This notion of regulation is just the desire to offload your duties as a responsible and intelligent market participant to a third party.
It’s intellectually lazy, and it should be blindingly obvious that, in a universe with more than one mind in it, the principle of caveat emptor will always be needed regardless of economic system. In fact, you need caveat emptor for daily life, not just economic decisions.
Here’s why: who does the regulating?
The government?
Neither politics nor the civil service rewards honesty. These occupations have feedback loops that stem from popularity with the public or with one’s union and are thus not reality-based.
In fact capitalism comes closest to rewarding honesty in that consumers go on forums such as this one and then make informed choices.
For example, I once bought an AWD car knowing full well it’s not 4WD. It’s still 100x better than 2WD on snow and gravel. I liked my AWD car - money well spent.
If I put a gun to your head and gave you 1 year to find out what, exactly, goes into a bag of Doritos and what the nutritional content is, you couldn't do it.
People have lives. We don't have the time, knowledge, or expertise to assess our goods. Not anymore, that stopped a good couple hundred years ago.
If we had the expertise we'd simply do it ourselves, which is what people did. But we stopped doing that, because the goods became too complex.
> AWD car knowing full well it’s not 4WD. It’s still 100x better than 2WD on snow and gravel. I liked my AWD car - money well spent
Sure, but keep in mind you understand, maybe, a fraction of a fraction of 1% of your car. If you wanted to understand it more deeply that is a lifetime commitment. And, that's for one singular good. Extrapolate that and suddenly you'll need to be immortal to be an "intelligent market participant"
> If I put a gun to your head and gave you 1 year to find out what, exactly, goes into a bag of Doritos and what the nutritional content is, you couldn't do it.
> Sure, but keep in mind you understand, maybe, a fraction of a fraction of 1% of your car. If you wanted to understand it more deeply that is a lifetime commitment. And, that's for one singular good. Extrapolate that and suddenly you'll need to be immortal to be an "intelligent market participant"
That's only true for a crazy definition of "understanding" and "intelligent market participant". You don't need a Grand Unifying Theory of understanding every subatomic particle in your car or Doritos from first principles.
People abstract away almost all of the complexity until they have a concept that fits in their head and can still deliver what they're looking for. This is good and right and is how all cognition works.
To the average car buyer like me, a car is a box with a couch that goes from A to B. In my case, I wanted the box to also handle snow on the way. From that point of view, my understanding of the a-to-b-couch-box-with-AWD is not a fraction of 1%, but exactly 100%.
To a Dorito buyer, the requirement is that it tastes good without immediately killing them. Not one Dorito buyer cares what strain of corn plant was used.
For almost every consumer product, you can try multiple different products at low cost and with ~no physical danger. So a large mass of buyers and sellers experimenting interactively will quickly arrive at near-optimal solutions.
The exception is things that can kill you on the first try, such as unsafe cars, airplanes, or medicine. For these products the optimal solution is the least possible amount of regulation combined with as much free market as possible.
> To a Dorito buyer, the requirement is that it tastes good without immediately killing them.
To the FDA, the requirement is that it's safe for human consumption, has a serving that is normal for a healthy adult, and does not lie about its contents.
See, YOUR requirements and what the government is able to give you are different.
Yes, buyer's DO care about this stuff. Maybe you've never read a nutritional label in your entire life, I don't know. But I know I care. And everyone I know cares.
>you can try multiple different products at low cost and with ~no physical danger.
Multiple obvious problems here.
First, trying multiple products costs money and time. Again, people have jobs, families, what have you. Consumers don't have the will for this.
Second, the "no physical harm" part is BECAUSE of regulations.
Did we all just collectively forget why these regulations were instituted and why we are now a high-trust society?
Companies used to just lie, and people used to drop like flies. We stopped that.
In my opinion, people's understanding of a free market is not only not in line with reality, but it also hasn't been in over 100 years. Moreover, nobody actually wants a free market. They just think they do, until they consider it more and realize it would actually be pretty terrible.
Point being - NO, companies shouldn't be allowed to lie.
> Here’s why: who does the regulating? The government?
The people.
Politics is also a market. New regulations arise when there is sufficient demand for them, as determined by the way the society is governed. If businesses don't want more regulations, they can always act in ways that don't create demand for regulations. But they often don't, because the market can reward defection better than cooperation.
The market just works the way it works, and regulations are one of the consequences.
If The People are qualified to regulate matters pertaining to 4WD vs AWD, then they are capable of figuring out which one to buy.
For what it’s worth, I believe some regulations are low effort and high return, and those ones are worth it. But to believe that regulation can solve everything is a simple mistake in logic, as shown above.
> If The People are qualified to regulate matters pertaining to 4WD vs AWD, then they are capable of figuring out which one to buy.
Buddy, if every American agreed with that sentiment then crystal meth would be legal nationwide. Sometimes the long arm of the law does have to supersede your freedom of choice to disable harmful options from being availible. This is actually pretty common in the automotive and agricultural sectors of not just the United States but most of the free world.
The average American knows the value of a seatbelt, but that's no excuse to give customers an option to buy a car without safety measures. It borders on homicidal insanity to suggest otherwise.
2. Read my last paragraph, I agree that low-cost and low-effort regulation like outlawing meth and enforcing seatbelts can have a big ROI.
Note though that the source of these regulations is The People, the same folks who vote for and ultimately decide on regulations are also the ones who make purchasing decisions.
People elect representatives, and very often they aren't even given a practical choice between conservative or liberal candidates. The control the average US citizen wields over regulation borders on non-existent, not even remotely comparable to your purchasing power at K-Mart or the Ford Dealership.
The point is that people generally don't know what they want for themselves. In certain industries like aviation and medicine, products do not legally exist until they are fundamentally scrutinized for harm to humans. This idea that the average American is an informed shopper is as illusory as the average citizen not voting a straight-ticket ballot. Advertising is just about the only thing that they are proven to understand, which is why that too is regulated carefully.
Companies make their offers and people are free to choose.
I’m saying the people should have more power to choose, more options to choose from, more disposable resources to choose with. This will lead to better outcomes than if the regulators try to create a situation with more limited but better-in-their-eyes options.
It’s intellectually lazy, and it should be blindingly obvious that, in a universe with more than one mind in it, the principle of caveat emptor will always be needed regardless of economic system. In fact, you need caveat emptor for daily life, not just economic decisions.
Here’s why: who does the regulating?
The government?
Neither politics nor the civil service rewards honesty. These occupations have feedback loops that stem from popularity with the public or with one’s union and are thus not reality-based.
In fact capitalism comes closest to rewarding honesty in that consumers go on forums such as this one and then make informed choices.
For example, I once bought an AWD car knowing full well it’s not 4WD. It’s still 100x better than 2WD on snow and gravel. I liked my AWD car - money well spent.