posted, book sales go up.

Yes, the argument of fairness matters. The patients have no choice, the chickens certainly have no choice and the consumers don't have much choice either. There's an argument that goes beyond choice, though… it turns out that transparency increases profitability.

If every chicken coop has a video camera in it, quality will obviously go up. Confidence in the product will go up. Employee behavior will improve as well, because it's hard to torture a chicken if you know you're going to get caught.

But wait, you might argue… if we have to take better care of the chickens, our costs will go up as well.

Here's the thing: when consumers get used to transparency, they're also more interested in the quality of what you sell, and are more likely to willingly pay extra. They'll certainly cross the street to buy from an ethical provider. And once people start moving in that direction, the cost of being an unethical provider gets so high that you either change your ways or fade away.

Chicken farms don't need a law prohibiting possession of images. They need a producer who will make a ton of great (true) chicken movies. Inundate us with images of cleanliness and quality instead of blacking us out. Don't race to the bottom (you might win). Instead, force your competition to race you to the top instead.

[Aside: the same objection happened when we started regulating hygeine in restaurant kitchens. Yes, it got more expensive to clean the pots and kill the rodents, but it was okay, because post-Duncan Hines, demand for quality went up enough to more than pay for it.]

The same argument holds true for doctors. Once information about good doctors becomes widespread, patients will be more willing to seek out those doctors, rewarding the ones who consistently take better care of their patients. The entire profession doesn't suffer (we'll still go to a doctor) merely the careless doctors will.

One more: A leading politician in India is arguing that bribery (in certain transactions) ought to be legalized. Why? Because if the briber feels free to rat out the bureaucrat, bribery goes down.

In all three cases, sunlight is an antiseptic and the marketplace rewards those that behave–and the entire market grows when the standards increase.

Consumers and those that want their admiration ought to reward those in favor of transparency (what a great opportunity for McDonald's). And the antidote for speech a provider doesn't like isn't a contract or a law. The antidote to speech you don't like is more speech.

 

As the spring selling season gets into gear, the use of incentives is clearly on the rise, forcing builders to make some agonizing choices. A new home sales survey by Wells Fargo that came out today, for instance, noted that 31% of sales managers surveyed in March said they increased their use of sales incentives, compared to 23% the month before.

A whole new type of website has emerged in many markets. It offers to search databases and find consumers the best incentives and discounts on new homes. It's getting harder and harder to get noticed in the marketplace without offering incentives, especially since buyers seem so reluctant to pull the trigger on a new home purchase. 

Many home builders, particularly the private ones, refuse to play the discounting game, or at least they say they do. They argue that the practice is unfair to the people who have already bought homes from them in communities. They make a strong point. But virtually every builder we talk with these days who is having any success says it's because the company cut prices to compete effectively.

The problem, of course, is that once you start down the slippery incentives slope, it's difficult to stop. Witness a conversation that I overheard recently on a consumer chat board. Someone who was offered $45,000 in incentives on a $379,000 house in Houston asked if this was "enough." No, it's not, someone predictably and anonymously replied. You won't know how much you can get until you ask for more.

The chat then turned into a discussion of what kinds of incentives are best. One poster advised buyers to beware of pricing on upgrades used as incentives; a "free" upgrade priced at $6,000 may only cost the builder $3,000. Thankfully, another commenter criticized this approach, saying that you are better off getting the builder to add things to the house for free, period.

Most builders, if they have to offer incentives, would prefer this approach. Even mortgage lender Lending Tree, a seeming advocate for the consumer, says that some of the most favorable incentives are ones designed to add value to the home, things like free hardwood or countertop upgrades, or free landscaping. "As long as there are no strings attached, these incentives can be a great opportunity," Lending Tree says on its website.

Some other relatively benign incentives might be discounts on options and upgrades that customers want to buy, rolling back premiums on certain lots, or incentives for using a certain mortgage lender, as long as the rates are good and everything else is aboveboard. Those kinds of offers may not have much impact on the value of other homes in the community. And they can protect appraisals.

The most predictable piece of advice in consumer forums is to beware of discounts off home prices, which may have been jacked up in order to leave room for a discount. Okay, that may happen, as it does in virtually every other retail business. I can't imagine paying full retail price at a department store these days.

But the key to all of this is that the builder and buyer need to agree on a fair value for the home. If they can't do that, then they should walk away from the deal. The problem is that today, with sales so hard to come by, the consumer clearly has the upper hand

 

Builder Magazine

Bedford NY Luxury Homes