Congressman Ron Paul has an article up at LewRockwell.com that deals with this point. It most deals with regulation in the financial sector, but he also provides this as an illustration:
It is much the same in any area rife with government involvement. Many feel that just because their children are getting good grades at a government school, they are getting a good education. After all, they are passing the government-mandated litmus test. But, this does not guarantee educational excellence. Neither is it always the case that a child who does NOT achieve good marks in school is going to be unsuccessful in life. Is your drinking water safe, just because the government says it is? Is the internet going to magically become safer for your children if the government approves regulations on it? I would caution any parent against believing this would be the case. Nothing should take the place of your own common sense and due diligence.Go and read Congressman Paul's The Moral Hazard of Regulation.