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.”