Five Things Government Does Better Than You Do

Source: Monica Potts, American Prospect, August 21, 2012

Economics assumes people are rational actors in the market, but we know a lot less about how to manage money than we think….The conservative approach to government stems from a basic tenet of free-market economics: that people always act rationally to maximize their own benefits, and that from this rises a general state of well-being for society as a whole. But this isn’t always true. One of the hottest academic disciplines to arise in the last few decades is behavioral economics, which explores the ways in which people behave irrationally. In addition, easy-predictable problems with certain markets prevent us from achieving the best outcomes. These two facts have consequences for how we should think about government in certain instances. There are many ways in which the government can make better decisions with our money than we can, and there are many ways that the Ryan budget would make society worse off by getting rid of government programs. Here are five:

Retirement Insurance…Health Care…Addressing Poverty…Disaster Relief…
All the Little Things
While I’ve been focused so far on specific things that the federal government can do better than individuals or the private market, there are a number of tiny things that local governments do to create the world in which you live–building roads, taking out the trash, keeping traffic flowing, and turning street lights on at night. Basically, we can call this “running your community.” …

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