Consumer Protection

Overview

The free market incentivizes safe products.  In fact, a competitive market system gives incentives for entrepreneurs to develop answers to safety problems that are faster, cheaper, and more effective than anything the slow-moving government can.

Licensing and regulation often serve the vested, corporate interests of by limiting innovation and blocking competition from the marketplace.  In doing so it not only keeps poor people from working, but it also endangers consumers by increasing the costs much higher than the benefits.

Opinions

People should be free to take steps to reduce health, safety, and other risks individually or through insurance and other cooperative efforts.  However, compulsory measures such as the FDA, OSHA, labeling laws, and licensing that impose rules of prior restraint are illegitimate. 

David Theroux, The Independent Institute

The free market is the best consumer protection agency that was ever “invented.”  Every producer has a profit incentive to make his products and services safe.  An empirical verification of this assertion is the development of the automobile.  Long before any government-mandated safety changes to autos, car manufacturers had innovated countless improvements that made cars safer and safer. 

Richard Timberlake, University of Georgia

Studies show that regulations intended to protect us backfire because the costs outweigh the gains.  The FDA, for example, has added 10 years to the development time of drugs.  More people die waiting for life-saving pharmaceuticals than are saved by the extra testing.  Similarly, states with more stringent regulations for electricians have more accidental electrocutions as consumers try to do repairs themselves rather than pay the higher cost for a “licensed” electrician.

Dr. Mary Ruwart, Author of Healing Our World

In principle, federal safety regulation can and should be abolished in favor of market institutions analogous to Underwriters Laboratory certification.  We are a long way from gaining widespread understanding of that notion, so I advise libertarians to propose serious reform, rather than abolition, of such federal agencies.

Robert Poole, Reason Foundation

So-called consumer protection agencies give people a false sense of security, so they are less diligent in ensuring the goods and services they buy are safe.  Furthermore, these agencies have a history of allowing dangerous products on the market while restricting consumers' access to safe products.  This is partially explained by the phenomenon of the regulatory capture, where bureaucrats at an agency become more concerned with protecting the interest of the industry they supposedly regulate than the interest of the public they supposedly serve.  

In a free society, manufacturers would be held liable for any and all damages caused by their product; this, combined with the desire to earn repeat business by maintaining a positive reputation with consumers, would provide them with an incentive to ensure their products are safe.  

Congressman Ron Paul, (R-TX)

Systems for consumer protection are all perfectly available in a free market, and not the proper function of government.

Tibor Machan, Chapman University

Today, the Food and Drug Administration simultaneously discourages the development of new products and increases their cost.  Simply relaxing Washington's bureaucratic stranglehold over pharmaceuticals and devices would be good; reconsidering the role of the FDA itself would be even better. 

Congress should restrict the FDA oversight to safety, leaving efficacy up to the marketplace, or allow firms to opt out of agency efficiency reviews with appropriate labeling. 

Doug Bandow, The Cato Institute