A reader recently noted, quite accurately, that I express many concerns about the state of our economy. He challenged me to instead offer solutions. Here are some.
Like anything else in life, government can fulfill an essential role, so long as it knows where its advantages lie, and where they may not.
Government should plan for long-term prosperity, innovativeness and sustainability. But, it cannot do all things well. It does not always demand efficiencies realized by private-sector providers who constantly feel the heat of competition breathing down their necks. When investors sacrifice today so they can be more productive tomorrow, they demand value from their investments and scrutinize them closely. If efficiency is important, and when would it ever not be, then the profit motive encourages a ruthless devotion to finding ways to do things better.
Private markets sometimes fail, though. Small organizations compete through innovation, but large monopolies instead attempt to concentrate power. They frustrate efficiency and scheme away valuable resources. Immune to the discipline of competition, they thrive in a cat-and-mouse game of tactics and strategies, rather than innovation and efficiency.
Our economy is becoming dominated by big corporations, powerful associations and, increasingly, monolithic government. Together, they squeeze the middle class from all sides in their battles of titans.
We need a public sector to protect a private sector from itself, and us from them, at times. And, we need a public sector to ensure that the poor can be educated and contribute to society, roads can be built that afford us access so the wheels of commerce can continue to roll, and bridges, police, courts and armies to serve us in ways the private sector probably won’t. These are the public goods that government is in the unique position to best provide.