I think many people have the wrong idea about libertarians and regulation. The perception of Libertarians is that we think all rules are bad which is far from the case. Rules and Regulations are a service like any other that provides value. Board games would be quite unenjoyable without rules to create a sense of fairness and achievement when one wins.

Essentially those who design board games are really in the business of designing regulations as games at the end of day are just sets of rules that turn mutual interaction into leisure. Although if a game designer makes rules that are too complicated or unfair it leads to people not playing the game and it failing in the marketplace. The interplay of market forces lead to better rules and better games, markets can and do exist for regulations at all levels.

The problem with government regulations is the same problem with government in all of its efforts, its monopolistic nature leads to bad rules (overly complicated and unfair) and bad enforcement (enforced harsher on the political weak and rarely on the politically connected). The lack of accountability from voluntarism and markets in the rules making process makes government the worst provider of such an important service.

Although when highlighting this point it begs the question how do markets provide rules? Here are some examples:

For Profit Insurance: Since people are paying Insurance companies to insure their risks, insurance companies often expect certain record keeping and risk mitigation to occur to be able to purchase a policy. If the demands of an insurance company are too onerous competing insurance companies will soak up market share with better less burdensome rules. If the rules are too light then the insurance company will find itself insolvent from too many claims. These extremes provide incentives for the insurance company to find the right balance. Of course, lack of competition in insurance markets often due to state laws can and has created the same monopolistic effects as government. Private certification companies like Underwriters Laboratory lend their stamp of approval for a fee and rigorous testing which companies desire to either lower insurance premiums, limit potential legal liabilities or even just to be eligible for an insurance policy. Hiring experts to act as middlemen provide accountability and protection in areas that are overly complex for the average consumer (remember travel agents or mortgage brokers). The better able they are in helping make your way through complex decisions the more repeat business and referrals they get. While there are always some agent/brokers who do bad business they often aren’t able to build up the repeat business to grow like a quality agent would. All of the above can be further held accountable by public review services like Angie’s list or yelp. Also information services that help create a more informed consumer provide accountability. Also voluntary collective purchasing can give groups the negotiating power to ask for certain rules to be followed in exchange for large business transactions.

The point is Markets can and do generate better governance and regulation when allowed to do so.