Is it true that animal testing is funded by us?

I've been told that libertarian economies depend on a reputation economy. How do rating companies get funded without becoming corrupted?

• Recent, the US has been dealing with securities rating companies being accused of incorrectly rating investments due to pressure from the companies they were rating. In the 60's, they were subscriber paid. Which worked until the invention of the photocopier. Then you could no longer depend on limited distribution of the information. Switching to being paid by the ratee, however, has lead to their "clients" just threatening to move their business to another rating company unless they got a better rating. Thus, they became corrupted. New rating companies couldn't really enter the market because to be an authorized rating company, the government required you have rated before. A closed shop or guild system, essentially. One imagines that opening the shop would give MORE opportunities to the investment companies to get an exaggerated rating. How do capitalist-based rating companies, essential for a libertarian economy, get funded if they can't accept money from the ratees and can't depend on subscribers to keep the reports secret? Without rating companies (or regulators that do testing, like the FDA), we end up with the market they have in China right now, don't we? http://www.foodsafetynews.com/2011/08/honey-laundering/ http://www.nytimes.com/2007/06/19/business/worldbusiness/19toys.html?pagewanted=all&_r=0 http://www.cpsc.gov/en/Newsroom/News-Releases/2010/CPSC-Identifies-Manufacturers-of-Problem-Drywall-Made-in-China/

• Answer:

  By way of a related anecdote, the transition from being subscriber-paid to being ratee-paid wasn't made at the initiative of the rating agencies themselves (as the question suggests with reference to the invention of the photocopier), but by Federal regulators and at the behest of large pension funds (which previously paid for ratings, and later wanted to enjoy those ratings for free). The short answer is that rating agencies acting in the free market would depend for their livelihood on their own reputation for accurate ratings. This is in sharp contrast with rating agencies in today's society, which enjoy a government-granted oligopoly, coupled with regulations that compel investors to use their services.