When there is a demand for a product it always comes with some extra and intangibles requirements that can be taken for granted. The economist Daniel Klein explains these expectancies that consumers often have for a product or service.
Klein presents that demand carries an associated requirement, the assurance of quality and safety that the client could associate with the product, translating the relationship between seller and buyer as the same as a promiser and truster.
I think that is a general principle that holds more or less and that we explore as economists and that is what we’re doing. Exploring this especial demand, not for the product but for the assurance of the quality and safety of the particular product we’re thinking about buying.” - Daniel Klein
The economist lists three ways to maintain this assurance, such as:
Daniel Klein mentions that this assurance needs channels to reaffirm consumers their security, such as mouth to mouth critics, signaling, brand names, and the dealers that become middlemen as a bridge for the truster and promiser, or someone who understand the quality of the product.
He also explains that this method is sufficient to maintain the guarantee because if the promiser fails it gets punished by its trusters, but if the government controls the system, it can develop an economical crisis.
This doesn’t work with governmentalized finance because money, banking, and finance are more complicated, money borrowed often becomes money loaned or investment, and have a systematic risk.” - Daniel Klein
Klein emphasizes honesty as the best policy and affirms that there is a demand for the certainty of quality, that if it has a problem, it is self-correcting. This system doesn’t need a government to interfere to be able to promote economic development.
Economist, professor and author
Nuestra misión es la enseñanza y difusión de los principios éticos, jurídicos y económicos de una sociedad de personas libres y responsables.
Universidad Francisco Marroquín