Safety and Government Agencies

Pete 'Maverick' Mitchell: What's your problem, Kazansky?
Tom 'Iceman' Kazansky: You're everyone's problem. That's because every time you go up in the air, you're unsafe. I don't like you because you're dangerous.
Pete 'Maverick' Mitchell: That right, Ice...Man. I AM dangerous.
--Top Gun

The recent controversy surrounding the Federal Aviation Administration's (FAA) grounding of Boeing (BA) 737 Max 8 jets demonstrates the foolishness of depending on government agencies for 'safety'--whether that safety relates to plane flights, food, drugs, cars, banking, etc.

Who is in a better position to determine the safety of a market transaction? Bureaucrats in a room, or the millions of buyers and sellers on the ground in market places engaged in voluntary exchange? If people are self interested, and they surely are, then isn't it in the best interest of individual market participants to determine safety-related aspects of the transactions that they are engaged in?

Of course it is. So if they are not doing so, then why not?

A common claim is that most people lack expertise and time to ferret out safety issues. But this is not a reasonable excuse. If there was demand for this information in the marketplace, then entrepreneurs would move to make it happen--particularly given today's state of information technology. A small example of this has been efforts by travel firms over the past few days to post plane makes and models scheduled by carriers for upcoming flights. This was done in response to "What type of plane am I flying?" questions suddenly being raised by customers.

Why, then, are not more people being entrepreneurial in everyday transactions w.r.t. safety? Perhaps it is because they think government agencies have their backs. People are economizers, meaning that they seek to conserve scarce resources including time and effort. They will spend less time doing their diligence in ferreting out problems and opportunities if they think someone else will do it for them--or recoup their losses in case of they have chosen poorly.

If the FAA, FDA, FDIC, et al backs it, then it must be safe, right?

This is moral hazard writ large. People are taking more risk than they otherwise would (including self-imposed ignorance of safety issues) because they think that their risky behavior is insured by government agencies.