Pearls of Wisdom: We Need Government Regulations

This was inspired by and in small part taken from a post by Bruce Schneier on May 25th.

Our nation is, as it always is, trying to determine what the role of government should be.

There are those who want the government out of their way. To them, the government represents an intrusion into their right to make money. The proper role of government is to operate the military and to provide some police and courts in order to enforce contracts and maintain order. Pretty much everything else can be done better by the citizens individually.  More specifically, the government has no place regulating commerce when the invisible hand of the marketplace can do a better job than government bureaucrats.

It’s a nice theory, but in reality, there are many things which can not be done acceptably by the private sector, and for which our society requires collective action.

Let’s take a simple example. If you go to the grocery store and you see some twenty-dollar per pint ice cream, you can try it, see if you think it’s worth twenty dollars, and maybe decide it is so extraordinary that it really is worth that much. The marketplace indeed works perfectly well when it comes to prices of ice cream. However, you don’t have to worry about it being safe. You know that in order for it to be sold here, the government has inspected the facility where it was made, and you can be pretty sure that it won’t make you sick. If there was no government regulation of the safety of food production, that new premium ice cream maker could never convince anyone to try his expensive ice cream. Yes, if he sold ice cream that made people sick, eventually word would spread and he would go out of business, but I certainly would not be buying any for my kids when he is trying to start a new business.

Another example is automobiles — again, if a company sells cars that end up causing fatalities, people will stop buying those cars, but that’s not an option we as a society are ok with. For better or worse, waiting until people die is not an acceptable option for Americans. Government safety regulations do technically limit the free market, but the guarantee and safety they provide in many ways allow commerce and entrepreneurship to flourish. Without them, a new car manufacturer would have no way of convincing customers to try his product over more established competitors. It would be crazy for them to try his new, untested car instead of a brand that people already knew was safe.

If you have been following the news, you have likely heard of “ransomware”. People’s computers become secretly infected, and one day, those unfortunate people see a message that all of their files have been encrypted. They then have to send someone a few hundred dollars to get them unencrypted, or they’ll be lost forever. That is very annoying, potentially very expensive, and occasionally life-threatening. Hospitals have become frequent targets for these ransomware attacks precisely because of the stakes involved – they can’t afford not to pay to unlock their systems when lives are on the line.

This problem is only going to become more common. More and more things are now being connected to the internet, from baby monitors to door locks.

What if you get a message on your smartphone one February morning that the heat will be disabled in your house that night unless you send someone a few hundred dollars? The company that made the electronic thermostats may not even be in business anymore. You may not have even noticed that the house had electronic thermostats when you bought it.

What if the message says that the brakes on your car will not work? Car makers are now bragging that they can update the software in new cars remotely, which is sometimes used to… incentivize… people who are behind in their car payments. That’s right, car dealers are now able to remotely disable the cars of people who don’t pay their bills. It’s only a matter of time before hackers get a hold of that ability.

What if the message says that the voting machines will not count your candidate’s votes unless…

You get the idea. So many of the things we use everyday are connected to the internet, and that is not a problem that the private sector can deal with. In a world when companies come and go with increasing frequency, we can’t rely on each individual product to be constantly updated by its manufacturer. The government can’t fix this problem itself, but it must begin to mandate security standards for all devices on the Internet of Things, or things are just going to get worse.

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