5: Limits and Incentives: Tools for an Efficient, Fair, and Responsible Society

Although it seems paradoxical, establishing limits that restrict behavior is actually critical to creating a society that maximizes freedom. At the most basic level, the individual freedom of action of any person is necessarily limited by the requirement that those actions do not compromise the freedom of others. But in this interconnected world of interacting people, preserving and even increasing freedom may require establishing other limits as well. Traffic control regulations are an interesting example. If people were allowed to drive on any side of the road they pleased, at any speed they pleased, and decide for themselves whether or not to stop at stop signs or traffic lights, car and truck travel would be much slower and more stressful, difficult, and dangerous. By having agreed limits on our freedom to make these choices when driving, we can all move around more freely.