I recently posted Jorge Cham's lesson on the difference between intrinsic and extrinsic motivation, but here's another example:
I was at Burning Man, a place with a "gift" economy. That means that people don't exchange things (either through barter of goods or money for goods); rather, they give things with no expectation of reciprocation. It turns out that people are quite creative with gifts -- everything from pancakes to moonshine to stickers...
Of course, someone had to put an end to all this "free love," and thus we have begun to see the rise of regulations and bureaucracy around gifts. In particular, food "givers" were required to get permits before they could hand out cookies, lemonade, etc.
Another regulation stipulates that this girl is "dressed appropriately" for distributing ice. Seriously!
Now I think that someone has lost the plot. Food safety regulations are founded on the idea that customers are not exactly sure of what they are getting, since food is an experience good. Thus regulations are designed to protect consumers from paying good money for bad food.
But what if the food is free? Is it worth it to hand out contaminated food if all you get in return is a smile and a hug? For the vast majority of people (the sane), it is not. Why bother to bake cookies that people are not going to enjoy?
In fact, most people enjoy giving -- they derive intrinsic pleasure from making others happy -- and the lack of monetary compensation (explicit motivation) ensures that only those who really care are going to put in the (costly) effort to make and distribute those goods.
Taking this point as accurate, you have to ask yourself why there's any need to regulate food at Burning Man. If anything, the regulators care a lot less than the producers and consumers about the quality of the food. Since they care less and are imperfect observers, it's likely that their monitoring will be characterized by some mix of lazy, haphazard and over-zealous. Better to leave the "monitoring" to those who care about quality (the givers) and spend the day at the pool (inside joke).
Bottom Line: Some systems do not translate well from one environment to another. Beware of imposing them, cookie-cutter, and causing more harm than good.