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I think the primary role is to enforce property rights and contracts. In order to have a meaningful market and property, you have to have clear, enforceable property rights and contracts are necessary to have any kind of market so that's the primary role. In addition, the government should be responsible for trying to minimize the amount of coercive activity in the economy and the amount to which those in any particular outside economy can have a coercive influence here. The latter basically means that you have to have an effective, honest, strict, forward police force, law enforcement and defense establishment. I think you have to limit the power of government because the incentives of the people within the government are very likely to try to expand their role. Members of the government are basically compensated as a function of the size the organization they run, rather than its net returns, so their incentives differ in this way to the private sector.
Cato Institute Chairman Emeritus and Senior Economist, William Niskanen
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