政府在市場經濟中的正確角色 2021

政府在市場經濟中的正確角色：以疫情後複蘇為例

約瑟夫·E·斯蒂格利茨 2021

https://doi.org/10.1016/j.jge.2021.100004

摘要

長期、廣泛的COVID-19大流行給公共衛生和經濟複蘇帶來了巨大挑戰。 政府必須在設計和執行經濟政策方麵發揮積極作用，以解決純粹市場力量無法解決的各種問題，例如外部性和風險市場的缺失。 Covid-19 暴露了當前安排的缺陷以及建立更好機構的必要性。 我們還需要更好地理解政府、市場和社會其他機構之間的關係。

一、簡介

COVID-19 大流行造成了不同程度的損害，世界各地的恢複路徑也多種多樣。 遏製疾病傳播和減輕其對公共衛生和經濟不利影響的努力既有成功也有失敗。 一些經濟體已經能夠迅速、成功地遏製病毒的傳播，實現了顯著的複蘇，而另一些經濟體仍在與激增的感染作鬥爭。 為了恢複強勁增長，僅靠市場力量不足以解決當前的各種問題。 各國政府必須加緊填補這一空白，並在複蘇中發揮關鍵作用。 本文旨在探討政府在恢複經濟增長方麵的重要性。

本文分為四個部分。 在第一部分中，我闡述了公共衛生部門麵臨的挑戰、遏製病毒所需的措施以及恢複增長的困難。 在第二部分中，我討論市場力量為何失效，並探討政府幹預至關重要的領域。 在第三部分中，我評估了有關政府在市場經濟中的作用的假設，揭示了經濟學家常常對市場自行解決問題抱有過分的信心。 最後，我回顧了在政府和經濟學領域進行新研究的必要性。

二、後疫情時代經濟複蘇的漫長道路上任務艱巨

2.1. 病情難以控製阻礙康複速度

首先要解決的問題是如何控製疫情本身，這對於經濟的強勁複蘇至關重要。 這需要采取更多預防措施和措施。 一方麵，要規範佩戴口罩，加強檢測和追蹤，保持社交距離，避免聚集，遏製疾病傳播。 我們還應該注重提高高風險環境（例如療養院）的安全性。

另一方麵，在有效治療該疾病方麵，我們也麵臨著挑戰。 由於對針對這種新疾病的療法的有效性仍知之甚少，因此不確定性仍然存在。 盡管目前有一些已獲批準的疫苗，但它們在廣泛接種過程中的整體長期有效性仍有待探索，特別是最近在幾個國家發現的高傳播性新變種。

在美國，雖然由於大規模生產短缺以及分配和注射疫苗方麵的困難，疫苗的推廣最初進展緩慢，但現在已迅速回升，每天注射數百萬劑。1 明顯基於種族 疫苗接種率的差異還導致黑人和西班牙裔社區的疫苗接種率低於白人，鑒於黑人和西班牙裔社區的感染率較高，這一點令人震驚。 此外，一些人不信任醫療保健係統，即使有疫苗也不願接受疫苗。 然而，與一年前相比，美國至少發現自己處於更好的位置，當時人們對這種疾病知之甚少。 更重要的是，拜登總統領導的新政府推出了計劃，呼籲各州和聯邦政府在上任的頭100天內在口罩強製執行、檢測、疫苗接種、治療、醫療等方麵更加協調一致。 此外，通過重新加入世界衛生組織，美國再次與國際社會團結起來，共同抗擊這一流行病及其影響。

由於其持續變異，且傳染性極高，除非世界上每個國家都取得成功，否則新型冠狀病毒肺炎 (COVID-19) 無法得到完全控製。

2.3. 整個社會保護體係沒有為窮人和弱勢群體提供足夠的幫助

美國醫療保健係統內提供護理和治療方麵的巨大不平等和低效率阻礙了疾病傳播的控製，從而阻礙了國家的複蘇。 首先，約9.2%的美國人口（約3000萬人）缺乏醫療保險。 如圖 1 所示，這一比例高於大多數經合組織經濟體的未參保率。與樣本中的大多數國家不同，美國的初級私人保險相對於公共保險所占比例較高。 其次，低收入個人和有色人種更有可能缺乏醫療保險。2越來越多的美國人依賴私人雇主提供的保險，這意味著失業也可能導致保險範圍的喪失——在 疫情期間。

Fig. 1 Source: OECD Health Statistics.

麵對危機時，失業保險的缺乏為經濟提供了薄弱的緩衝。 例如，美國失業三個月後維持收入的比例為57%，低於OECD許多發達經濟體，如圖2所示。美國失業六個月後維持收入的比例降至8%，相比之下，美國失業三個月後維持收入的比例為57%。 25 個月後，經合組織的總量逐漸下降至 30% 左右。

圖2.失業保險的替代率，來源：OECD統計（注：替代率是失業一定月數後維持收入的比例。比率是指沒有子女的單身人士收入占總收入的67%） 平均工資，包括社會救助福利，不包括住房福利。）。

 

Fig. 3. Public Expenditure as a Share of GDP

 

此外，由於帶薪病假規定不足，許多員工生病時無法呆在家裏，這增加了遏製 COVID-19 傳播的難度。 在大流行之前，與其他發達國家相比，美國帶薪休假的覆蓋率相對較低（Heymann 等人，2009 年；經合組織，2020 年）。 為了應對這一流行病，通過了《家庭優先冠狀病毒應對法案》，為受到病毒影響的工人提供兩周帶薪病假，但僅限於某些公共雇主和雇員人數少於 500 人但超過 50 人的私人雇主 雇員，不包括一半以上的工人。 因此，許多受感染的美國人，特別是在無症狀的情況下，仍然繼續工作，部分原因是他們沒有帶薪病假。 這種情況在儲蓄不足、靠工資過活的人中最為普遍。 此外，許多低薪員工是一線工人，他們在封鎖期間必須繼續外出工作。 接觸病毒的高風險使這些工人更加脆弱，特別是那些在運輸、物流、倉儲和食品行業工作的工人。 

2.4. 延遲且設計不當的刺激方案延長了複蘇之路

立法進程緩慢且充滿爭議，加上總統領導力不足，抑製了對該疾病及其經濟後果的強烈反應。 2020 年春季通過的 COVID-19 一攬子計劃的設計和實施都很糟糕，大部分旨在提供救濟的資金並沒有被最需要的人收到。 此外，救助計劃並不是針對持續一年多的如此廣泛的危機而設計的。 州和地方政府麵臨嚴重的預算限製，迫切需要額外的資金。 盡管如此，這些計劃的龐大規模彌補了設計上的缺陷，部分解釋了美國與其他一些發達國家之間經濟衰退程度的差異。 拜登政府的到來代表著一個重大的變化。 這種疾病受到了認真對待； 聽取了專家的意見； 科學得到了應有的回報； 政府能力開始恢複； 開始製定嚴肅的經濟計劃，以提供救濟並解決美國經濟長期存在的缺陷。 1.9萬億美元複蘇計劃的通過導致對美國經濟的預期大幅上調，國際貨幣基金組織預計2021年經濟增長6.4%，使美國能夠在年底超過疫情前的預測。

2.5. 巨大的滯後效應

恢複增長最重要的問題之一是解決 COVID-19 造成的經濟損害，其中一些損害可能是長期的，從而產生滯後效應。 第一個是破產，它往往與人力資本、組織資本和信息資本的損失有關。 例如，當小企業被迫解散並根據《破產法》第 74 章申請破產時，就會發生這些經濟後果。 當疫情結束後，這些破產的公司將無法恢複——它們不僅僅是“未破產”。

滯後效應的第二個例子與對企業資產負債表的影響有關； 資產負債表的惡化削弱了企業投資甚至生產的能力和意願。 違約增加也對銀行資產負債表產生了影響。

第三，由於收入和財富的減少，家庭資產負債表的疲軟導致耐用品支出減少。 家庭和企業資產負債表的惡化以及不完善的風險市場不確定性的增加往往會促使更多的預防性儲蓄，從而削弱總需求。

上述所有因素都阻礙了恢複速度。 如果我們能夠在短時間內（例如六周）控製住疫情，那麽造成的損失就會有限。 然而，一年多來，COVID-19 已經嚴重影響美國的生活，預計這種情況還會持續更長時間。 這意味著更大的損失和更多的恢複障礙。

取決於美國以及世界各地采取的衛生和經濟政策的類型，複蘇之路仍然存在很大的不確定性。 COVID-19 仍有可能持續很長一段時間，而不是作為一種暫時現象消退。 雖然有效疫苗的迅速部署和拜登政府采取的強有力措施為這場痛苦的結束帶來了希望，但疾病的持續變異和大量似乎對獲得疫苗有抵抗力的人是來源 值得關注。

此外，由於帶薪病假規定不足，許多員工生病時無法呆在家裏，這增加了遏製 COVID-19 傳播的難度。 在大流行之前，與其他發達國家相比，美國帶薪休假的覆蓋率相對較低（Heymann 等人，2009 年；經合組織，2020 年）。 為了應對這一流行病，通過了《家庭優先冠狀病毒應對法案》，為受到病毒影響的工人提供兩周帶薪病假，但僅限於某些公共雇主和雇員人數少於 500 人但超過 50 人的私人雇主 雇員，不包括一半以上的工人。 因此，許多受感染的美國人，特別是在無症狀的情況下，仍然繼續工作，部分原因是他們沒有帶薪病假。 這種情況在儲蓄不足、靠工資過活的人中最為普遍。 此外，許多低薪員工是一線工人，他們在封鎖期間必須繼續外出工作。 接觸病毒的高風險使這些工人更加脆弱，特別是那些在運輸、物流、倉儲和食品行業工作的工人。 3

2.4. 延遲且設計不當的刺激方案延長了複蘇之路

立法進程緩慢且充滿爭議，加上總統領導力不足，抑製了對該疾病及其經濟後果的強烈反應。 2020 年春季通過的 COVID-19 一攬子計劃的設計和實施都很糟糕，大部分旨在提供救濟的資金並沒有被最需要的人收到。 此外，救助計劃並不是針對持續一年多的如此廣泛的危機而設計的。 州和地方政府麵臨嚴重的預算限製，迫切需要額外的資金。 盡管如此，這些計劃的龐大規模彌補了設計上的缺陷，部分解釋了美國與其他一些發達國家之間經濟衰退程度的差異。 拜登政府的到來代表著一個重大的變化。 這種疾病受到了認真對待； 聽取了專家的意見； 科學得到了應有的回報； 政府能力開始恢複； 開始製定嚴肅的經濟計劃，以提供救濟並解決美國經濟長期存在的缺陷。 1.9萬億美元複蘇計劃的通過導致對美國經濟的預期大幅上調，國際貨幣基金組織預計2021年經濟增長6.4%，使美國能夠在年底超過疫情前的預測。

2.5. 巨大的滯後效應

恢複增長最重要的問題之一是解決 COVID-19 造成的經濟損害，其中一些損害可能是長期的，從而產生滯後效應。 第一個是破產，它往往與人力資本、組織資本和信息資本的損失有關。 例如，當小企業被迫解散並根據《破產法》第 74 章申請破產時，就會發生這些經濟後果。 當疫情結束後，這些破產的公司將無法恢複——它們不僅僅是“未破產”。

滯後效應的第二個例子與對企業資產負債表的影響有關； 資產負債表的惡化削弱了企業投資甚至生產的能力和意願。 違約增加也對銀行資產負債表產生了影響。

第三，由於收入和財富的減少，家庭資產負債表的疲軟導致耐用品支出減少。 家庭和企業資產負債表的惡化以及不完善的風險市場不確定性的增加往往會促使更多的預防性儲蓄，從而削弱總需求。

上述所有因素都阻礙了恢複速度。 如果我們能夠在短時間內（例如六周）控製住疫情，那麽造成的損失就會有限。 然而，一年多來，COVID-19 已經嚴重影響美國的生活，預計這種情況還會持續更長時間。 這意味著更大的損失和更多的恢複障礙。

取決於美國以及世界各地采取的衛生和經濟政策的類型，複蘇之路仍然存在很大的不確定性。 COVID-19 仍有可能持續很長一段時間，而不是作為一種暫時現象消退。 雖然有效疫苗的迅速部署和拜登政府采取的強有力措施為這場痛苦的結束帶來了希望，但疾病的持續變異和大量似乎對獲得疫苗有抵抗力的人是來源 值得關注。

恢複強勁的經濟增長麵臨著許多任務。 經濟政策應旨在減輕或最大程度地減少損害，並使我們處於更好的複蘇地位。 例如，如果工人能夠在短期和長期內與公司保持聯係，那麽複蘇就會更容易。 這意味著當企業重新啟動時，雇主不會失去公司特定的人力資本。 一些國家在保持低失業率方麵比其他國家更成功，例如新西蘭、德國和大多數歐洲國家。 相比之下，美國的政策設計糟糕、管理不善、成本高昂且相對無效。 同樣，當小企業得不到援助時，它們就會破產，社會將麵臨疫情後創建新企業的任務，這比維持老企業生存要困難得多。 因此，這些早期故障可能會帶來高昂的成本。

3. 為什麽純粹的市場力量不足以恢複經濟增長

幾十年來政府幹預薄弱，導致美國的衛生和經濟係統在長期大流行麵前變得脆弱。 阿羅和德布魯（Arrow and Debreu，1954）建立了一係列市場有效“解決”經濟問題的條件。 然而，這些條件通常不會得到滿足，而且市場總體上運行不佳，因為通常政府幹預可以提高經濟（帕累托）效率。5 在本節中，我們將討論市場失靈的不同方麵。 下一節我們將概述政府應發揮的積極作用，以及一些國家過去公共幹預的經驗。

3.1. 外部性

傳染病的本質造成了無法通過價格體係來應對的外部性。 這意味著，一個人決定去上班或從事任何可能暴露他人的活動，就會給他人帶來成本，而他並沒有為此付出代價。 最好的應對措施是征收針對特定行動的稅，即針對特定互動的稅，但這種稅很難征收。 這就是為什麽我們的公共幹預手段非常不完善，例如封鎖、隔離等來阻止疾病的傳播。 還有一些措施，例如帶薪病假，可以通過減少不利外部性的方式影響行為。 不幸的是，正如前麵提到的，大公司的反對導致很大一部分勞動力沒有帶薪病假。第二種外部性與宏觀經濟有關。 一家企業的破產會影響其他企業，而一家企業的救助也會帶來社會效益。 還有許多其他方麵的行為會引起宏觀經濟外部性，例如過多的外債。

3.2. 缺乏風險市場

與整個大流行期間的行為尤其相關的是風險市場的缺失。6如果有良好的保險市場，個人和企業就能夠購買保險來抵禦疾病的破壞及其經濟後果。 在美國和其他國家，引人注目的事情之一是許多企業認為他們已經購買了保險來應對業務中斷。 企業每年要支付數千美元的保費來防範此類事件。 但這最終是徒勞的，因為保險公司聲稱保單中的細則意味著因 Covid-19 封鎖而造成的業務中斷並未得到承保。

缺乏良好的保險市場也會產生重大的宏觀經濟影響，因為它會導致家庭和企業采取強烈的預防行為，從而減少總需求。

因此，Covid-19暴露了這一關鍵“市場失靈”、不完善的風險市場以及相關市場失靈的重要性——執行合同的困難，包括因語言模糊而產生的困難。

3.3. 對準備災難的企業進行補償

與風險相關的最後一個重要的市場失靈是需要對企業進行隻有在異常事件中才有價值的活動進行補償。 此類活動包括建立口罩、防護裝備、呼吸機等庫存。然而，對於每 10 至 20 年一次的事情進行補償是不存在的。 這就是為什麽解決這些突發事件是公共責任。

4. 政府在疫情後恢複中的適當作用

政府的角色是什麽？ Covid-19 說明了政府可以而且應該發揮的重要作用。 正如我們在第二節中討論的，政府越有效地控製疫情及其經濟後果，持久損害就越小，恢複也就越快。 除了複蘇的公共衛生方麵之外，政府還可以發揮多種作用，特別是在解決市場無法自行解決的問題時。 以下小節更普遍地強調了政府需要更廣泛地發揮的眾多作用中的一些作用。

4.1. 規定

政府首先要發揮的作用是監管。 私營公司有賺錢的動機，但他們常常通過利用他人來實現這一目的。 例如，我們在之前提到的疫情期間保險公司的剝削中就看到了這一點。 政府必須實施監管以防止此類剝削並追求其他社會目標。7 不完善和不對稱的信息、不完全的風險市場以及其他市場失靈意味著，與伴隨監管和其他政府行為的價格幹預相比，價格幹預本身的效果並不好。

4.2. 風險社會化

政府的第二個作用是提供社會保險。 個人麵臨許多私人市場無法承保（或不可承保）的重大風險，例如失業、退休和社會保障。 當存在影響每個人的相關風險時，私人市場尤其會失敗，在這種情況下，政府應充當最後的再保險公司。 同樣，對於係統性風險超出任何保險公司承受能力的宏觀經濟事件，也必須提供社會保險。8而且我們必須考慮交易對手風險對宏觀經濟的影響。

這對政府來說並不是一個新角色，但公共政策似乎對以前吸取的教訓記憶猶新。 例如，1997年亞洲金融危機期間，承保保險的公司破產，導致那些自以為購買了保險的人沒有得到保障。

4.3. 緩解道德風險問題

每當個人獲得保險時，就有可能出現“道德風險”，即他們不會采取必要的行動來減輕道德風險。 這些不利的激勵效應有多大，通常並不清楚。 必須判斷道德風險效應相對於風險緩解價值的重要性。

讓我們看一下美國正在就一項非常具體的計劃進行辯論的例子——失業，這是與該疾病相關的風險之一。 私人市場從不提供失業保險，因此每個社會都依賴公共提供的失業保險。隨著失業保險的加強，可能會有一些不尋找新工作的動機。 問題是這種道德風險有多重要。 失業保險隻是他們正常收入的一小部分，大多數人都知道這隻是暫時的。 他們知道找到一份好工作有多難，因此不會利用失業保險。 他們可能因為害怕病毒而不會去上班，但失業救濟金不會推動他們的決定。 此外，當工作機會很少（如果有的話）時，個人就不會去尋找：缺乏尋找並不是因為失業保險，而是因為缺乏就業機會。

美國國內一直存在爭議，因為最初的失業方案提高了福利，以補償少數隻提供失業救濟金中工資一小部分的州。 為了防止人們挨餓或以其他方式受苦，政府除了正常的失業救濟金外，每周還發放600美元，導致失業金高於工資。 然而，一項跨州實證研究發現，沒有證據支持上述失業保險阻礙了人們工作的論點。 9 盡管自認為所向無敵的年輕人不斷冒險，但他們這樣做的程度並不受他們的生活水平影響。 保險。 相反，謹慎的老年人無論保險是什麽樣的，都不會冒險。 總體而言，保險具有二階效應。

4.4. 美國經濟史和東亞經濟增長對政府作用的啟示

第一個教訓是政府必須介入解決市場失靈的問題，例如： 與較大的外部性有關。 新機構的創建帶來了社會變革，從而產生了巨大的社會外部性。 阿羅（Arrow，1962a，b）和斯蒂格利茨（Stiglitz，1987）也表明，市場在創新資源配置方麵的效率低下，無論是在指導創新的方式和程度方麵。10在過去半個世紀中經濟快速增長的國家， 包括東亞國家在內的國家通常比那些增長失敗的國家更好地應對市場失靈。

第二個教訓是，政府對市場發展的整體支持極其重要。 很難找出哪個經濟體在沒有政府強有力幹預的情況下取得了成功的發展。 19世紀和20世紀初期的美國經濟增長都是如此，二戰結束後東亞和中國經濟的快速增長也是如此。

19世紀的美國是農業經濟體。 政府支持農業推廣服務，以提高農業生產力，並將技術帶給全國農民。 大蕭條之後，又是政府推動了從農業經濟向製造業經濟的結構轉型。 二戰的巨額開支也促進了美國經濟的轉型。 二戰及艾森豪威爾執政期間的巨額研究支出，特別是美國研究型大學的支持，為美國在許多領域的技術領先地位發揮了重要作用。 美國生活水平的提高是基於公共資助的基礎研究； 私營部門本身根本無法提供足夠的支持。

政府也在東亞奇跡中發揮了重要作用。11 對於成功的東亞經濟體來說，關鍵不是移動技術前沿，而是從其他地方引進知識並迎頭趕上。 僅靠市場無法實現這一目標。 當我擔任世界銀行首席經濟學家時，我們認為發展中國家與發達國家的區別在於知識差距，而不僅僅是資源差距。 市場努力維持這種知識差距，而政府則需要克服這些差距。 12

這一觀點已得到越來越多的認可。 在瑪麗安娜·馬祖卡托（Mariana Mazzucato）的《創業國家》一書中，她強調了政府在促進創新方麵的作用。 這是我們應該從成功經濟體中汲取的教訓之一——隻有通過國家行動才能（部分）克服市場失靈，從而實現持續增長。 就東亞奇跡而言，這就催生了“發展型國家”的概念。 非洲的一些國家已經援引了這一想法，並為它們的發展成功做出了貢獻。Mazzucato，2013

5. 政府與經濟學係統研究的案例

忽視政府的作用就等於忽視經濟的很大一部分——在某些地方，公共部門占經濟的 30%，而在另一些地方，這一比例高達 60%。標記政府和經濟學領域的更通用方法是“政府和集體行動經濟學”，因為集體行動可以在許多不同層麵（國家、地區、省、地方）並通過各種媒介（政府、工會）進行。 、民間社會、非政府組織）。

5.1. 經濟學家對政府在市場經濟中的作用做出具體假設常常是錯誤的

許多參與政策製定的經濟學家對市場解決問題的能力過於自信。 他們認識到外部性和不完善的保險市場，並且能夠認識到巨大的風險必須社會化，因為沒有保險公司有能力承擔這些風險。 然而，當談到政府政策時，許多經濟學家很容易忘記這些事實，並開始擁護市場的優點。 一些人認為，即使市場不能解決所有問題，依靠市場也比求助於政府更好。 當然，很明顯政府並不總是有效。 任何在美國生活過或觀察過特朗普政府統治下的國家的人都了解政府失敗的概念。 然而，如果我們放眼世界，最成功的國家都有成功的政府。 例如，基於人們對政府的信心、對科學的信任以及社會團結，新西蘭在遏製疫情方麵取得了出色的成績。

教訓很簡單：我們需要努力在公共和私營部門建立更好的機構。 一般來說，經濟學家傾向於對亞當·斯密感到神秘，並將他誤解為不受約束的市場的倡導者。 但在斯密的《國富本質和原因探究》一書中，他用了一頁又一頁的篇幅討論政府確保市場運轉的必要性。 他看不見的手隻是這本書中很小的一部分。 他不僅對市場效率失靈極其敏感，而且對市場在防範剝削方麵的不足也極其敏感。 史密斯認為，政府需要防止對工人和消費者的剝削。 政府在提供教育方麵也發揮著重要作用。Smith，1976

5.2. 社會科學、政治學和公共選擇

經濟學不能與政治學和其他社會科學分開。 政治學是對政府和我們集體決策方式的研究。 政府製定支撐經濟的規則和法規。 它設定了調節宏觀經濟的利率以及稅收和支出水平。 它提供經濟所依賴的基礎設施、教育和基礎研究。 受詹姆斯·布坎南影響的公共選擇是經濟學的一個分支，試圖解決公共決策者的激勵問題。 然而，這個領域並沒有想象中那麽成功，因為它建立在每個人都是自私和渴望權力的信念之上。

然而，大量研究表明，人們並非完全自私。 我們在家庭中看到了這一點，我們希望以不完全自私的方式彼此互動。 我們在我們的國家和世界上也看到了這一點，這裏到處都是奉獻一生來幫助他人的人。 因此，公共選擇理論體現了一種特別狹隘的人性觀。 近年來，我與卡拉·霍夫（Karla Hoff）（Hoff 和 Stiglitz，2016）等人一起進行的研究之一是發展一種內生偏好和行為的理論。 我們提出的問題如下：決定人們利他行為與自私行為程度的因素是什麽？

5.3. 研究政府和經濟學需要新的方法

研究政府和經濟學，應該運用理論研究、案例研究、曆史研究等多種方法。

首先，我們必須為政府和經濟學研究奠定堅實的理論基礎。 我們需要關於個人、社會及其相互作用的本質的理論基礎。 最近許多流行的經濟學著作都采取了特別狹隘的觀點。 它還關注假設經濟（幾乎）始終處於均衡狀態的情況。 例如，標準宏觀經濟模型之一的動態隨機一般均衡模型（DSGE）始終假設均衡，即使在不均衡期間出現各種有趣的情況，例如 2008 年和 2020 年的意外衝擊和金融危機。

其次，必須謹慎做出正確的假設。 我們總是必須簡化。 但做出錯誤的簡化會導致錯誤的政策等。 我們之前的討論提供了多個例子。 例如，在 Covid-19 中，企業和高收入個人之間的一階效應是預防行為的增加，這不是標準 DSGE 模型的一部分。

花費全部精力解決複雜的跨期替代問題會分散人們對其他問題的注意力，例如對風險變化的反應。 同樣，今天，在考慮氣候變化時，標準經濟模型更多地關注跨期影響，而不是其帶來的巨大風險。

第三，要合理運用其他學科。 經濟學家應該更多地借鑒社會學、政治學和心理學等其他學科的研究。 一個例子是埃莉諾·奧斯特羅姆 (Elinor Ostrom) 作為一名政治學家對經濟學的開創性貢獻。 15 右翼經濟學家在管理與共同池問題（例如與漁業相關）相關的當地外部性時，先前的假設始終是根據科斯分配財產權 定理。 然而，Ostrom（1990）確定了一種替代方案——監管框架——以防止過度捕撈，這在許多發展中國家行之有效。 此外，她還指出，產權解決方案具有顯著的缺點，包括交易成本高和容易導致不平等。

六，結論

除了提供財政刺激方案外，政府還需要采取一係列其他方式來填補市場空白，以促進強勁的經濟複蘇。 僅舉幾例，除了確保充分就業之外，這些措施還包括調節外部性、促進強有力的競爭、防止剝削、限製市場力量和提供社會保護。 在應對 COVID-19 最成功的國家中，政府有效地發揮了這些作用。

這場大流行病暴露了迫切需要進行改革，以建立良好的治理，解決政府和市場失靈問題，並改善機構。 不幸的是，在包括美國在內的一些西方國家，人們普遍存在一種毫無根據的信念，即市場會自行解決一切問題。 然而，富有和強大的市場參與者往往會反對對整個社會最有利的解決方案，因為這意味著他們必須放棄一些金錢和權力，因此需要政府幹預。 但這些力量將試圖阻止政府發揮其應有的作用。 此外，一些政府腐敗。 正如特朗普政府所見，行善的力量也賦予了做壞事的能力。 因此，我們必須努力糾正市場失靈和政府失靈。 創建良好的製度是一場永無休止的鬥爭。

這就是為什麽對政府和經濟學的研究很重要。 隻有通過研究這些機構並找出它們何時成功、何時失敗，我們才能建立更好的機構。 我們永遠不會創建完美的機構，但我相信我們可以在公共和私營部門創建更好的機構，並為它們製定更好的框架，以便它們共同合作並與其他人（包括民間社會和非政府組織）合作。

The proper role of government in the market economy: The case of the post-COVID recovery

Joseph E. Stiglitz

https://doi.org/10.1016/j.jge.2021.100004Get rights and content

 

Abstract

The long-lasting, widespread COVID-19 pandemic has imposed huge challenges on public health as well as economic recovery. Governments must take an active role in designing and enforcing economic policies to address various problems that pure market forces cannot, such as externalities and the absence of risk markets. Covid-19 has exposed deficiencies in current arrangements and the need to develop better institutions. We also need to develop better understandings of the relationship between government, the market, and other institutions within society.

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1. Introduction

The COVID-19 pandemic has caused varying degrees of damage followed by diverse paths to recovery around the world. There have been both successes and failures in the effort to contain the spread of the disease and mitigate its adverse effects on public health and the economy. Some economies have been able to swiftly and successfully contain the spread of the virus, allowing for remarkable recoveries, while others are still struggling with surging infections. In order to restore robust growth, market forces alone are inadequate to resolve the various issues at hand. Governments must step up to fill this void and play a key role in recovery. This paper aims to examine the importance of government in restoring economic growth.

This paper is divided into four sections. In the first section, I lay out the challenges faced by the public health sector, the measures required to contain the virus, and the difficulties in restoring growth. In the second section, I discuss why market forces fail, and explore the areas where government intervention is crucial. In the third section, I evaluate assumptions about the role of government in the market economy, revealing that economists often place an undue amount of confidence in the market to resolve problems on its own. Finally, I review the necessity of a new research in the fields of government and economics.

2. Mounting tasks in the lengthy path to Post-COVID economic recovery

2.1. Difficulty controlling the disease impedes the speed of recovery

The first issue to address is how to control the pandemic itself, which is crucial for a robust recovery. This requires more precautions and measures to be enforced. On one hand, we must normalize mask-wearing, enhance testing and tracing, maintain social distancing, and avoid congregation to contain the spread of the disease. We should also focus on increasing safety in high-risk environments, such as nursing homes.

On the other hand, we also have challenges to address when it comes to the effective treatment of the disease. Uncertainty remains since there is still little knowledge about the effectiveness of the therapeutics being used against this new disease. Although there are currently a few approved vaccines, their overall long-term effectiveness are still to be explored during widespread inoculation, especially concerning recently identified highly transmissible new variants in several countries.

In the US, while the vaccine roll-out was initially sluggish due to a shortage of mass production and difficulties in distributing and administering the shots, it has now picked up quickly, with millions of shots being administered every day.1 Significant race-based disparities in vaccine take-up have also resulted in lower vaccination rates in Black and Hispanic communities compared to the white population, which is alarming given higher infection rates in the Black and Hispanic communities. Furthermore, some people distrust the healthcare system and are hesitant to receive the vaccine even when it is available. However, the US at least finds itself in a better position compared to a year ago, when there was little knowledge about the disease. More importantly, the new administration under President Biden has rolled out plans calling for more coordinated efforts across state and federal governments in mask-mandating, testing, vaccinations, treatments, medical care, etc. during its first 100 days. Moreover, in rejoining the World Health Organization, the US has once more united with the international community in efforts to combat the pandemic and its fallout.

Due to its continuing to mutate, and given the high level of contagiousness, COVID-19 cannot be fully controlled until every nation in the world succeeds.

2.2. Huge social costs associated with the pandemic

After a yearlong battle with the pandemic, the death toll of COVID-19 in the US surpassed 520,000 by early March—a staggering figure, comparable to the American lives lost in World War II, Korea, and Vietnam combined. With over twenty-eight million reported cases worldwide, COVID-19 amounts to the largest public health threat since the 1918 influenza pandemic. Although US cases have plummeted in recent weeks, the daily number of new infections is still above 50,000, partly due to the recently identified new variants. With a one-year decrease in life expectancy during the first half of 2020 reported by the Centers for Disease Control and Prevention, this pandemic may well have a long-term impact on public health.

Besides the damage caused to public health, the virus has had an equally significant economic impact on households and businesses across the nation. The US yearly GDP fell by 3.5% in 2020—the worst drop since World War II, though markedly less than that in Europe. After reaching a historical peak of 14.7% last April, the unemployment rate gradually declined to 6.2% in February 2021, which is still well above the 3.5% rate in February 2020, showing long-lasting stagnation in the labor market recovery. Moreover, these “headline” unemployment numbers mask the true depth of the weaknesses in the labor market, reflected more accurately in reductions in the level of employment.

2.3. The overall system of social protection does not provide sufficient help for the poor and vulnerable

The huge inequities and inefficiencies in the provision of care and treatment within the US healthcare system have impeded controlling the spread of the disease, and thereby the nation's recovery. First, about 9.2% of the American population (about 30 million people) lacks health insurance. This is a higher uninsured rate than most OECD economies, as shown in Fig. 1. Unlike most countries in the sample, primary private coverage consists of a higher proportion relative to public coverage in the United States. Second, low-income individuals and people of color are more likely to lack health insurance coverage.2 The dependence of more Americans on private employer-provided insurance means that the loss of jobs can also lead to a loss of insurance coverage—especially troublesome in the midst of pandemic.

Fig. 1 Source: OECD Health Statistics.

 The absence of unemployment insurance provides a weak buffer for the economy in the face of a crisis. For example, the proportion of income maintained after three months of unemployment in the US is 57%, lower than many developed economies in the OECD, as shown in Fig. 2. The US rate declines to 8% after six months of unemployment, compared to a gradual drop to around 30% after 25 months for the OECD aggregates.

 

Fig. 2. Replacement rate in unemployment insurance， Source: OECD Statistics (Note: The replacement rate is the proportion of income that is maintained after a certain number of months of unemployment. Rates refer to a single person without children earning 67% of the average wage, including social assistance benefits and excluding housing benefits.).

Fig. 3. Public Expenditure as a Share of GDP

Source: IMF (Note: Economies listed are G-20 countries excluding the European Union).

Furthermore, due to the insufficient provision of paid sick leave, many employees cannot afford to stay home when they are ill, increasing difficulties in containing the spread of COVID-19. Before the pandemic, the United States had relatively low coverage of paid leave compared to other developed nations (Heymann et al., 2009 and OECD, 2020). In response to the pandemic, the Families First Coronavirus Response Act was passed to offer two weeks of paid sick leave for workers on whom the virus had an impact, but only for certain public employers and private employers with fewer than 500 employees but more than 50 employees, excluding more than half of all workers. Thus, many infected Americans, especially when asymptomatic, have continued to work, partly because they do not have paid sick leave. This situation is most prevalent in people with a shortage of savings who are living paycheck to paycheck. Moreover, many low-wage employees are frontline workers who must continue to work outside of their homes during lockdowns. The high risk of exposure to the virus makes these workers more vulnerable, especially those who work in transportation, logistics, warehousing, and food industries.3

2.4. A delayed and ill-designed stimulus package has prolonged the path to recovery

A slow and contentious legislative process with inadequate presidential leadership inhibited strong responses both to the disease and its economic aftermath. The COVID-19 packages passed in Spring 2020 were poorly designed and implemented, and much of the money meant to bring relief was not received by those most in need. Furthermore, the relief package was not designed for such an extensive crisis lasting over one year. State and local governments face severe budgetary constraints and are in dire need of additional funding. Still, the massive size of the programs made up for the deficiencies in design, partly accounting for the difference in the magnitude of the downturn between the US and some other advanced countries. The arrival of the Biden administration represented a substantial change. The disease was taken seriously; experts were listened to; science was given its due; competency in government began to be restored; and serious economic packages both to provide relief and to address longstanding deficiencies in the American economy began to be formulated. The passage of the $1.9 trillion Recovery Package has led to substantial upward revisions in expectations for the US economy, with the IMF projecting 6.4% growth for 2021, enabling America to exceed pre-pandemic projections by the end of the year.

2.5. Enormous hysteresis effects

One of the most important issues for restoring growth is addressing the economic damage of COVID-19, some of which could be long term, giving rise to hysteresis effects. The first of these is bankruptcy, which tends to be associated with a loss of human capital, organizational capital, and informational capital. These economic consequences occur, for instance, when small businesses are forced to dissolve and file for Chapter 74 bankruptcy. Such bankrupt firms will not be able to recover when the pandemic is over—they don't just become “unbankrupt.”

The second example of hysteresis effects are related to the impacts on corporate balance sheets; the deterioration in their balance sheets undermines the ability and willingness of corporations to make investments or even produce. Increases in defaults have also had an impact on bank balance sheets.

Third, the weakening of household balance sheets has led to less spending on durables due to decreases in income and wealth. The worsening of household and firm balance sheets and the increase in uncertainty in imperfect risk markets tends to prompt more precautionary savings, thus weakening aggregate demand.

All of the factors listed above have impeded the speed of recovery. The damage would have been limited if we had been able to bring the pandemic under control in a short period—say, six weeks. Yet, COVID-19 has been severely affecting life in the United States for over a year now, and it is expected to go on for even longer. This means greater damages and more obstacles to recovery.

Depending on the kinds of health and economic policies deployed not only in the United States, but also around the world, there is still much uncertainty regarding the path to recovery. It is still a possibility that COVID-19 may last for a very long time to come rather than subsiding as a temporary phenomenon. While the rapid deployment of effective vaccines and the strong measures taken by the Biden administration have provided hope that the end of this travail is in sight, the continued mutation of the disease and the large numbers of individuals who seem resistant to obtaining the vaccine are sources of concern.

There are many tasks ahead to restore robust economic growth. Economic policies should be aimed at mitigating or minimizing damage and putting us in a better position for recovery. For example, recovery will be easier if workers have been able to keep connections with their firms, both in the short-term and long-term. That means when business restarts, employers will not have lost their firm-specific human capital. Some countries have been more successful than others at keeping unemployment low, such as New Zealand, Germany, and most European countries. In contrast, the United States’ policy has been badly designed, poorly administered, costly, and relatively ineffective. Similarly, when small businesses are denied assistance, they go bankrupt, and society will be faced with the task of creating new businesses after the pandemic, which is much more difficult than keeping old businesses alive. Hence, there may be high costs associated with those early failures.

3. Why pure market forces are inadequate to restore economic growth

Decades of weak government intervention have left the health and economic systems of the United States fragile in the face of a prolonged pandemic. Arrow and Debreu (1954) established a set of conditions under which markets efficiently “solve” economic problems. However, those conditions are not typically satisfied and markets do not work well in general, in the sense that there are typically government interventions that can enhance economic (Pareto) efficiency.5 In this section, we will discuss different aspects of the failure of market forces, and in the subsequent section we will outline the active roles that governments should take, and the past experiences of public intervention in several countries.

3.1. Externalities

The very nature of contagious disease creates an externality that is impossible to deal with through the price system. This means that one person's decision to go to work or do any activity that might expose someone else imposes a cost on others that he does not pay for. The best response would be to have action-specific taxes, i.e. interaction-specific taxes, which are difficult to impose. That is why we instead have very imperfect instruments of public intervention such as lockdowns, quarantines, and so forth to stop the spread of the disease. There are also measures, such as paid sick leave, which affect behavior in ways that reduce adverse externalities. Unfortunately, as previously mentioned opposition from big companies resulted in large fractions of the workforce not having paid sick leave. A second type of externality is related to the macroeconomy. The bankruptcy of one firm affects others, while the rescue of one firm has social benefits as well. There are many other aspects of behavior that give rise to macroeconomic externalities, such as excessive foreign denominated debt.

3.2. Absence of the market for risk

Particularly relevant to behavior throughout the pandemic is the absence of risk markets.6 If there were good insurance markets, individuals and businesses would have been able to purchase insurance against the ravages of the disease and its economic consequences. One of the striking things in the United States and other countries is that many businesses thought they had bought insurance to cover business interruption. Businesses paid thousands of dollars of premiums every year to guard against an event just like this. But this turned out to be in vain, as the insurance companies claimed that fine print in the policies meant that the business interruption resulting from the Covid-19 lockdown was not covered.

The absence of good insurance markets also has significant macroeconomic implications, as it leads to strong precautionary behavior by households and firms, which reduces aggregate demand.

Thus Covid-19 has exposed the importance of this key “market failure,” imperfect risk markets, as well as related market failures—the difficulties of enforcing contracts, including those that arise from the ambiguity of language.

3.3. Compensation for firms in preparation for disaster

The last important market failure associated with risk is the need to compensate firms for undertaking activities that will only be of value in unusual events. Such activities include building stockpiles of masks, protective gear, ventilators, etc. However, compensation for something that occurs once every 10 to 20 years does not exist. This is why it is a public responsibility to address these contingencies.

4. The proper role of government in post-COVID recovery

What are the roles of government? Covid-19 has illustrated the important roles that government can and should play. As we discussed in Section 2, the more effectively the government can control the pandemic and its economic aftermath, the smaller the lasting damages will be and the sooner recovery will take place. Beyond the public health aspects of recovery, there are multiple roles the government can fill, especially when it comes to fixing problems that the market cannot resolve on its own. The following subsections highlight more generally some of the many roles that government needs to play more generally.

4.1. Regulation

The first role the government must play is regulation. Private companies have an incentive to make money, but they often accomplish this by taking advantage of others. For example, we have seen this in the previously mentioned exploitation by insurance companies during the pandemic. Governments must impose regulations to prevent such exploitation and pursue other social goals.7 Imperfect and asymmetric information, incomplete risks markets, and other market failures imply that price interventions by themselves do not work well compared to price interventions accompanied by regulation and other government actions.

4.2. Socialization of risks

A second role of the government is to provide social insurance. Individuals face many significant risks that are not insured (or insurable) by private markets, such as unemployment, retirement, and social security. Private markets especially fail when there are correlated risks that affect everyone, and in such circumstances the government should act as a reinsurance company of last resort. So too for macroeconomic events where systemic risk is beyond the capacity of any insurance company, social insurance must be provided.8 And we must consider the macroeconomic implications of counterparty risk.

This is not a new role for the government, but public policy seems to have a short memory of previously learned lessons. For example, companies writing insurance went bankrupt during the 1997 Asian financial crisis, with the consequence that those who thought they had purchased insurance were not covered.

4.3. Mitigating the moral hazard problem

Whenever individuals obtain insurance, there is the possibility of “moral hazard,” that they will not take the action required to mitigate the moral hazard. How significant these adverse incentive effects is often not clear. A judgment must be made about how important the moral hazard effects are relative to the value of risk mitigation.

Let us look at one example that is being debated in the United States in terms of a very specific program—unemployment, one of the risks associated with the disease. Private markets never provide unemployment insurance, and therefore every society relies on publicly provided unemployment insurance. With stronger unemployment insurance, there may be some incentive not to search for a new job. The question is how important such a moral hazard is. Unemployment insurance is a fraction of their normal income and most individuals know that it is only temporary. Knowing how hard it is to get a good job, they are not going to take advantage of unemployment insurance. They may not go to work because they're afraid of the virus, but the unemployment benefits are not going to drive their decision. Moreover, when there are few if any jobs available, individuals will not search: the lack of searching is not because of unemployment insurance, but because of the absence of employment opportunities.

There has been controversy in the United States because the original unemployment package raised benefits to compensate for a few states that provided only a small fraction of wages in unemployment benefits. To prevent people from going hungry or suffering in other ways, the government granted $600 per week in addition to normal unemployment benefits, resulting in higher unemployment pay than wages. However, a cross-state empirical study found no evidence supporting the argument that the above unemployment insurance discouraged people from working.9 Although young people who believe they are invincible continue to take risks, the extent to which they do this is not affected by their insurance. Conversely, old people who are cautious do not take risks no matter what their insurance is like. Overall, insurance has a second-order effect.

4.4. Lessons on the role of government from US economic history and East Asian economic growth

The first lesson is that the government must step in to solve problems of market failures, e.g. associated with large externalities. The creation of new institutions brings societal change, which generate large societal externalities. Arrow (1962a, b) and Stiglitz (1987) show too that markets are inefficient in the allocation of resources to innovation in both how and how much they direct that innovation.10 The countries that have had rapid economic growth over the past half century, including those in East Asia, have typically dealt with market failures better than those countries that have failed to grow.

The second lesson is that integral support from the government for market development is extremely important. It is hard to identify any economy that has achieved successful development in the absence of strong government intervention. This was the case for US economic growth in the 19th and early 20th centuries as well as in the rapid economic growth in East Asia and China since the end of World War II.

In the 19th century, the United States was an agricultural economy. The government supported agricultural extension services to boost productivity in agriculture and bring technology to farmers across the country. It was again the government that facilitated the structural transformation from an agricultural economy to a manufacturing economy after the Great Depression. The massive expenditures for World War II also facilitated the transformation of the US economy. The huge research expenditures in World War II and afterward during the Eisenhower administration, especially the support of US research universities, were instrumental in providing the US with its technological leadership in many areas. The improvement of the standard of living in the US has been based upon publicly funded basic research; the private sector simply would not have provided adequate support on its own.

Government has also played an important role in the East Asian Miracle.11 For successful East Asian economies, the key has been not to move the technology frontier, but to bring in knowledge from elsewhere and catch up. Markets alone cannot achieve this goal. When I was chief economist at the World Bank, we argued that what separated developing from developed countries was the gap in knowledge, not just the gap in resources. Markets work to maintain such knowledge gaps, and government is needed to overcome them.12

This view has been increasingly recognized. In Mariana Mazzucato's book, The Entrepreneurial State, she emphasizes the role of the government in promoting innovation. This is among the lessons we should learn from successful economies—that it is only through state action that market failures can be (partially) overcome to achieve sustained growth. In the case of the East Asian Miracle, this gave birth to the concept of “the developmental state.” A few countries in Africa have invoked this idea, and it has contributed to their successes in development.Mazzucato, 2013

5. The case for systemic studies of government and economics

To ignore the role of government is to ignore a very large fraction of the economy—in some places the public sector makes up 30% of the economy, while in others it comprises up to 60%.13 A more general way to label the field of government and economics is “economics of government and collective action” since collective action can take place at many different levels (national, regional, provincial, local) and through a variety of mediums (government, unions, civil society, NGOs).

5.1. Economists are often wrong in making specific assumptions about the role of the government in the market economy

Many economists involved in policymaking are overly confident in the ability of the market to resolve problems. They recognize externalities and imperfect insurance markets, and they are able to realize that large risks must be socialized because no insurance company is capable of bearing them. However, when it comes to government policy many economists are prone to forget these truths and start championing the virtues of the market. Some believe that markets, even if they fail to solve all problems, it is better to rely on them than to turn to government. Of course, it is clear that governments don't always work. Anyone who has lived in the US or watched the country under the Trump administration understands the concept of government failure. And yet, if we look across the world, the most successful countries all have successful governments. New Zealand, for example, has done a fantastic job containing the pandemic, based on people's confidence in government, trust in science, and their social solidarity.

The lesson is simple: we need to work to create better institutions in both the public and private sector. In general, economists tend to mystify Adam Smith and misinterpret him as an advocate of unfettered markets. But in his book An Inquiry into the Nature and Causes of the Wealth of Nations, Smith spends page after page discussing the necessity of government to make sure the market works. His invisible hand is just a very small part of the book. He was extraordinarily sensitive not only to market failures in efficiency, but also to the inadequacy of markets in guarding against exploitation. Smith argued that government was needed to prevent the exploitation of workers and consumers. The government had an important role too in providing for education.Smith, 1976

5.2. Social sciences, political science, and public choice

Economics cannot be separated from political science and other social sciences. Political science is the study of government and the way we make decisions collectively. The government sets the rules and regulations that underpin the economy. It sets the interest rates and levels of taxes and expenditures that regulate the macroeconomy. It provides the infrastructure, the education, the basic research on which the economy relies. Public choice, influenced by James Buchanan, is a branch of economics that tries to address the incentives of public decision-makers. However, this field has been less successful than hoped because it is founded on the belief that everyone is selfish and power-hungry.

However, there is a great deal of research to show that people are not utterly selfish. We see this within our families, where we hope to interact with one another in ways that are not utterly selfish. We also see this within our country and the world, which is full of people who have devoted their lives to helping others. Thus, public choice theory embodies a particularly narrow view of human nature. One of my own strands of research in recent years that I have done with Karla Hoff (Hoff and Stiglitz, 2016) and others is to develop a theory of endogenous preferences and behavior. Among the questions we have asked is the following: what are the factors that determine the extent to which people act in an altruistic way versus the extent to which they act selfishly?

5.3. The need for new methodologies to study government and economics

To study government and economics, we should deploy a wide variety of techniques including theoretical research, case studies, and historical studies.

First, we must form a strong theoretical foundation to inform studies in government and economics. We need theoretical foundations regarding the nature of the individual, society, and their interaction. Much of the fashionable recent work in economics has taken a particularly narrow view. It has also focused on situations where the economy is assumed to be (almost) always in equilibrium. For example, dynamic stochastic general equilibrium models (DSGE), one of the standard macroeconomic models, always assume equilibrium even though every interesting situation occurs during disequilibrium, such as the unanticipated shocks and financial crises of 2008 and 2020.14

Second, care has to be taken in making the right assumptions. We always have to simplify. But making the wrong simplifications will, for instance, lead to the wrong policies. Our earlier discussion has provided multiple examples. For instance, in Covid-19, the first-order effect among firms and upper income individuals was an increase in precautionary behavior, which is not part of the standard DSGE model.

Spending all one's energy solving complex problems of intertemporal substitution takes away attention from other problems, such as the responses to changes in risk. Similarly, today, in thinking about climate change, the standard economic models focus more on the intertemporal effects than on the overwhelming risks that it poses.

Third, we must properly utilize other disciplines. Economists should draw more upon research from other disciplines such as sociology, political science, and psychology. One example is Elinor Ostrom's seminal contribution to economics as a political scientist.15 The prior presumption among right-wing economists for managing local externalities associated with the common pool problem (such as associated with fisheries) was always to assign property rights according to the Coase Theorem. However, Ostrom (1990) identifies an alternative– regulatory frameworks– to prevent overfishing which have worked well in many developing countries. Furthermore, she showed that the property rights solution had significant disadvantages including high transaction costs and the tendency to lead to inequality.

6. Conclusion

In addition to the provision of a fiscal stimulus package, there is a long list of other ways in which the government is needed to fill the gaps of the market in facilitating a robust economic recovery. To name a few, beyond ensuring full employment, these include, regulating externalities, promoting robust competition, guarding against exploitation, limiting market power, and providing social protection. In the countries with the most successful COVID-19 responses, government has played these roles effectively.

The pandemic has laid bare the dire need for reforms to create good governance, addressing both government and market failures, and improve institutions. Unfortunately, in some Western countries, including the United States, there is a pervasive and unfounded belief that the market will solve everything on its own. However, wealthy and powerful market players tend to work against solutions that are best for society as a whole when it means they must relinquish some of their money and authority, hence the need for government intervention. But those same forces will try to impede the government undertaking the roles which it should play. Moreover, some governments are corrupt. The power to do good also enables the capability to do bad, as seen in the Trump administration. Thus, we must work to correct market failures and government failures. It is a never-ending struggle to create good institutions.

That is why research on government and economics is important. It is only by studying these institutions and finding out when they succeed and when they fail that we can move toward building better institutions. We are never going to create perfect institutions, but I believe we can create better institutions both in the public and private sector, and develop better frameworks for them to work together and with others, including civil society and NGO's.
 

1

According to the Centers for Disease Control and Prevention (CDC), the share of total population having received 1 or more doses of vaccine, and both doses, are 17.7% and 9.2% respectively by March 7, 2021.

2

According to the 2019 National Health Interview Survey for adults aged 18-64, 25.8% of those categorized as poor (with income less than 100% of the Federal Poverty Level) are without health insurance, compared to 9% for those not categorized as poor (with income of 200% FPL or greater). Additionally, 29.7% of the Hispanic population and 14.7% of the non-Hispanic Black population are uninsured, compared to 10.5% for non-Hispanic white individuals. Artiga et al. (2020) find that under the Affordable Care Act between 2010 and 2018, Black Americans were 1.5 times more likely to lack insurance than white Americans, and the uninsured rate of Hispanic people was 2.5 times higher than that of whites.

3

See for example, Berube and Bateman (2020) and Tomaskovic-Devey et al. (2020).

4

Chapter 7 is an option for corporations and limited liability companies going out of business for help facilitate an orderly liquidation.

5

As discussed in Stiglitz (1993), these conditions are “extremely special and empirically irrelevant”. A large amount of literature shows that these conditions are essentially the only conditions under which markets are efficient. Greenwald and Stiglitz (1986) illustrate that when markets are incomplete or there is imperfect information, markets are not constrained Pareto efficient.

6

Rothschild and Stiglitz (1976) characterize insurance market equilibrium under adverse selection and show that competitive equilibrium may not exist. Stiglitz and Yun (2013) study how the presence of moral hazard and adverse selection affect the optimal and equilibrium insurance contracts and discuss the role of the market and the government in implementing optimal allocation.

7

See Stiglitz (2009) for further discussions on the rational for government intervention as well as the types and instruments of regulation.

8

Stiglitz and Yun (2014) offer an explorative design of a social insurance program, income contingent loans, which effectively provide interstate and intertemporal smoothing with minimal adverse effects on incentives.

9

See Bartik et al. (2020), Finamor and Scott (2021), and Marinescu et al. (2020).

10

Innovation is inherently risky, marked by imperfect information and incomplete insurance markets. As a public good, knowledge cannot be supplied efficiently by private markets.

11

Stiglitz (2016) provides a detailed review of the growth processes in these economies, where the state played a catalytic and a regulatory role, at the same time acknowledging the importance of markets. These economies depart from the Washington Consensus policies, which called for a small state, limited government activism, and paid no attention to inequality or social cohesion.

12

There is a potential role for the government since markets are not efficient in general when technology is endogenous. Policies aimed at improving the static allocation of resources often fail when promoting learning, advancing knowledge, and closing the knowledge gap within a country, as well as the gap between developing and developed economies.

13

There are different measures of the size of the public sector. Fig. 3 shows public expenditure as a share of GDP for G-20 countries, which vary from 16% for Indonesia to 56% for France in 2019.

14

Stiglitz (2018) provides a detailed assessment of the problematic micro foundations of DSGE models in incorporating aspects of economic behavior.

15

Ostrom is one of the few political scientists and the first woman to win the Nobel Prize in economics.