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{{DES | des = "Capitalism [...] provides financial incentives to harm and even kill people. Just ask those people who say they have been victimized by cigarettes, predatory lenders, Volkswagen diesel emissions, Takata airbags, General Motors ignition switches, Trump University, Vioxx, asbestos or other products." | show=}}
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Capitalism may be the best economic system ever devised, but one of its drawbacks is that it provides financial incentives to harm and even kill people. Just ask those people who say they have been victimized by cigarettes, predatory lenders, Volkswagen diesel emissions, Takata airbags, General Motors ignition switches, Trump University, Vioxx, asbestos or other products.

With some of those examples, providers knew of problems long before they were disclosed but kept selling their wares, sometimes even covering up problems, all for profit.

Our economic system uses three main mechanisms to rein in misbehaving companies. One is that businesses themselves may eschew dangerous choices, either because of their decision-makers’ consciences or out of self-interest, because they fear that their reputation — and therefore, sales — would be injured by damaging disclosures. But businesses also face countervailing pressure to generate profits. If competitors get away with cutting corners, more ethical companies that incur higher costs and so must charge higher prices may lose market share. As a result, companies may feel pushed to make choices that impose risks on consumers.

Another check on business misconduct is consumers themselves. Consumers can choose not to buy dangerous products, and declining cigarette sales indicate that many have.

But while consumer decision-making can be a potent restraint on matters consumers pay attention to — like price — consumers can’t protect themselves against hazards they don’t know about. Sometimes consumers can’t understand the risks of their conduct, which may help explain why so many consumers lost their homes in the subprime crisis. Other times companies conceal their misconduct, as Volkswagen did with diesel emissions. Or companies may create enough doubt that consumers can’t determine the truth, as tobacco companies did with the health dangers of smoking. Consumers who want to continue enjoying a product may choose to believe the company so they can continue doing so. Many smokers did just that.

The third protection is regulation. Lawmakers can study problems and require businesses to protect consumers against risks that ordinary people might not anticipate. For example, consumers getting credit cards need not master the meaning of universal default or double-cycle billing because Congress has forbidden credit card companies from employing those methods.

But regulation is under constant attack. The Republican Party platform proposes a “regulatory budget” that would limit the costs regulation can impose on the economy. Many of the attacks take place outside consumers’ view, in arcane congressional bills or when bank lobbyists are named to head government agencies. But though out of sight might mean out of mind, it doesn’t mean nonexistent.

One problem with regulation is that often the people who benefit from it — consumers — are not the people who feel most keenly the burdens it imposes. The businesses that must comply with regulations no longer make the money they once made from selling injurious products. Even if their products did not cause problems, they may now have to spend money complying with regulations. Consequently, many businesses and their lobbyists fight hard against regulation. They argue that regulation raises prices and restricts access to things consumers would otherwise have. Sometimes, that is so. But other times it isn’t, and even when it is, society is sometimes better off as a result.

Critics of regulation don’t just attack its costs. They also ask who is better able to protect your family: you or a government employee. Perhaps the people who lost their homes because of predatory lending would have been better off if policy makers had decided earlier that sometimes the answer is a bureaucrat.

The more we discard regulation, the more consumers must depend on companies to protect us from risks from their products that consumers cannot readily understand or don’t have time to study. And as the examples above indicate, companies sometimes succumb to the incentive to dispense with that protection.

Many voters will base their decision in this year’s election on the character of the candidates, or other issues, like immigration or foreign policy. But how we protect people though regulation is also very much on the ballot. When you hear complaints about too much regulation, don’t forget to ask what harm that regulation may prevent. Capitalism lifts standards of living — but regulated capitalism keeps us well enough to enjoy a higher standard of living.
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