o Behind these judgements were a pessimism about the markets ability to deliver

O behind these judgements were a pessimism about the

This preview shows page 31 - 33 out of 39 pages.

after World War II saw a major role for the state in the production process. o Behind these judgements were a pessimism about the market's ability to deliver economic change in key dimensions with the speed deemed necessary. o More recently the pendulum has swung the other way with a sizeable fraction of the herd of both politicians and economists charging in the direction of minimalist government, privatisation, and so on. o I shall argue, on the basis of theory, of rights and of experience, that the state's role should not be minimal. o The state's emphasis however, should not be on production. o It should rather be on health, education, protection of the poor, infrastructure and providing the right environment for entrepreneurial activity to flourish. o When we add to the list basic administration, law and order, and defence, we see that a substantial fraction of GOP will be involved. 23.2 Stern’s 5 arguments for State intervention a) Market failure may arise from many possible sources including externalities, missing markets, increasing returns, public goods, and imperfect information; b) Income distribution a concern to prevent or reduce poverty and/or to improve income distribution c) Rights to certain Goods the assertion of rights to certain facilities or goods such as education, health and housing d) Paternalism relating, for example, to education, pensions and drugs e) The rights of future generations
Image of page 31
Page 32 of 39 including some concerns relevant to the environment 23.3 Evidence in support for State Intervention a) Health and Nutrition performance of China and Sri Lanka in reducing mortality rates and increasing life expectancy has been outstanding in relation to their incomes. This high performance appears largely to have been the result of public action Through, in large part, a strong focus on the food supply and distribution system China has attained a high level of food consumption per capita China has placed a great emphasis on preventive measures including education, the provision of pure water supply and adequate sanitation. The explanation behind Sri Lanka's outstanding performance is similar to that of China although Sri Lanka's advance came rather earlier (primarily prior to 1960). Like China, Sri Lanka has long had an emphasis on public health - a particularly important example being the eradication of malaria. b) Protection of living standards To a major extent the reduction of age-specific mortality rates and the lengthening of life expectancy are achieved by protecting the poor from death and illness, by, for example, providing clean water, adequate sanitation and ensuring that they can obtain food c) Education statistical relationships between the level of the real GOP and average years of education estimates of social returns to primary education in based on Psacharopoulos ( 1985): o SSA (26%) o Asia (27%) o Latin America (26%) d) Infrastructure World Bank Operation Evaluation Department: investments in roads and irrigation to have been particularly productive.
Image of page 32
Image of page 33

You've reached the end of your free preview.

Want to read all 39 pages?

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes