I respect Marcus quite a bit, but his reasoning in this piece astoundingly off-base.

1) Medical liability is expensive because malpractice insurance has become a form of social insurance: if you go to the doctor and something goes wrong, you get a settlement from the insurance company. Things going wrong include losing ability to earn income, death, etc. Expensive. His claim that doctors aren't better or safer after 30 years doesn't make sense; his arguement that (a significant amount) of people are priced out of the health insurance market by malpractice premiums is controversial at best.

2) Strict liability applies to many products. Businesses that make these products are still in business. There was some adjustment, but they moved on. Some of it is cost restructuring, and some of it is in improved products: even in the medical field, marked improvements have been observed (See the WSJ article on anesthesiologists: http://www.post-gazette.com/pg/05172/525947.stm) The GAO and others have soundly refuted the claim that doctors are detered from practice by liability policy.

3) The cost arguement applies to just about every extension of liability. A priori, we can't measure the benefits and the costs just look high. See the fight waged by the regulated industry against every single environmental regulation ever passed.

"subsidies are a net 'bad' as an assumption in economics"

Not in the case of externalities, and I think that's really what is at stake here. Marcus is right--people will buy secure SW if they want it. People will also eat healthy if they want to. But for some set of reasons, they don't. And we should start to care if market behavior of individuals affects others. My life is certainly worse off when millions of un-secured PCs are out there. So the subsidy to F/OS would improve social welfare if we assume this software is more secure for the magnitude of users.

This is what I am curious about: if 10 million windows users just got sick of XP and got the local geek to put some distro on their machine, what would the network look like over the next 24 hours? Six month?