I tend to believe that most people prefer to avoid making consumption choices that lead to environmental degradation, exploitation of laborers, or financial crisis. The problem is that we often do so without knowing it, and thus entire genres of investigative journalism come about to expose these situations. The list is literally endless.
The problem is that market transactions convey very little information other than price. It is hard to know about production practices or conditions under which the goods we consume are produced. And it is one of the fallacies of free market economics that the equilibrium price will ever reflect all relevant information regarding the good. Thus, market transactions put consumers in a bind where it is difficult to gain much information other than price even if one wanted to. This leads to purchases of clothing that are produced in sweatshops overseas, food that is produced using unsustainable environmental practices, and financing that involves trading CDOs (pools of mortgages) for profits without any knowledge of the local housing market, which was what sparked the current financial crisis.
Efforts to provide more information to consumers has been well intentioned but thus far unsatisfactory. The best example is the certification of organic foods, which was an attempt to provide more information about production methods; once the government took control of term, the lobbying forces in Washington whittled down the organic standards to the point where it is now a nearly meaningless certification (according to Michael Pollan, Twinkies could meet the criteria for an organic certification). Government regulation of labor through OSHA has similarly been defunded and made less effective.
A more effective way to provide information down the distribution chain seems to be to keep economies local. When food is produced at a nearby farm, or even better when each household knows their farmer, consumers are better equipped to make socially desirable decisions. There exists the possibility to literally see how food is produced. I imagine that we would not have any Concentrated Animal Feeding Operations if they were in our backyards. Nor sweatshops. Similarly, mortgages kept at a local level would not have engendered the financial catastrophe that we saw in 2007, where investment banks were pooling mortgages from across the country, slicing, dicing, selling, and re-pooling them, over and over to make profits without actually knowing what they were. Keeping the lending local, and encouraging more intimate knowledge of the conditions under which the loans were made and to whom, would certainly have mitigated the euphoria and speculation that led to the 2007 collapse of the subprime mortgage sector.
Certainly, not everything can be locally produced. I know that Wisconsinites appreciate Florida citrus in the winter months. There is undoubtedly a role for trade. But also, there are a great deal more things that can be produced locally that currently are not. Giving consumers the relevant information to make better informed decisions will allow their transactions to reflect more honest valuations than are currently made in market transactions with long distances between production and consumption.
We shouldn’t forget that there’s also a downside to more information. I cringe everytime I see “Made in America” labels because it basically assures the consumer “Don’t worry, this product was not made by brown people stealing your jobs.”