FINAL WORD

Our introductory survey of government’s role in the economy is a sobering reminder of the responsibility ties and shortcomings of collective action. On the one hand, governments must defend their borders stabilize their economies, protect the public health, and regulate pollution. On the other hand, policies often reflect primarily the attempt to redistribute income from consumers to politically powerful interest groups.

Does this mean we should abandon the visible hand of government for the invisible hand of markets? Economics cannot answer such deep political questions; all it can do is examine the strengths and weaknesses of both collective and market choices, and point to mechanisms (such as green taxes or subsidies to research ‘and development) by which a mended invisible ta’and may be more efficient than the extremes of either pure laissez-faire or bureaucratic rule making.