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As I see it, this is similar to food safety or mass-produced vehicle certification processes.

Unfortunately, modern markets are empirically fairly poor at optimizing for long-term outcomes with all externalities accounted for (example off the top of my head: the Deepwater Horizon oil spill).

When a major malfunction or accident does happen, no penalty or fine is really sufficient to bring about any meaningful sense of justice. (Think again the oil spill, or a tainted staple food poisoning tens of thousands of people, or to use a really cliché example, a malfunctioning UAV crashing into a group of kids playing at recess.) As the accidents are often due to incompetence or attempts at cost-cutting rather than outright malice, the deterrence factor of the penalty doesn't really apply – to those guilty, it just looks like they're taking the good kind of risk optimizing their systems until it's too late. The guilty corporation simply can go bankrupt and out of business, and finding and then charging personally responsible employees isn't always easy.

And yet Deepwater Horizon still happened. If the regulations that all rigs must use equipment bit x, y, and z, certified by industry conglomerate w, weren't in place, then maybe new, much safer technology would have been developed that would have made the spill not happen. If the market needs permission from bureaucrats, who may or may not be corrupt, or needs a new law passed, to adapt or develop better solutions to its problems, then it's no wonder we are stuck on obsolete tech that is 50+ years old and that the revenue in regulated markets is entirely dominated by a small oligopoly that holds everyone by the balls (see also phone companies).

Maybe, maybe not. What is the market motivation for developing and more importantly using technology which is safer on a 50-500 year scale? How high would you like the penalties for criminal negligence, manslaughter, etc, to be? Is it feasible for them to be higher than the potential savings on process optimization or cutting corners? Do you hold corporations or people, or both, responsible?

While government regulations might not be the most efficient, they do not cloud a picture of exactly how safe a plant is and will remain that would otherwise be perfectly clear. Short of each investor evaluating safety of each plant, oil rig, and factory themselves, the situation with government regulation removed would boil down to an analogy to the S&P credit rating business. We've seen how for-profit independent third-party rating business has worked out.

If you'd like an example from a market with little regulation, look no further than Bhopal.

I'm not going to argue that the current regulations we have in place are amazing. They're not and they can certainly be improved. I will, however, argue that they do a better job keeping us safer than the free market, as it has been implemented worldwide over the last century, would.

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