What Can be Wrong with Forcing Firms to Reveal More Information?

by Don Boudreaux on April 26, 2005

in Trade

"Hey Mr. Free Trader, do you at least agree that companies should be required to tell customers if the people theyre dealing with on the phone live in America or not?"

Thats the opening line of an e-mail that arrived today in response to my most recent post on Paul Craig Robertss incoherent fears about outsourcing.

I knew immediately the sort of proposal that my correspondent has in mind. Many times during the past year I’ve heard it proposed that Uncle Sam require American companies with call centers in Bangalore, India, and other foreign lands to have their employees in these centers begin each conversation by informing each American who calls into these centers that he or she (the employee) is not American and is not located in America.

John Kerry even made such a proposal part of his presidential campaign, and introduced a bill in to the Senate hopper called the Call Center Consumers Right to Know Act.

Sen. Kerry’s bill, if passed, would have required any

United States corporation or its subsidiaries that utilizes a call center to initiate telephone calls to, or receive telephone calls from, individuals located in the United States, shall require each employee in the call center to disclose the physical location of such employee at the beginning of each telephone call so initiated or received.

Those who argue in favor of such a requirement allege that its not coercive (at least not to consumers). It merely requires companies with off-shore operations to disclose this fact clearly to consumers. Consumers are then free to patronize or not the firms that have some of their operations in foreign lands. Many consumers, after all, do indeed care about whether or not the company theyre patronizing has off-shore operations. And some of these consumers would no doubt stop patronizing the company upon learning that it hires foreign workers.

"So what can be wrong with full disclosure?" – so concludes the e-mail from my correspondent.

I answered by pointing out that requiring firms to reveal the physical location of their employees isn’t really full disclosure. Its fuller disclosure, but it’s far from full disclosure.  And this distinction is relevant. There remain oodles of information about each company and its employees that is not explicitly revealed in the absence of legislation but which might well be relevant to some callers.

Here are some other things that many American consumers no doubt care about and that firms probably would not not reveal unless forced by government to do so:

- an employee’s sexual orientation

- an employee’s religious beliefs

- an employee’s political beliefs

- an employees attitudes toward controversial matters such as abortion, euthanasia, and the death penalty

So why stop with requiring firms to reveal their employees’ physical whereabouts? Why not also require firms explicitly to reveal to customers information on all of the above matters?

When Joe from Atlanta calls the Dell help center, he might then be treated to the following greeting: "Hello. Thanks for calling Dell. Im Anokhi. Im answering your call in Bangalore, India. Im an atheist lesbian who always votes for the socialist party. I see nothing wrong with abortion, although Ive never had one myself. I also believe in euthanasia, although I oppose the death penalty. I also feel strongly that the U.S.-led war in Iraq is immoral. How can I help you today?"

This greeting sounds silly. This greeting is silly. But each piece of information offered is plausibly important to some small handful of Americans. Therefore, I see no reason to single out for enforced disclosure information on companies’ extent of off-shoring. Declaring truthfully that some customers might find this information useful is insufficient to justify such enforced declarations.

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