It’s time to start paying as we go

April 20, 2009 | By | 1 Reply More

I would think that the economic collapse of the United States has clearly demonstrated that the “free market” is not benevolent when those holding great power in society are not benevolent. Consequently, the best way to run society is to use government to make sure that powerful interests don’t run roughshod over regular folks.

But what are the proper functions of government, to the extent that government works with markets to allocate goods and services? This question was addressed by economist Jeffrey Sachs in the May 2009 edition of Scientific American:

The reasons include the protection of the poor through a social safety net; the correction of externalities such as greenhouse gas emissions; the provision of “merit goods” such as healthcare and education that society deems to be essential for all its members; and the financing of scientific and technological research that cannot be efficiently captured by private investors. In all these circumstances, the free market system tends to under-provide the resource in question.

Sachs ends his article by indicating that there is no alternative to raising taxes to pay for the services Americans want and need. In particular, this year’s deficit “will reach an astounding 1.7 5 trillion, or 12% of GDP.” Further, the government debt held by the public will rise from 40% of GDP in 2008 to 65% of GDP in 2013. According to Sachs, this continued buildup of public debt “will threaten the well-being of our children and our children’s children.”

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Category: Economy, Politics

About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

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  1. Erich Vieth says:

    Marcus Baram reports on Judge Richard Posner's epiphany:

    Judge Richard A. Posner, a federal appeals court judge who has been called the most cited legal scholar of all time, discussed his doubts and his analysis of the current financial crisis in a wide-ranging interview with the Huffington Post.

    A longtime proponent of deregulation, the idea that business works best in a free market without burdensome government regulations, Posner began to change his mind when he realized the enormity of the crisis.

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