[Good Government, Bad Government] The Government’s Role in a Healthy Market Economy

The most important thing a government should do is enable each citizen to make the fullest possible use of his or her potential. To do that, people must be allowed the freedom to try what they want. And they must also be allowed to keep the results of their efforts. In other words, the principles of freedom and responsibility must be upheld.

For these principles to take root, regulations on people’s lives and economic activities must be minimized. At the same time, however, the government must be rigorous in maintaining basic order. The law must be strictly enforced against acts that infringe on the rights and freedoms of others.

Beyond this, the government must provide public goods. Public goods are things that many people need but that are difficult for the private sector to supply through the market. Public goods such as national defense, the prevention of infectious diseases, and the establishment of good diplomatic relations with other countries must be handled by the government so that citizens can live their lives more comfortably.

In addition, it may be necessary to help the poor. This means assisting, on behalf of taxpayers, people who find it difficult to survive on their own, such as child household heads, elderly people living alone without family support, and people with severe disabilities.

These are the roles the government should take on in order to maintain a healthy market economy. However, not all governments adhere faithfully to these principles. Some fall short, while others go too far and create problems.

The most common problem is that, instead of protecting the lives and property of the people, the government itself becomes a predator. Many governments in Africa fall into this category. Another common problem is making everyone dependent on the government in the name of a social safety net. Most welfare systems in advanced countries fall into this category. Another frequently repeated mistake is protecting domestic firms from competition with foreign companies or products. The more this happens, the more the economy declines and the harsher people’s lives become.

From here on, we will examine, through the examples of various countries, what governments should do and what they should not do.

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Original title: [좋은 정부, 나쁜 정부] 건강한 시장경제를 위한 정부의 역할

Author: Center for Free Enterprise (CFE)

Date: 2008-12-22

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=18&idx=10719