> The only reason people make money off of stocks is because at the end, someone gives those companies money. And everyone has a choice to vote with their wallets and through their actions in general.
This ‘voting with your wallet’ argument always ignores the problem of collective action. Even if every individual would prefer the bad companies to not exist (or at least to not behave the way they do), the rational choice is still to purchase products from them if their product is superior and/or cheaper.
Take something like Walmart or Amazon. I think a majority of people dislike the way they do business (the way they treat their employees, the environment, and competitors), but the only choice a consumer has is “shop there and get the cheaper prices, and the company continues to exist like it does” or “don’t shop their, pay more money for things, and the company continues to exist like it does”
Me, as an individual customer, can’t make the company stop existing in its current form. They aren’t going to miss my business. It isn’t even a rounding error on their balance sheet. My only choice is to get the cheaper prices or not.
Even if the company would change if everyone stopped shopping, I don’t get to make that choice. Hell, if everyone else is stopping shopping there and they are going to go out of business, it is STILL in my best interest to shop their while I can and save the money… it isn’t like my business is going to SAVE them any more than it will kill them.
You can’t kill a business practice by voting with your wallet.
The only time consumer choice will work is when the individual consumer has a better alternative; if I get a better PERSONAL experience (either cheaper or a better product) by shopping somewhere else, then voting with your wallet makes sense and will work (because everyone will have the same incentive). Companies won’t be punished for their external costs by their customers, since the customers aren’t choosing to suffer those costs or not; they suffer the external costs no matter what, they only can choose to enjoy the benefits or not. Why suffer the external costs AND not even get to enjoy the benefits?
This is why change has to come from some binding collective action (like legislation or regulation or something), not individual consumer choice.
You are correct in the sense that a single person can't change anything, but the issue is a level deeper. The thing is, even if you dislike a company and don't use it, you aren't willing to bully people who do use it.
If as a society, we were more willing to police ourselves, you would see real change. In the end, acceptance of peers is the number one fundamental drive for a lot of people past basic needs.
This ‘voting with your wallet’ argument always ignores the problem of collective action. Even if every individual would prefer the bad companies to not exist (or at least to not behave the way they do), the rational choice is still to purchase products from them if their product is superior and/or cheaper.
Take something like Walmart or Amazon. I think a majority of people dislike the way they do business (the way they treat their employees, the environment, and competitors), but the only choice a consumer has is “shop there and get the cheaper prices, and the company continues to exist like it does” or “don’t shop their, pay more money for things, and the company continues to exist like it does”
Me, as an individual customer, can’t make the company stop existing in its current form. They aren’t going to miss my business. It isn’t even a rounding error on their balance sheet. My only choice is to get the cheaper prices or not.
Even if the company would change if everyone stopped shopping, I don’t get to make that choice. Hell, if everyone else is stopping shopping there and they are going to go out of business, it is STILL in my best interest to shop their while I can and save the money… it isn’t like my business is going to SAVE them any more than it will kill them.
You can’t kill a business practice by voting with your wallet.
The only time consumer choice will work is when the individual consumer has a better alternative; if I get a better PERSONAL experience (either cheaper or a better product) by shopping somewhere else, then voting with your wallet makes sense and will work (because everyone will have the same incentive). Companies won’t be punished for their external costs by their customers, since the customers aren’t choosing to suffer those costs or not; they suffer the external costs no matter what, they only can choose to enjoy the benefits or not. Why suffer the external costs AND not even get to enjoy the benefits?
This is why change has to come from some binding collective action (like legislation or regulation or something), not individual consumer choice.
https://en.wikipedia.org/wiki/Collective_action_problem