Saturday, April 27, 2013

The Need for Public Complaint

Market competition benefits society by inciting companies to improve their products and lower their prices. In practice, of course, this process is never perfect, and Russia is a particularly good example of that. As should be clear to any objective observer, Russian products and services often suffer from bad quality.

As an example, it is possible to mention the mobile internet service in Moscow, which is patchy, congested and overloaded. I am paying 1500 rubles per month for Yota 4G that should provide at least a few megabits per second. However, the service now hardly works at all in the evenings and the connection is broken many times a day. Another example is the elevator in our building, which comes from the Shcherbinsky Lift Factory, a relic from Soviet times. Since it was installed last summer it has broken down at least half a dozen times.

It is hard to imagine that companies can provide such services for long to their customers and survive. Yet in Russia, such companies not only survive; they often thrive.

The reasons for this can be partly found in the particular traits of the Russian market: it is surprisingly uncompetitive, absurdly inefficient, and - at least now, pre-WTO - strongly protected. But the low quality of many Russian products and services is also due to a large extent to the tolerance of bad quality among Russian consumers. Market competition works by a bottom-up process: it is the consumers who, through their choices and their complaints, decide the fate of companies.

Russians may not yet have much political consciousness, but they have acquired a certain level of economic awareness; for instance for the price/quality relationship in the market economy. Middle-class Russians often tend avoid Russian products and services when they can - as their choices of cars and holidays show.

However, such product discrimination is not a sufficient message from the consumers to the market; public complaint is also required. While product discrimination is passive and mostly self-serving, public complaint is active and disinterested. When we complain publicly about a product or a service, we do not hope to resolve our own quality issue, but to inform the community about it so that our fellow citizens can avoid it. This is a habit which, for obvious historical reasons, is not yet very common in Russia – and it is reflected in the quality of the good and services. Russian product quality can be good just after the launch of a business, but it often declines with time, as the stoic Russian customer quietly and patiently suffers.

There are some means for public complaint in Russia, such as the Federal Service for Supervision of Consumer Rights Protection and Human Welfare (Rospotrebnadzor), internet sites such as for financial services complaints, for rating restaurants, the programmes Control Purchase on TV channel ORT1 for food quality exposure, and social networks such as Vkontakte for creating customer groups. However, these avenues are significantly underused: during the entire year 2012, for instance, Rospotrebnadzor received only 1172 complaints for the entire city of Moscow.

It seems reasonable to think, therefore, that if Russian customers showed more intolerance to bad service by complaining more frequently using the means available, including word of mouth, companies might take them more seriously. The quality might then improve, as companies would worry about the impact to their sales of such negative publicity.

This situation is a useful reminder that the success of a market economy depends, among other things, on the active involvement of its citizens, ideally both in the economic and in the political sphere. Though the state of many Western societies show that political responsibility may unfortunately be too much to ask of most people, at least a certain level of economic responsibility might be possible. This means learning the civil virtue of complaining publicly, in order to let market competition improve our lives.

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