Safety Regulations Can Be Dangerous

People often scoff when I argue that more laws and standards reduce innovation. Scoffers probably can't think of an example of what wasn't created because of those restrictions. Enter the Tata Nano, a $2,500 unveiled in India yesterday. In a country where the next cheapest car runs about four times as much, the Nano has a lot of potential to give mobility (and opportunity) to a lot of people.

But don't expect the US (or Europe) to benefit from mobility--the Nano won't meet the government's safety standards. We are forced to favor safety over price, or get nothing and the poorest are hurt most of all. In a country where it's hard to go anywhere without a car, those who need the most opportunities find their job choices severely curtailed.

Some might say we don't want less safe (but cheap) cars, but even that is not obvious. Recall that in the wake of Hurricane Katrina, where people lost their lives because they has no way to escape New Orleans, the more expensive car was the more dangerous one.