Wednesday, November 21, 2007

The Wrap: Know Your Wary Supplier

The Bush administration's import safety expert recently advised consumers to know their supplier. HHS Secretary Mike Leavitt encouraged people to buy from organizations they trust. He essentially reiterated the old maxim "buyer beware".

Two stories highlight different aspects of this modern dilemma. First, how does the consumer get information about the firms selling them goods, especially companies that aren't publicly traded. The British have a plan to address the problem of secretive private equity firms. CNN Money reported:

Private equity firms doing business in Britain should publish an annual report that details their structure and portfolio or keep this information updated on their Web site, according to the rules. Public companies bought for more than £300 million or firms that change private hands for more than £500 million should provide information about their ownership, as well as disclose details about the performance of their business. The guidelines are voluntary, but buyout firms that do not comply with them will be obligated to explain why they have not.

If a firm plans on shorting the consumer on quality goods or services, it seems they would be happy to stiff the general public as well. How does a consumer get the information they need to fulfill Mike Leavitt's advice?

The second dilemma is more difficult. What if you really trust the organization where you shop? Let's say the Church of Wall Street has some fine looking crosses to sell. Staff there believe they've been made in Italy, a fine Christian nation. But low and behold, it turns out that maybe Communist market worshipping heathens produce the Christ laden crosses in a modern day sweatshop. Trinity Church's supplier is investigating the conditions under which their products are made.

Investors who purchased high risk mortgages bundled by big Wall Street firms are now trying to find out what's of value in the whole mess. Similarly retailers today can't seem to speak for the goods that rest on their shelves. Which ones actually meet the contractor's specs and which one's have freewheeling substitutes inside that cause varying rates of harm? Who is degraded in the whole process of ever growing profits, the employee, maybe even the consumer?