if a medical treatment satisfies mandatory government licensing requirements its more likely to be safe than it would be if there were no such requirements, right?
not necessarily. if a government agency claims the treatment is safe (even implicitly, by allowing it to be used), most people are satisfied that it's safe, and the manufacturers aren't under much pressure to do additional safety research.
if the government took no position about the treatment's safety, and it was well understood that the buyer should beware, people would be more cautious.
pressure on the manufacturer to provide credible assurances of safety would be much greater. they'd be more likely to commission (for instance) long-term experimental safety studies.
caveat emptor = a more robust system
see also the fence paradox
a common objection: but it's unrealistic to expect regular people to research the claims made by manufacturers and make sensible decisions!
1. they're not alone. voluntary certification and customer watchdogs could do much of the work.
2. the burden for understanding research or deciding who to trust is always on the users of the medication whether they realise it or not, and whether it's a gov agency vouching for the safety of the product or a private firm.
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if i had a penny for each time i've been told "a free market could only work if people were perfectly rational" i'd have about three pounds. that's altogether too much.
1/n
it gets things back to front. one of the biggest virtues of a free market is its robustness and anti-fragility. all it needs are plain old *approximately rational* people to give constantly improving results.
a key reason: on a free market gains from choosing well and costs of choosing badly apply in large part to the chooser. he's well incentivised to consider carefully. this is v different to the incentives that choosers face under repdem voting contests.