There are those who believe that the government cannot possibly
improve matters, and thus they favor a minimal role for the government.
And there are others who believe that the government is necessary.
There are 2 broad classes of wants: 1)
security and 2) worldly goods:
Security: No one wants
to be killed or violated. And although people can buy things such
as locks, there is still general agreement that the government
is needed to help provide this.
Worldly goods: Such as food, shelter, clothing, roads, bridges, vehicles for transportation and recreation, clean air, entertainment, etc… It is with these types of goods where the dispute seems to arise over the market vs. the government supplying them. There are certainly those situations where the market will prevail, but there are also instances where it will not. This is where market failure occurs because the market cannot provide an optimal, or efficient level.
Public goods: Public goods
are non-rival (many people can consume without infringing on the
benefits/enjoyment of others), and non-excludable (as many people
as want can consume the good at the same time). It is with these
types of goods that the market appears to oftentimes be extremely
bad at providing adequate amounts. People have a low incentive
to reveal their true preferences or true willingness to pay. You
usually want others to reveal their preferences first. Incentive
is there to try to enjoy the benefits of the good without paying
anything-incentive to reveal preferences is lower because each
person has incentive to become a free rider. Inefficiency can
exist for three basic reasons: 1) high collective decision-making
costs, 2) a free rider problem monitoring, and 3)
a free rider problem in the enforcement of contracts. With a pure
public good, the government may be seen as necessary. However,
there aren't always pure public goods. I mention this because
I am trying to emphasis the point that each case must be considered
on a separate basis.
I found some more interesting information on monopolies.
Generally government intervention is seen as necessary when there
is a presence of "collusive monopoly." Yet, a monopoly
can only really be successful if the colluders have talents and
resources that differ from those in their potential competitors.
However, talents can eventually be produced and resources are
discovered all of the time. So given time the market quite possibly
could solve the problem. Is the government really necessary, then?
Monopolies are, however, inefficient because they produce too
little and charge too much. Yet this is good for the environment
in the case of nonrenewable resources. Monopolies have incentive
to preserve these because they do not want to run out. If the
government forced them to lower prices and sell to those who were
willing to pay, more would be used in the present and less would
be left for future use. This would be worse for future consumers.
Again, is the government really necessary?
Furthermore, monopolies can be a result of luck, collusion,
initiative, research and development, invention, etc… In
the case of collusion, government intervention might be seen as
good, however, governments don't always make correct judgements
and decisions as to the cause of a monopoly. Therefore intervention
on the part of the government often discourages some future discoverers
from making what would otherwise be investments that benefit consumers.
This would of course be inefficient as well. So once again we
must ask, is the government really good and necessary to make
things efficient?
What I am again hinting at is the fact that government intervention
is not always the best option. There can be wastes and inefficiencies
in using democratic institutions (government failure). However,
this is not to say that the market alone is perfect either. Each
situation must be considered and the costs and benefits must be
weighted. People tend to all too readily jump to the conclusion
that the government should deal with all problems. What really
needs to be done is to compare the government use and market use
and see which is believed to cause the least amount of inefficiency.
Plus, although no immediate market solution can be found doesn't
mean that one can't or won't be found by some clever person. Things
change, (for example technology) and I think that we need to be
able to adapt and be ready to alternate between using the government
and using the market, rather than just all one or the other.