From: Rafal Smigrodzki (rafal@smigrodzki.org)
Date: Tue Jul 01 2003 - 17:49:01 MDT
Alfio wrote:
> swarm Calif. biotech meeting)
>
>
> On Thu, 26 Jun 2003, Rafal Smigrodzki wrote:
>
>> Alfio wrote:
>>
>>>> But what reason is there to think that laws and the bloated
>>>> government departments that always grow around them like a cancer
>>>> will stop somebody selling colored water as orange juice better
>>>> than the market can?
>>>
>>> I am somewhat uneasy at applying market logic to issues regarding
>>> basic human needs. Even assuming that the market will adjust
>>> perfectly, it will do at the public expense (at first): for example,
>>> if a producer sells some poisoned food, the market will not correct
>>> it before some people die. Or, if very unsafe cars are sold, again
>>> they will continue to be sold until they are demonstrated unsafe on
>>> the market, e.g. when people die because of them (come to think of
>>> it, the FDA is doing a better job than automobile regulations...)
>>
>> ### This is incorrect. Only unpredictable dangers will be
>> inadequately addressed by the market (but this is the nature of the
>> world - the unpredictable by definition defies a specific
>> preventative action, whether individual or collectivist). The
>> predictable dangers can be easily addressed by civil liability and
>> insurance. [...]
>
> I'm not so sure. Just to stay with the previous examples, I have heard
> enough examples of questionable behaviour by food industries (I'm not
> talking about GM, but about for example wine with methanol, junk food
> made more or less out of plastic, etc.) and car makers (SUVs rolling
> better than billiard balls, plastic-made little cars that crush into
> nothing), even with all the checks currently in place. Most of them
> are attempts to sidestep those checks and regulations, which can
> surely result in lawsuits. But we see that a minority of companies
> keep trying.
### Yes, they keep trying, but do they succeed? If the courts are swift,
information flow about quality unimpeded, and liability more expensive than
the "questionable behavior", it is really a bad idea to try to add methanol
to your wine.
Bribing an inspector assigned to you by the state oversight agency tends to
be cheaper than bribing all the independent free market quality analysts
attracted by rumors of your wrongdoing (and there will be rumors once you
start cheating), all the customers who find out they have been cheated, and
all the courts hired by your customers. The state thrives on corruption
because it is a monopoly, the free market is much more resistant to it.
---------------------------------------
>
> A market solution would wait for the first incidents to appear before
> doing anything.
### No, the increased cost of liability insurance or credit appears well
before somebody is predictably harmed. Really. If you are caught driving
drunk, your liability insurance (in the free market) will go up well before
you hit somebody.
---------------------------
And if the lawsuit deterrent is not working now, I
> have some doubts that it would be working then. At least, we don't
> have many examples of pure-markets to see if it happens this or that
> way.
>
### Manufacturers are bending over backwards to avoid being targeted by
lawsuits. Of course, the effectiveness of the legal system is impaired by
the fact that the state owns and operates courts, instead allowing private
courts to operate and compete. So you have slow, expensive courts bound by
statutes and regulations, but this is just another argument for the free
market.
Rafal
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