I don’t deny that there could well be an increased role for commercial forces in correcting the asymmetries of information. Nor do I deny the possibility that government, “in its best attempts,” would be more more inefficient that the market’s “best efforts” at self-policing.

Two points are relevant here: Frank’s critique is at least in part that government has gotten nowhere near its “best attempts” in correcting for these asymmetries. Moreover, abstract notions of what the industry’s “self-policing” might look like are of little use absent analysis of the incentives for the industry to self-police. This is why the distinction between morality and efficiency is so crucial. Where a policy — say, of less-than-vigorous self-policing — is efficient but unethical, what reason is there under a straight micro analysis for the firm to more vigorously police?

Sure, in an ideal world, it is plausible to argue that the market’s best efforts at self-policing might be superior to the government’s best efforts at self-policing, but the world we live in does not resemble that ideal. More so, it has not resembled that world over the past hundred years.

I’m not sure I understand why you claim that the economically efficient behavior may “de facto” provide a more moral result than the ‘morally satisfactory’ behavior. Ex hypothesi, the claim is that the economically efficient behvaior is certainly not coextensive with the morally sufficient behavior, and has historically been divergent.

Some kinds of efficient behaviors may produce policies and behaviors we judge as ethical. Indeed, often enough, this is the case. But there are also no shortage of scenarios in which the descriptive claim that a regulatory-market balance is efficient seems to fall short of normative assessments. My basic claim is that this is precisely one of those scenarios, and a major part of the reason for that is the terrible asymmtries of information as to these consumer products.

I am certainly open to market-based suggestions for resolving these asymmtries, but the problem is that there seems little incentive, as you point out, for firms to spontaneously do so by themselves. In the absence of these incentives, I see little alternative to mandates.

Being no strict adherent to law-and-economics, I wholly accept a distinction between “efficient” and “morally satisfactory.” But I wonder if, in our zeal to achieve the best moral result, we’re too ready to rely upon remarkably substantively, not economically, inefficient ways of protecting consumers in order to avoid the economic efficiency side of the equation, which is never morally ideal… but de facto may provide a more moral result than the “morally satisfactory” regulation.

Yes, the libertarian will say that, but there are some serious problems with the arguments. In the first place, there is a very serious problem of asymmetrical information. Contrary to merevaudevillian’s argument, recalls do not “solve” the problem in any way, shape, or form, because by the time the recall is issued, often enough, consumers have been hurt or have been killed.

Indeed, a strong regulatory body is one (though not the only means) of trying to resolve the problem of asymmetrical information. Ideally, we’d like to prevent disasters from occurring, rather than simply reacting to minimize the harm once it has already done so.

Note, this is not to deny market forces have some role to play in regulating manufacturer behavior. This strikes me as trivially true. But the notion that the industry should self-regulate and that that is sufficient to minimize the harm and strike a morally satisfactory (note, not efficient, but morally satisfactory) balance between safety and price is absolutely belied by the weight of history.

Alternatively, the market does seem to be solving this issues, or at least it’s beginning to. A recent Consumer Reports survey shows that 89% of consumers are aware of the recalls, and of them, 30% will purchase fewer toys and 30% will not purchase toys made in China. Given the “escalating product recalls,” it is curious that (1) most people know about them, but (2) that most still think the risks are not significant enough to change behavior, though (3) a substantial minority are changing their behavior in a way that might require the market to make some alterations or risk losing a large portion of sales. 30%, after all, while still a minority, would really harm toy producers if they fail to take action on their own.

I think one of the principles of libertarians, in additional to the dream of “perfectly informed consumers”, is full and equal access to the court system. Companies would be incentivized to create safer products out of fiscal responsibility to avoid liability. Unfortunately , I would imagine it is frequently those people who are forced to use the riskiest/lowest cost products are also those people with the least access to the courts.

I think libertarians might also say that everyone should be able to make a price-safety trade off. So, for example, poor families should be able to buy more, cheaper food from Anon-a-corp due to its poor reputation, and thereby can save money by risking their health. (Much less of a tax burden than food stamps!) I think they’d take the model of getting paid more for a difficult or dangerous job into all walks of life.

As for me, I’d rather have a government that sets basic standards. And that’s one reason why the EU is becoming the de facto world standard setter:

http://www.economist.com/world/europe/

displaystory.cfm?story_id=9832900&CFID=19230555&CFTOKEN=13130608

It is historically irresponsible to maintain this. Of course, an argument can be made, as an argument can be made on virtually anything. But the weight of history is heavily stacked against such a claim.