Questions     Quotes     People     Upcoming People
About     Contact

What role should government play in an economy?

Dinesh D

The politician, Tipp O’Neill once compared the federal government to being big, fat and out of control. In contrast, the actual role of the government should be small, lean and in control, or under control. What this means is that we have limited government - limited government that has defined, enumerated functions, beyond which it should not operate.

This doesn’t mean that there aren’t certain things which need to be done, but the question is whether it’s the role of the government to do them. For example, my neighbor’s child may be desperately in need of sex education, but it’s not my job to go provide it. The sex education should come from that child’s parents or possibly from the schools, but it’s not my job to provide sex education for my neighbor’s child.

So although there are things which need to be done, it doesn’t necessarily follow that it’s the federal government’s job to do them. So the role of the federal government should be limited to certain important duties, most notably, it is sworn to protect us from foreign and domestic threats, but apart from those enumerated functions, it should abstain.

Author, Commentator and President of The King's College, Dinesh D'Souza

Ben Shapiro

The government should do very little. The government's only job in an economy should be to prevent things like fraud, but other than this, in my opinion, the government should play very little role. It's not their job to push particular programs and or businesses, it's their job to get out of the way, and to allow people who earn and produce products that other people want, to do just that.

When the government does become involved , it's almost invariably detrimental. For example, people like to say that the Securities and Exchange Commission (SEC) is evidence that when the government becomes involved, things become better, but the fact is that all it does is create more hazard by encouraging people not to conduct their research before investing in things like stock.

Whenever the government gets involved, all they tend to do is shift burdens from those who are less productive to those who are more productive. They tend to do things like reduce productivity, over-regulate when they seek to merely prevent basic things like fraud and redistribute according to the legislator's favorite businesses or interests. Nothing good generally happens when the government gets involved in the economy.

Syndicated columnist and author, Ben Shapiro

Peter Schiff

The government's role in an economy should be restricted to enforcing certain ground rules which facilitate commerce, including, but not limited to, enforcing contracts and protecting private property rights.

The founders of the United States held a skeptical view of government understanding that greater government involvement always comes at the expense of freedom which in turn restrains progress and lowers standards of living. With this in mind, they designed a system in which the government's role was limited to defending the freedom and liberty of its people. A little government can do a lot of good but a lot of government can do a lot of harm which is the reason that Thomas Paine said that "government, even in its best state, is but a necessary evil; in its worst state an intolerable one".

Despite its best intentions, the consequences of government intervention in an economy are almost always detrimental. For example, although it seems counter-intuitive, higher education in the United States is so expensive precisely because government subsidizes it. At its current cost, many people wouldn't be able to afford to attend universities, but because the government guarantees their student loans, universities can charge virtually any price they desire.

On the other hand, if there were no government subsidies, these institutions would have to reduce the price and increase the quality of tuition in order to make attendance more affordable and attractive. Many jobs don't even require a higher education and the result is that we have indebted college graduates waiting tables, cleaning toilets and driving buses.

Economist, investment advisor, author and commentator, Peter Schiff

Carrie Lukas

Government needs to protect property rights and enforce a strong, transparent legal system, but otherwise should have a limited role in our economy and instead allow the free market to work.

Today, the government wants to guide the economy, often choosing which technologies and industries deserve favored status (tax breaks or subsidies), which is an inherently corrupt process and counter-productive to economic growth. It's impossible to imagine that a cadre of politicians or bureaucrats are best suited to decide which businesses and industries deserve resources. We need individuals to make those decisions, since they have an incentive to make sure that money is used wisely. Washington has no such incentive.

Independent Women's Forum director and Goldwater Institute senior fellow, Carrie Lukas

Mike Connolly

Only large enough a role to maintain order, enforce laws and contracts, and meet needs – like courts and national defense – best left to public rather than private oversight.

As a rule, market competition more efficiently rewards virtue, punishes irresponsibility, and more fairly distributes resources and opportunities than government. Markets favor the most accountable, innovative, and best companies, while government policies usually only favor the most politically well-connected companies.

Ideally, everyone should have the freedom to succeed and the freedom to fail based on his own merit, work ethic, and pluck. Government’s job should be to guarantee equal rights and equality of opportunity, and leave the outcomes up to individuals, their families, neighbors, businesses, and customers.

Communications Director, Club For Growth, Mike Connolly

Tim Robinson

This is a highly contested issue. Following the lead of the father of modern economics, Adam Smith, contemporary libertarian economists, exemplified by Milton Friedman and his followers, believe that social well-being is maximized by minimizing government involvement in the economy. They say that government involvement should, in effect, be limited to ensuring good government, maintaining law and order, and the defence of free societies. At the other extreme, socialists believe in a strong role for government and government ownership of the means of production and distribution. Under a socialist regime private ownership is restricted to personal belongings and effects. The reality is that the last century has seen the mixed economy prosper with government involvement through legislation and regulation pervading the economy. In recent times, the extent of government ownership of the means of production and distribution in mixed economies has typically diminished although funding of health and welfare services has grown strongly.

Professor & Head of QUT's School of Economics and Finance, Tim Robinson

Grover Norquist

Government should enforce and protect property rights, avoid creating barriers to entry for companies and individuals looking to create small businesses and self-employment.

Government should allow either competing private currencies or if they maintain a monopoly on fiat currency they should link its value to real goods such as gold or a basket of commodities.

Why should government be limited in scope and function? Well, the Constitution says so. The list of legitimate, Constitutional powers the federal government has are spelled out. There is a list of things they definitely cannot do the Bill of Rights. The ninth and tenth amendments reiterate that if they are not listed in the Constitution they are denied to the federal government and reserved to the states or the people.

President of Americans For Tax Reform, Grover Norquist

Tad DeHaven

The problem with government is that anything it does necessarily comes at a cost. There's no such thing as a free lunch. The government can do nothing positive without also simultaneously doing something negative. Let's say that a factory was given a $500,000 grant which saved 500 jobs, that's what's seen, but what isn't so readily seen is what could have been created or what was lost in the private sector because the federal government borrowed or taxed that money out of the economy to create those jobs. The fundamental question is, "Who or what is better at fostering economic growth or job creation?" - the federal government and Joe Biden or the market and individuals making decisions on the basis of their own self interest? And I would side with the latter.

Writer and Cato Institute Budget Analyst, Tad DeHaven

Steven Malanga

The government’s role in an economy should be to create an environment in which people feel as though they will be rewarded for, and reap the benefits of, their innovation, by doing things like protecting property rights, enforcing contract rights and ensuring that taxes aren’t prohibitively high. These factors help to spark the entrepreneurial spirit in people because they know that their efforts, if successful, will be rewarded. In societies were these basic rights aren’t protected, there is little spirit.

Contributing editor of City Journal and Manhattan Institute senior fellow, Steven Malanga

Pete Sepp

Government contributes to a growing economy by creating a consistent legal system that protects property rights and innovation. Also, by fostering a friendly business environment, where one business does not get preferential treatment over another, commercial activity enriches the many instead of the politically-connected few.

A small and responsible government that keeps taxes low and provides basic functions according to a constitutional charter, allows the most effective mechanism for distributing goods and services, the free market, to flourish. That creates a consumer-driven economy with a low burden of government, and prosperity is inevitable. We know this to be the case not only internationally (see above, but among the states. See, for example, the American Legislative Exchange Council’s analysis, Rich States, Poor States.

Vice President of the National Taxpayers Union, Pete Sepp

William Niskanen

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

Timothy Johnson

I would like to see the government play less of a role because when the government gets involved, it creates failures and discourages rather than encourages people to be entrepreneurs because of burdensome regulation and taxation. I think the government tries to be all things to all people and subsequently takes away individual rights under the auspice of uniform rights. The challenge, as individuals, is that we find ourselves working hard for those who choose not to work and yet enjoy the same benefits . So I think government has to be very clear about its responsibility to not create a dependency system and to allow for each individual to really utilize their skills and judgment because what was intended as a safety net has become a disincentive to work. One of the challenges we have today is that we're creating a system where people become more dependent upon the government versus relying upon themselves.

Entrepreneur and Chairman of The Frederick Douglass Foundation, Timothy Johnson

Ira Stoll

It should prosecute and punish crime, including theft and criminal fraud, and it should provide a judicial system for the resolution of civil disputes. It should provide an army that can defend a country from external attacks. It should provide some safety net for the deserving poor.

If it starts expanding its functions much beyond that it tends to start trampling on the property rights and low marginal tax rates [See: What causes an economy to prosper?]. Another important thing is that the government’s role, whatever it is, be established by law enacted by the consent of the governed. This idea of limited and enumerated powers can help prevent the government from trampling the rights of individuals.

Editor of and author of "Samuel Adams: A Life", Ira Stoll

Michael J. Boskin

It should set sensible rules of the game, a modest hand – neither heavy nor missing – in taxes, spending and regulation, to assure the private economy can prosper.

Professor of Economics at Stanford University, Michael J. Boskin

David Ranson

To remove obstacles to the free inflow of capital.

President of H. C. Wainwright and Company, Economics, David Ranson

Steve Deace

The biggest misconception is that we're having a debate about the role of government in America today, when we're really having a debate about what authority or moral ethic we are going to govern ourselves by. The answer to that question then determines the role of government. For example, cultures that abandon the Judeo-Christian moral ethic, as ours is currently doing, end up growing government because something must fill the God-shaped void in the society. And that something ends up being the

Talk radio host and author, Steve Deace

Stephen Golub

The experience of various countries over the past 150 years suggests that a mixed economy, with an appropriate combination of free markets and government intervention, is most conducive to prosperity. The government must create a level playing field while prohibiting abuses. Public investment and private investment are both necessary.

The government must provide public goods—education, infrastructure, the rule of law, and a sense of respect for social obligations. The global financial crisis is a reminder that lack of regulation of financial markets invites disaster. The financial abuses that led to the crisis also show that the profit motive must be tempered by ethical conduct in business, which the government can foster through regulation and uncorrupt leadership.

Professor of Economics at Swarthmore College, Stephen Golub

Rabbi Aryeh Spero

To protect people from real danger and harm, and practices that are deliberately discriminating.

Columnist and commentator, Rabbi Aryeh Spero