The Associated Press reports that Toyota faces a plethora of class action lawsuits from its customers – not because people suffered physical injuries from defective cars, but because the cars have “lost” value:
Such class-action lawsuits “are more scary for Toyota than the cases where people actually got injured,” said Tom Baker, a University of Pennsylvania law professor. “A super-big injury case would be $20 million. But you could have millions of individual car owners who could (each) be owed $1,000. If I were Toyota, I’d be more worried about those cases.”
[ . . . ]
Toyota owners suing the company contend their vehicles have dropped in value because of the recalls and that Toyota knew all along about safety problems but concealed them from buyers. They point to evidence such as Kelley Blue Book’s decision this month to lower the resale value of recalled Toyotas an average of 3.5 percent, ranging from $300 less for a Corolla to $750 less for a Sequoia.
The idea that a customer has “rights” in the value of a good — as opposed to the right to simply posses a good — is a tent-pole of modern consumerist philosophy. We see this same reasoning in antitrust, where customers have a “right” to expect a certain price level. And it’s a key component of the real estate cycle, as consumers are told not to merely purchase housing, but to “invest” in “building equity” via 30-year mortgages. The customer is taught to look at value as tangible, objective, and an entitlement.
The state has embraced consumerist thinking because it’s an excellent vehicle for decoupling judicial power from the traditional concept of fraud. Libertarians acknowledge fraud as a form of theft. But it’s a constrained definition. The victim must show he has been deprived of his property without consent. Certainly, consent may be conditioned on certain warranties as to a good’s condition and usability. But the indeterminate future value of a good is not a normal condition or warranty. That is precisely because value is always subjective, and as the immediate seller, I cannot “guarantee” you will be able to resell the good x years in the future for y dollars.
But what if a seller did make such a “guarantee”? He would still not have committed fraud in the ordinary sense, because the customer still cannot reasonably rely on such a promise. The customer who feels entitled to a future resale value is, quite frankly, an imbecile. “A” cannot hold “B” liable because at some future point, there is no “C” who will agree to pay a certain amount for a good that “B” previously sold to “A.”
Of course, the cases against Toyota are unlikely to alleged the company itself made any such claims about resale value. As the AP article notes, the principle “evidence” of lost value to date is the Kelley Blue Book’s decision to lower its own estimates of resale prices. But the Blue Book is nothing more than a third party’s opinion: “A” cannot hold “B” liable just because “C” states an opinion that the good B sold A might be worth less than B assumed.
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Following that same logic, all homeowners whose home values have plummeted could sue the Federal Reserve???
Skip,
We’ve been having a parallel discussion at our group blog, “Are Emotions Property?”
To summarize, we’re trying to find a way to succinctly explain why people do not have property in their emotions/other people’s opinions of themselves, and thus why it is not a violation of the NAP to call someone names or belittle their character or capabilities.
This is the dumbest thing I’ve ever heard. I hope this gets thrown out quick.
This is really scary. Imagine if horse and buggy owners sued Henry Ford for loss of resale value on their horses and buggies. Imagine if the railroad tycoons sued airline companies for loss of value on the trains. This is would stop human development in its tracks, and its exactly the kind of thing statist judges would do in the name of protecting consumers.
“But what if a seller did make such a “guarantee”? He would still not have committed fraud in the ordinary sense, because the customer still cannot reasonably rely on such a promise. The customer who feels entitled to a future resale value is, quite frankly, an imbecile.”
Hmm…what if one were to apply this logic to fractional reserve banking – then it wouldn’t be fraud.
For people who want guarantees, there’s future contracts. Didn’t take one out? Then stop your (generally speaking) bitching. I really wish people would give up their (lame) entitlement mentality.
Hmm, If the company knew about the problems but hid them from the public, then how is it not fraud? On the other hand, once the problem is fixed, then no further harm done, right? In the first case, compensation would seem to be in order, but once the recall is done and the issue is fixed then it seems that the owner shouldn’t be entitled to any further claims. They can’t claim more from toyota then what they get via their warranties.
bob —
For the record, I don’t consider fractional reserve banking fraud. Not that anyone cares what I think.
I would like to know how to join in the class action suit
Hey Stephanie…. ever find out how to join in on the law suit? If so please let me know. Thanks
This response has also been posted at: http://groups.google.com/group/libertarian-critique/browse_frm/thread/91c75adfd25ae52b where extended discussion is more enabled.
SM Olive wrote:
> The idea that a customer has “rights” in the value of a good – as
> opposed to the right to simply _posses_ a good – is a tent-pole of
> modern consumerist philosophy. We see this same reasoning in
> antitrust, where customers have a “right” to expect a certain price
> level. And it’s a key component of the real estate cycle, as consumers
> are told not to merely purchase housing, but to “invest” in “building
> equity” via 30-year mortgages. The customer is taught to look at value
> as tangible, objective, and an entitlement.
In the context of any reasonable meaning of the “rights” word, Oliva is
quite correct here. Most certainly no one should ever assume that any
good will necessarily have any particular value at some time in the
future, since correct economic thinking (particularly the Austrian
School) shows that exchange value (as opposed to subjective value to the
owner) is always determined by the marketplace.
> The state has embraced consumerist thinking because it’s an excellent
> vehicle for decoupling judicial power from the traditional concept of
> fraud. Libertarians acknowledge fraud as a form of theft. But it’s a
> constrained definition. The victim must show he has been deprived of
> his property without consent. Certainly, consent may be conditioned on
> certain warranties as to a good’s condition and usability.
This libertarian approach is inconsistent with their view that adherence
only to the Non-Aggression Principle is the essence of being
libertarian. In fact there is no use of physical force at all when fraud
is committed. Rather all that occurs is factual dishonestly about an
exchanged good or service. Thus the responsible harm of fraud is not due
to any use of physical force, but is instead rooted in the contract that
exists between those exchanging the values – or should always exist if
they are rational people. Moreover once seen that the violational
character of fraud comes from the contract governing the exchange, it is
only a short step to also incorporate the violational character of
“buyer beware”, to the greatest extent possible (note that many
libertarians even go so far as to insist that it is perfectly correct
for one exchanging party to use “buyer beware” *against* the other).
Such inclusion could be done by use of a general contract clause stating
something like: “the seller agrees that s/he does not have current
knowledge of any factor that might reduce the value of [the product or
service being exchanged] beyond those listed in this contract”.
> But the indeterminate _future_ value of a good is not a normal
> condition or warranty. That is precisely because value is always
> subjective, and as the immediate seller, I cannot “guarantee” you will
> be able to resell the good _x_ years in the future for _y_ dollars.
> But what if a seller did make such a “guarantee”? He would still not
> have committed fraud in the ordinary sense, because the customer still
> cannot reasonably rely on such a promise. The customer who feels
> entitled to a future resale value is, quite frankly, an imbecile. “A”
> cannot hold “B” liable because at some future point, there is no “C”
> who will agree to pay a certain amount for a good that “B” previously
> sold to “A.”
This is logically incorrect. The seller certainly could warrant
contractually that the good would be able to be resold for $y in x
years, since such warranty can be realized by the seller purchasing back
the good for $y in x years, if no one else is willing to do so. So there
is nothing “imbecilic” in a purchaser both wanting such a sales contract
clause and holding the seller liable if s/he does not make good on hir
contractual promise. Actually it would be more “imbecilic” for the
seller to agree to any such contract clause, although this would greatly
vary with the type of product or service involved.
It should be noted that not fulfilling a contractual responsibility is
just as much a violation of the other contract party as is using
physical force against hir. This is made clear from a foundational point
of view by my treatise: “Social Meta-Needs: A New Basis for Optimal
Interaction”
and the formal portion of its implementation as the Natural Social
Contract see: selfsip.org/solutions/NSC.html
> Of course, the cases against Toyota are unlikely to alleged the
> company itself made any such claims about resale value.
Actually within their advertising literature at the time, Toyota likely
*did* make such claims, although they were never contractually binding
statements.
> As the AP article notes, the principle “evidence” of lost value to
> date is the Kelley Blue Book’s decision to lower its own estimates of
> resale prices. But the Blue Book is nothing more than a third party’s
> opinion: “A” cannot hold “B” liable just because “C” states an opinion
> that the good B sold A _might be_ worth less than B assumed.
It is correct that that the Blue Book resale price is a mere opinion.
However that would not prevent a Toyota purchaser from rightfully suing
Toyota for violation of contract *if* such promised resale value had
been included in the sales contract *and if* the purchaser could not
actually find any buyer who was willing to pay the promised price.
this issue is born out of frustration anger and fear by Toyota owners (me) who see Toyota spending money on lawyers public relations voodoo masters discounts for new cusatomers and nothing on explaining what if anything they are doing on safety concerns and why they have no interest in offering trapped owners relief- details when I am more awake-
ipscat
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