Two benefits of government

In order to judge if government works well or badly, it’s useful to begin by considering why government is needed in the first place. This essay began with the working title three tasks of government, then three functions of government. This choice of words presumed a very active role for elected and selected government officials as public problem-solvers. As I thought about it some more I concluded active intervention is just one side of justification for government. The other side is the mutually beneficient interaction between citizens that good government passively enables.

That’s why I write about the benefits of government. Government officials don’t necessarily need to know and nurture the benefits of their work as they go about their tasks and functions. In fact some benefits of government arise merely from its founding (especially from foundational laws), others from stability. So in principle we don’t have to assume that the government is elected or even approved by the people. The two benefits I present in this essay will in any case be the same, even though their scope would certainly be greater under democratic government. I will in the following refer to the governing authority interchangeably as “the state” or “the government” or “the authorities”.

First benefit: mutual trust

The first benefit of government is that it institutes mutual trust. This benefit is probably the oldest of the three. I would not initially trust a stranger in anything, but I would be encouraged to show some trust if I learn that we both live under the same governmental authority (or that our respective authorities are on good terms with one another). The most basic manifestations of mutual trust are personal safety, property and liberties secured by rules that citizens are expected to obey. But mutual trust has grown much further in modern societies.

For instance, think of the benefits you gain from having an official identity legitimated by the state. How complex would your transactions be with other people, with businesses or government agencies if your identity would every time be questioned? Turning the situation around, how could you trust a stranger claiming to be someone, claiming to represent a respectable business or an agency if you would not have any means to ascertain that the person, business or agency really exist?

A related example of mutual trust is official accreditation. In many transactions we not only need to establish identities, we also need to evaluate credentials. The most relevant individual credentials are likely to be education (e.g. state-sanctioned university vs. a dubious private one) profession (e.g. licensed practitioner vs. amateur) and credit history, but there are also important negative credentials such as criminal records. The credit histories and financial accounts of businesses are also a form of official credential because they are overseen by the authorities.

This brings us to another, particularly important locus of mutual trust: the marketplace. Flea markets might work even without government help, but more complex marketplaces would soon collapse from fraud and deceit if official identities and credentials did not exist. Mutual trust and control are two faces of the same coin. On the one hand great benefits can be gained from instituting markets that extend mutual trust across national borders, even across the world. On the other hand international and global markets require increasingly complex control measures. The larger a market is, the harder it is to say if controls are serving their purpose or not. At some point disadvantages from complexity and ineffective control outweigh the benefits from mutual trust.

Second benefit: shared resources

The second benefit of government is that shared resources are provided and managed. If such resources were to be provided privately there would be unnecessary overlap and waste, or nothing would be done at all.  Scientific knowledge is one example of such a resource. Scientific progress would be slower if all research would be privately funded, because the incentive to publish would be weak. Publicly funded research, on the other hand, is published without restraint so that other researchers don’t have to invent the same wheel. The same logic applies to patents granted by the state, where the exclusive right to utilize an invention for a specific period is exchanged for the requirement that the idea be made public in a patent publication.

Societal infrastructure is another shared resource often best provided by a single producer. It is more sensible to have one authority provide roads, street lights, electricity, sewage disposal etc. than to have several private actors competing against each other. Privatization would lead to double and triple parallel networks (roads, electricity lines, piping), a wasteful outcome for the society in question. Many pieces of service infrastructure such as transport, health care and education are certainly more amenable to partial privatization, but partial state provision is probably good even in these areas.

One of the oldest shared resources is currency, closely linked also to the first benefit of government. The role of government as a manager of shared resources is particularly crucial in this case. Natural resources also require management. Individuals generally lack a broad perspective of the natural resources they use, which leads to prisoner’s dilemmas when they are overused or misused. Such dilemmas can be solved to everyone’s benefit by  mutual agreement, but they require oversight and enforcement to see that everyone abides by the rules. The alternative to state action is no action at all because a single sensible user would reap no benefit from her altruism and foresight if other users think only of their own short-term needs.

Finally, some natural resources such as oil and minerals require equitable distribution schemes to ensure that the benefits don’t go solely to the people with the resources to dig them out.  This is a complex task and one that many states handle very poorly, often because government officials themselves benefit greatly from colluding with the expropriators.

Knowledge in benefits

A few closing observations can be made on the role of knowledge in both benefits. Mutual trust exists when citizens know spheres of social life where government has laid down rules and sanctions which will be enforced. Acting freely within the rules, each individual can rest assured that others will follow the same rules. But citizens don’t need first hand acquaintance with all the legal statutes that enforce mechanisms of mutual trust. In fact only a small part of such statutes will be of direct interest to any one person. Ordinary practical knowledge of how daily affairs are expected to proceed, knowledge disseminated more by imitation and word of mouth than by writing and reading, is sufficient for mutual trust. But the knowledge is in this case originally created by the authorities in the form of laws and bureaucratic rules.

Authorities don’t have to know very much about society to institute mutual trust. Even badly informed laws will promote trust as long as they are enforceable and more or less stable. More important for mutual trust is that citizens need to know about state authority. There will not be much mutual trust in spheres that citizens presume to lie beyond state authority.

For shared resources the situation is reversed. In order to provide and manage such resources sensibly, authorities need useful knowledge of society and of the resources themselves. This knowledge may be provided by academic experts, by departments in the governmental machinery or by interest groups. But the citizens who use these resources don’t need to have any knowledge at all of how society as a whole utilizes them. Mutual trust requires that citizens be well-informed, but shared resources can be used sensibly even by badly informed citizens as long as the authorities are knowledgeable.

In other words, some aspects of government require that the authorities possess knowledge, whereas others require that they create knowledge and disseminate it among the citizens.


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