Libertarian (private sector, free-market) and non-libertarian (public sector, government intervention/regulation/oversight) policy proposals tend to have different types of failure modes. Here are some things to consider before implementing a proposal of each type. Additions and other feedback are as always more than welcome.

Checklist when considering a government-intervention approach:

  • Is the free market insufficient?
  • Is the intervention sufficient?
  • Is the inherent moral cost of infringing on individual liberty justified?
  • Is the economic cost justified?
  • What is the opportunity cost of the money being spent?
  • What market distortions (inefficiencies) will this create?
  • How will this be misused?
  • What moral hazards does this present for ordinary people?
  • What opportunities are there for intentional abuse by members of the public?
  • What moral hazards does this present for the officials implementing and enforcing it?
  • What opportunities are there for intentional abuse by officials?
  • What precedents does this set for future legislation?
  • What opportunities does this present for regulatory capture?
  • How can ordinary people circumvent these regulations/interventions?
  • How can wealthy individuals and corporations circumvent these regulations/interventions?
  • How harmful is this if it turns out you’re the baddies?

Checklist when considering a free-market approach:

  • What negative externalities exist?
  • What moral hazards exist?
  • Does this enable abusive monopolization (as in company towns)?
  • Does this enable/encourage artificially creating inelastic demand (as in hard drugs)?
  • What related regulations exist that might tend to distort the proposed market?
  • Is this an isolated demand for free enterprise that disproportionately benefits companies receiving monopolies, subsidies, or other advantages from the government?