I think Garett’s basically wrong about airport security on the free market.  Yes, both markets and politics respond to risk misperceptions.  But the political response is much more likely to ignore cost and convenience, to impose whatever sounds good.  The market response will still pander to misperceptions, but it will weigh these misperceptions against cost and convenience.  Both markets and government embrace slogans like “You can’t put a price on safety,” but only governments ever take such slogans seriously.

If this seems too abstract, here’s one massive cost-cutting, convenience-raising change I’d predict in a free market: Profiling.  Private security firms would still claim to treat everyone equally.  But they’d wave the elderly, women, families with children, and well-dressed men right on through, especially if they look like “regular Americans.”  Private security firms would redirect their spare attention to (a) young men who look like they might be violent criminals, and (b) anyone who looks like they might be of Middle Eastern descent.  Free market airport security would arguably be less fair than the status quo, but the total cost would be markedly lower and average convenience would be markedly higher.