Inspections are there because large institutions don't always take the care they should, and as a consumer I sure as hell want -somebody- to look into it. If it weren't a government institution then I'd expect some sort of company to do it, and any restaurant that hadn't gotten inspected I would avoid.
On the other hand I -don't- worry when I use Air-BnB, because it has reviews that signify quality, and because there's not much that can go wrong with sleeping on a couch.
You're not going to convince me that I would still buy raw milk, or that pasteurized milk would be unavailable, in the absence of FDA regulation.
There's a competitive advantage to labeling food, and there's no stopping companies from labeling food in the absence of food labeling regulations. The most trusted organic certification is from a for-profit certification company, Quality Assurance International. McDonald's published nutrition information before it was required by any law. Intentionally incorrect labeling is already covered by fraud and tort law.
Devils advocate: are food standards also a terrible imposition? The government insists on coming around to all the restaurants in the city and inspecting them to make sure that no-one will be poisoned or killed by the food they eat. How dare they stand in between a willing buyer and seller. Right? Right?
Food standards, restaurant inspections, building codes, health and safety codes... the list goes on. Are they all illegitimate attempts to stand between a willing buyer and seller?