Of course, if there were no legal remedies against fraud, people would be more careful–but they would be too careful; they would incur high costs of self-protection. It is cheaper to punish fraud, just as it is cheaper to punish burglary than to tell people to fortify their houses.
Where is the line drawn between individual and community action to secure private property? Why is protection for burglary a public good, but protection against flood, not? Of course, protection from murder is a public good, as it should be and of course, “protection” from not being wealthy isn’t a public good. But why is insurance for large sums of money a public good, but protection from starvation not?
The line is feeling awfully arbitrarily drawn to me, atm.