What is the purpose of government?

What is the role of government?  How big should it be.  Opinions on this vary greatly.  An extreme anarchist would say there should be no government at all.  An extreme communist would say that the government should do pretty much everything.  Most of us are somewhere in between.  Before we discuss the role of government, I think we need to go back to an even more basic question.  What is the purpose of government?  Let me start by sharing some of my core underlying values and assumptions.

  • Freedom is good.  In an ideal world, I would be able to do whatever I want and you would be able to do whatever you want as long as my exercising my freedom doesn’t stop you from exercising your freedom.  To use the old line, my right to swing my fist stops where your face begins.
  • A key aspect of freedom is that I can make my own decisions about my life.  If I make a good decision, I should have the right to profit from this decision.  If I make a poor decision I should suffer the consequences and not make you suffer for them.
  • Another key aspect of freedom is that two people can choose to make a voluntary transaction where each person believes that the transaction will make him or her better off.
  • There are people who are unable to help themselves through no fault of their own, most notably small children and some people who are ill.  It is good to help these people.

In the ideal world we would all do what we want while respecting the rights of others , mutually interact to prosper, and would voluntarily share some of our proceeds to help those who cannot help themselves.  In this ideal world, we would need no government.  Unfortunately, we do not live in an ideal world.  The following realities intrude:

  • There are people who will not respect the rights of others.   We want to be protected from these people.
  • Even well meaning people will have honest disputes.  We want a fair way to adjudicate these disputes.
  • The world is full of externalities.  An externality is any event where one person receives the benefit and another person unwillingly pays the cost.  For example if a factory pollutes, the factory owner receives the benefit of higher profits but the surrounding residents pay the costs by suffering from the pollution.  We want to minimize these externalities.
  • We want to have community investments where everybody benefits.  For example, we all benefit from a national defense.  If we make payment towards national defense voluntary we have a problem.   We all benefit equally from national defense even if our contributions are unequal.  It is to my benefit to not contribute to national defense and let everybody else contribute.  Unfortunately, if everybody acts in their own best interest here we have no national defense and everybody is worse off, not better off.
  • Voluntary contributions may be insufficient to help people who cannot help themselves.

Due to these problems, we need to have government.  In short, we need government because it is in everybody’s best interest to have an institution that handles the situations where having everybody act in their own best interest doesn’t work.

I believe that is the one and only purpose of government.  To repeat:

We need government because it is in everybody’s best interest to have an institution that handles the situations where having everybody acting in their own best interest doesn’t work.

With this purpose in mind, my next blog will focus on what is the proper role of government.

P.S.  As a side note, it should be obvious that in my value system the core ideal focuses on freedom.  Other people have different starting points.  Many people would start by focusing on fairness.  In my opinion, the fairest situation is where everybody is equally free.  This is a good example of a core assumption from which everything else derives.

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