As competition becomes more limited in each industry, the efficiency of production diminishes, and the price of the product increases and/or its quality decreases (cf. pp. 4.11:133, 4.11:143). Product manufacturers, however, tend to find that their liability for product defects is limited by the regulatory environment itself, since they are generally held legally responsible only for adhering to a specific set of regulations. (As we shall see in our third graph, concerns about liability and litigation become paramount in a mixed economy.) For example, risk/cost/benefit analyses by the Federal Aviation Administration (FAA) generally evaluate a human life as worth only about $200,000, a figure derived from typical judgments against airlines in liability cases. But the size of those judgments in turn tends to be limited by the fact that airlines can disclaim ultimate responsibility for safety, provided that they follow the regulatory rules. At least in this instance, the very existence of regulation leads to a devaluation of human life. On the one hand, such minimized liability tends to decrease the safety and quality of products still further. At the same time, it tends to make manufacturers regard the regulatory environment more favorably, providing them with another incentive to lobby to expand the scope of regulation within their own industries.      Next page
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