Quotation of the Day…

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… is from pages 144-145 of the 2009 Revised Edition of Thomas Sowell’s Applied Economics: Thinking Beyond Stage One:

A very different kind of institution for dealing with risk has arisen in more recent times. This is the … organization or movement devoted to imposing safety requirements through publicity, litigation or the promotion of government regulation. These include “public interest” law firms, ideological organizations and movements, such as the so-called Center for Science in the Public Interest, and government agencies such as the National Highway Traffic Safety Administration. Since these organizations do not charge directly for their services like mutual aid societies or insurance companies, they must collect the money needed to support themselves from lawsuits, donations, or taxes. Put differently, their only money-making product or service is fear – and their incentives are to induce as much fear as possible in jurors, legislators, and the general public.

Whereas individuals weighing risks for themselves are restrained in how much risk reduction they will seek by the costs of reducing those risks, there are no such restraints on the amount of risk reduction sought by those whose risk reduction is paid for with other people’s money. Nor is there any such inherent restraint on how much fear they will generate from a given risk or how much credit they will claim for whatever risk reduction may take place, regardless of what the facts may be.