Donald Trump is good for consumers.
And not necessarily in the way you’d think. The new president is busy deregulating vast swaths of American industry with reckless abandon. But he has also ― undoubtedly without meaning to ― created a class of consumer that will be more enlightened and harder than ever to rip off. If you’re reading this, you may be among them.
This is the first of two articles that will explore the effects of the Trump presidency on American consumer behavior. This week I’m looking at the benefits, and next week, in the interests of fairness, I’ll examine the other side.
In some cases, lowering regulation is thought to reduce the cost of products. A 2016 George Mason University study suggested that federal regulation raised the price of goods and services, affecting the poor disproportionately. It would follow, then, that deregulating everything from airlines to financial services would benefit consumers, particularly working-class Americans.
So the current administration’s oft-repeated promise of eliminating “burdensome” federal regulations might lead to lower prices for consumers. (And I know some of you, dear readers, are silently screaming that it could also lead to higher profits, if not also more dangerous products. Noted, but let’s deal with those in next week’s column.)
Removing regulations could also make some products more accessible to consumers. Take credit cards, for example. The 2009 CARD Act, which tightened regulation on credit cards and other financial products, reduced access to credit cards for younger consumers, according to a study by the Wisconsin School of Business. Specifically, it found those under the age of 21 were 15 percent less likely to have a credit card after passage of the legislation.
“We know the CARD Act reduced the use of credit cards by young people,” says Andra Ghent, an associate professor at the Wisconsin School of Business. “But the public policy benefits of that change are less clear.”
A glimpse into the mind of consumers
Cheaper, but possibly more dangerous, products. Kids with credit cards. OK, that might not be yuge for consumers. But consider what’s happening in the minds of consumers, now that Trump is in office.
If you spend all day talking to consumers, as I do, you’ve probably noticed a significant change. It started in November, when unabashedly anti-regulation candidate Trump was elected to office. Fearing the new administration would systematically dismantle vital federal protections, consumers began to realize that if they wanted help, they would have to help themselves.
But what is happening in the mind of customers? And how is the Trump administration making American consumers great again?
Consumers trust the government less ― a lot less
Now that the administration appears to be on the side of American businesses, consumers are becoming increasingly aware of the fact that they have no ally in Washington. That’s turning even the most big-government Democrats into borderline Libertarians, at least when it comes to their skepticism of the government. And that’s not necessarily a bad thing. A healthy dose of disbelief serves all consumers well, regardless of political affiliation.
Consumers don’t take product claims at face value
In an era of “alternative” facts, customers are far less likely to believe anything, including the heavily advertised product claims a company makes. It’s increasingly clear that a skilled politician ― or showman ― can weasel out of any claims made (like wiretapping). That’s particularly useful when it comes to contracts. Should a consumer simply trust a company to do the right thing? Or even, to honor its word? Increasingly, the answer to those questions is “no.”
Consumers know they have to work harder for a positive resolution
Since November, I’ve noticed a significant uptick in the number of consumers who simply refuse to take “no” for an answer. They’re aware that they can’t count on a federal or state agency to compel a company to do what’s right. Instead, they are determined to see their case all the way to the Supreme Court, if necessary. As a consumer advocate, I’ve been waiting for years for something to light a fire under aggrieved consumers. I’ve said it before, and I’ll say it again: You are your own best advocate.
Donald Trump and his surrogates may think that bulldozing away regulations will usher in a golden era for corporate profits. But it appears to be having the exact opposite effect. Consumers are more skeptical and empowered than they have been in perhaps a generation, thanks to the administration’s pro-business policies.
And in the end, that can only benefit you.