Do we need Government? Regulation and the Market
/Do we need government? In part one of an ongoing series, we aim to answer this very question. All aspects of life and society are under the microscope, no stone is left un-turned, and every avenue visited. Do we need government? Lets find out.
In our modern times, business activity, large and small, is regulated by government. It sets the rules for play, and companies must either comply, or face the consequences. These rules are minimum standards that, for the most part, work in everyone’s favour to ensure a safe and civil society. Market self-regulation occurs when companies govern themselves, based on feedback from consumers (usually in the form of sales, or lack thereof).
Whether self-regulation is effective is a whole new can of worms, but let’s say that it does work that way, and people will boycott companies that do wrong by their customers. That’s great, except, oh wait, customers can’t know right away whether a product is dangerous or defective or what have you. What about the potentially hundreds of thousands of people who have to buy from these companies for people to realize that they’re doing the wrong thing? Never mind the people who buy faulty but otherwise harmless products, what about people who buy safety-related products and they malfunction because the manufacturer decided to save a few dollars?
Suppose that we have an unregulated airbag manufacturer, and that they sell faulty airbags to only one car manufacturer, for only one specific model of car. How many customers will have to be injured or killed because of these faulty airbags before customers realize that that make/model of car has faulty airbags and it shouldn’t be bought? Also remember that traffic collisions don’t happen right away, so thousands or tens of thousands of cars may be sold with faulty airbags before a problem is detected. Even if, from that moment, not one more of those cars is sold, thousands have <i>already</i> been sold, waiting to kill or injure an unsuspecting consumer.
Sure, eventually people will stop buying the car, but before that happens, people must trust that the company did the right thing and that the airbags are good. In fact, they must trust their very life to it. If the airbags are faulty, the market will respond, but only after many people are injured or killed. How is that right?
The same logic can be applied to any industry: A smartphone company could decide to sell devices that have a life-expectancy of one year, due to cheap parts and cut corners. There could be a boycott, sure, but only after tens of thousands of people are separated from their money under false pretense.
One response to these ideas is that the consumers may look to secure compensation from whatever company has wronged them or their families, but with no government to enforce the rules, then consumers are left waiting on the company at fault to pay what is due. Since the problem in the first place is caused by a desire to save money, it seems unlikely, to say the least.
Those who want companies to remain unregulated are saying that it’s okay for a few people to get ripped off, hurt, or killed before the market responds, just so companies don’t have to pay costs of government regulation compliance. Do we need government regulation? Indeed we do.
