The Ludwig von Mises Institute has an article about something familiar to all americans who have looked behind their TV sets or their toasters:

Look at the back of your computer monitor, the bottom of your table lamp, or the label on your hair dryer. Chances are you will see the symbol “UL” with a circle around it. It stands for Underwriters Laboratories, a firm headquartered in Northbrook, Illinois, and an unsung hero of the market economy.

Most people don’t realize that dozens of products in their homes — toasters, fire extinguishers, space heaters, televisions, etc. — have been tested by the Underwriters Lab for safety. The Lab also tests items like bulletproof vests, electric blankets, commercial ice-cream machines, and chicken de-beakers, among thousands of other products.

But the Lab isn’t an arm of the government. It is privately owned, financed, and operated. No one is compelled by force of law to use its services. It thrives — and makes our lives safer — by the power of its excellent reputation. For that reason, its ideologically driven enemies on the Left despise it.

The firm was formed in 1894 to deal with the dangers posed by the dramatic increase in the use of electricity. Today, it employs 4,000 scientists, engineers, and safety specialists to render an independent verdict on hundreds of thousands of products.

The very existence of the Lab debunks the common civics-text view that, without government intervention, private businesses would seek profit without regard for safety; thus, bureaucrats have to police markets to impose a balance between private interests and the common good. The government, according to this view, is the only thing standing between us and unceasing fatal accidents.

The truth is the opposite. The market is well equipped to regulate itself, and does a fine job of it. It’s the government that operates without oversight. To discover the quality and value of products, no one would trust the advice of the scandal-ridden Commerce Department or the Federal Trade Commission.

Unlike quality and price, safety isn’t always at the forefront of the consumer’s mind. But that hasn’t kept manufacturers from seeking out the Lab’s testing services. For those who appreciate the virtues of private enterprise, the UL insignia is an inspiration.

The Lab was the first to set standards for certifying the safety of pilots and planes before the government intervened. It set the standards for building materials, fire-fighting equipment, air conditioners, and household chemicals. It employs safecrackers and pyrotechnicians to test safes, and a variety of unique machines and devices to test thousands of other products each year. It has been testing multicolored Christmas lights since 1905, and entered the building-code business right after the San Francisco earthquake of 1906.

Despite its unparalleled experience and success, the market economy keeps the Lab innovating. As engineer John Drengenberg of the Lab said,

There’s always some little twist in a new product — an innovative feature or something to make it cheaper — to keep us busy developing the appropriate test procedure.

Its effectiveness in determining safety standards (even for brand-new products) and maintaining them over time has generated an interesting result. Many government regulations, especially at the state level, merely mimic the building codes and insurance requirements of the Lab.

The Lab also “regulates” in a cost-effective way. Companies come to the Lab to present their products and the tests they have already conducted. The company pays a testing fee ranging from a couple of hundred dollars to several thousand, depending on the costs of the tests to be conducted.

If the product passes, it receives one of three designations:

1. To be “listed” means that the product has passed muster for sale as a final product, like a hair dryer.
2. If it is listed as “recognized,” it is safe to use as a component within the final product, like a transformer.
3. To be “certified” means that the product has met someone else’s standards, such as the Chicago building code.

Each product is tested for each use, and the Lab is strict about how its mark is used by manufacturers. For example, Securitron Magnalock sent a new lock to the Lab for testing. New standards had to be established, and the lock was duly tested and “recognized” as a component for a delayed-exit system.

When the company faxed all of its field representatives that the product was “UL approved,” Lab officials suspended the listing. It then required Securitron to inform all employees that UL does not “approve” any product.

To insure continued safety, manufacturers agree to let the Lab inspect their production facilities and to retest on demand. These on-site inspections, often four a year, are unannounced. Lab inspectors can require manufacturers to present data and to rerun safety trials and experiments. Companies, in turn, pay a tiny fee for every UL designation symbol they put on their products.

Manufacturers can modify their products to adapt to market conditions, but the Lab oversees changes that affect product safety. The Lab is inflexible and scientific, but it’s also driven by common sense and realism.

Nothing is perfectly safe, of course. The competitive marketplace and the Lab aim for safety in a framework of rational attention to costs. UL official Drengenberg has noted, “It would be very easy for us to come up with an overly strict standard,” but then no one could afford to buy the product.

In fact, the Lab once built a fireproof office for some of its employees. The expensive room featured ceramic tile on the walls and ceiling, a thick concrete floor, metal furniture, and similar standards. Not only was the cost high, the esthetic results were not impressive. As Robert Yereance, author of Electrical Fire Analysis says, “most of us cannot afford a fireproof dwelling and would not like living in it if we could.”

The Lab notes that 80% of accidents and fires are caused by consumers, not products. It takes this into account in its requirements. In the case of space heaters, for example, the Lab felt that enhanced warning labels would reduce as many fires as an expensive redesign, thus keeping down cost and price.

[…]

http://mises.org/story/3440

The Ludwig Von Mises institute keeps pouring out example after example of why we do not need the state for the majority of things that ‘need organizing’. The above is yet another instance showing how the market can solve any problem more efficiently than state regulation. Not only does it work better, but it is sensible, unlike the insane health and safety madness that has overtaken Britain, where, for example, every pest control company operating in the UK will soon have to have two people on hand every time a ladder is deployed…by order of the state. That means that either the companies that are currently working will need to double the numbers of their exterminators and pass the greater expense of these extra wages to the infested customers or the companies will have to do half as many jobs since they are no longer able to send a single man out with a ladder to do his job. Both outcomes will result in greater pestilence in the UK. But the government likes that, because they are the ultimate pestilence.

But I digress.

The above story proves yet again that we are all better off without the state interfering in our affairs. Wether the part of our lives is schools, money, safety or anything you can imagine, when the state is removed from the equation and people are left to organize themselves the optimum and just result emerges.

This entry was posted on Sunday, May 10th, 2009 at 12:46 pm and is filed under Economics, History, Someone Clever Said, The Facts, Told You So.