"Note that government regulations in the area of product quality sometimes have the opposite effect as intended - companies that otherwise would seek out higher standards simply do just enough to meet the minimum government standards. "
Of all the really wacky things Libertarians believe I think this logic is possibly the most disingenuous. You are saying that companies are consciously making the decision to do as little as possible to meet the standards. So your solution is to remove the standards. Now, with the standards, they do the minimum, remove the standards and magically, they will spend more money and/or other resources, to produce higher quality. That lack of logic is staggering.
This type of magical thinking permeates a lot of Libertarian thoughts. Much like the companies that willfully pollute government property, but not their own. We are to trust the slime merchant who chooses to pollutes public land, will somehow change their ways if the land were privately owned (ideally their own). Why, we are told it's because polluting their own land would devalue it and reduce profits. Of course the company could spend the money to not pollute any land, but instead, they choose to pollute someone else's land, namely public land. So the company is putting profit ahead of concern for the public. But somehow, that's lost on our Libertarian friends.
Companies pollute and produce poor quality for one reason only, because it saves them money, allowing more profit for the owners. I am all in favor of capitalism. But it's not a religion with a biblical set of morals which guide behavior towards goodness for fellow man. Corporations exist to provide a sufficient rate of return on the dollars invested by it's owners. There is no moral code which dictates how that rate of return is achieved.
I notice Libertarians don't talk much about the people who run companies or work in the government. They like to say the government does this bad thing and that bad thing and businesses do this and that good thing. They seem to miss the constant shuffling of people between jobs in corporations and government. Look in the cabinets (and their tentacles) of the past few presidents and look on the board of directors of fortune 500 and see all the familiar names. Dick Cheney was with the evil government, using force to suck money away from the private sector, then he was a good guy corporate executive waving the flag of freedom, collecting profits for capitalist disciples, now he's part of the evil tyranny again. Damn, it's all so clear to me.
People, yes it's people who run the companies, and history has shown that people will often do whatever it takes to achieve their objectives, regardless of the laws in place.
"Notice that frequent government inspections (USDA) have not stopped contaminations"
true and the existence of police has not stopped crime, so let's get rid of the police
At some point you need to step back from your religious Libertarian messianic stupor and check into hotel reality.