Quote Originally Posted by rong View Post
So do you think their should be no regulation with regard to safety standards in cars? We currently have minimum requirements in the build of a car and also legal requirements for annual safety testing. Is this an example of government regulation (i may be barking up the wrong tree) and do you think this is a bad thing?
Yes. If there is ever a role for regulations, it's for safety in ways that otherwise would not be addressed. The question then becomes whether I think safety issues would be addressed by markets. I think the answer to that is yes.

People talk, publications exist, insurance companies employ actuaries. Catastrophe is major news. If a car or a company gets labeled as lax on safety, it's virtually a death sentence. The incentive to fix safety problems proactively and retroactively is huge, and I think would be even bigger in a free market since consumers would believe that companies are solely responsible for their own problems instead of turning attention to government to solve the companies' problems.

Government imposed safety regulations are unlikely to solve any problems since they don't reflect an ever-changing environment. Consider drugs. The regulations made on them were made a long ass time ago in a different world. Today we do not live in that world, yet the regulations still impose the ramifications of that world on us. If we let markets solve drugs, everything would work just fine back in a world where people didn't wanna consume them, and everything would also work just fine in the world today where people do want to consume them. In areas where the regulations work, they're not needed because the consumers would have already gotten the problem fixed by voting with their dollars. In areas where regulations don't work, they just increase costs, reduce innovation, and decrease stability through distorted incentives. In severe cases, which are all too standard for governments, regulations destroy lives by the millions (unjust war and imprisonment for drugs, to name just two of the many)

Answer this question: why do food/car companies recall faulty products: to appease the government or save their own bacon with consumers?


Even if we believe that markets don't solve safety problems perfectly (a reasonable belief), does that necessarily mean that government does any better? I think the answer is an emphatic no. Look at it this way: which organization's accountants perform better cost-benefit analyses: a company selling product in the industry or a government bureaucracy that oversees only what it legislatively is required to?