ABSTRACT

This part introduction presents an overview of the key concepts discussed in the subsequent chapters. The part seeks to make the argument that the proponents of government mandates often seek to use them to promote particular social objectives, such as eliminating discrimination, protecting unskilled workers, or helping the disabled. It shows that mandates may be useful to solve market imperfections or inefficiencies. For example, workers may not know the true risks involved in a particular production process. Mandatory workers' compensation insurance guarantees that workers will be covered in case of accidental injury, thereby forcing the firm to internalize the cost of potential injuries. Mandating an increase in wages allows politicians to look like they are being "tough" with employers who are "exploiting" low-wage workers. Mandates are carried out by the individuals directly affected by the law: employers. They have the greatest incentive to meet the requirements of a mandate in the lowest-cost way, or risk going out of business.