How and when is it best for government to play a role in the market?

[princess]

The Production Possibility Frontier (PPF) examines the wants of individuals, businesses and governments and resources such as land, labor, capital and entrepreneur.

How and when is it best for government to play a role in the market?

[DoILiveInOz]

I would say never unless there is a negative externality such as many types of pollution.
http://library.thinkquest.org/26026/Econ...d_pol.html
http://en.wikipedia.org/wiki/Externality
http://economics.fundamentalfinance.com/...nality.php

[Bored Goblin]

Here are a few cases:
- Negative and positive externalities (pollution and education)
- natural monopolies (utilities)
- price fixing and tricks to limit competition
- protecting people from themselves (tobacco, alcohol)

[simplicitus]

As you can see from the previous two answers, no two people agree. For some, this is a philosophical issue: they want what's "right" no matter what it does to society or the economy. And "right" means no interference at all.
http://en.wikipedia.org/wiki/Anarcho-capitalism
http://en.wikipedia.org/wiki/Laissez-faire

Others claim the government should stay out in general, but recognize that there is a role for the government in such areas as education. Milton Friedman, author of "Capitalism and Freedom", is the classic example.
http://www.schoolchoices.org/roo/fried1.htm

Then there is the majority of people (as proven by repeated votes) who believe the government should provide a social safety net: pensions, unemployment insurance, food stamps, etc.
http://en.wikipedia.org/wiki/Mixed_economy

Then there are political issues such as civil rights. Should the government have passed civil rights legislation or is it O.K. for private companies, no matter how big, to discriminate? (I have to wonder how many of those opposed to people building mosques are also opposed to government interference in the market?)

And different people and different countries draw the boundary in different places. (Should the government have made the GPS system available to the civilian population? Should the Army Corp of Engineers be dredging rivers, harbors, and canals rather than private industry or the individual states?)

But, when you look at all the answers, please consider:

1. No matter how you look at it, even if you were to get rid of social security, Medicare, etc., just looking at the defense budgets, the government is the single biggest customer in the economy.

Whether you like it or not, there is no way the government is NOT going to play a major role in the economy. So the question is not whether it should, or when it should, but what it should.

2. I have yet to meet anyone, even extreme libertarians, that really and truly want to get rid of all zoning laws. No one wants a garbage dump next door, no matter how clean or odor free it may be.
http://en.wikipedia.org/wiki/NIMBY

So one wonders how people who claim to want no government interference reconcile this fact with their claims. After all, zoning laws are the among the biggest, if not the biggest, interference of the government in the market.
http://en.wikipedia.org/wiki/Zoning

That still leaves a rather wide range of answers, and while it is clear that why I think is the one and only truly right way, ...