What should the role of government be when it comes to economy? Today, the free-market model seems to be the most prosperous and dominant across the world. So should the government listen to free-market economists who promote the idea that governments should stick to fixing market failures when they arise?

Or should the governments do more? After all, if government enters the economy, like a private entrepreneur , it would be the most influential, resource-abundant player in the economy. Such capabilities may potentially lead to technological breakthroughs and overall economic growth. But they may also lead to failures and this is where governments differ from private entrepreneurs. Government resources come from taxpayer’s money, whereas private companies get their funds from private investors. While private entrepreneurs answer directly to their investors, governments answer to all of the taxpayers. Taxpayers do not have a say in what the government would be doing as an active player in the economy because it is logistically impossible. There cannot be a coherent discussion among millions of taxpayers. So the key difference between private entrepreneurs and governments is that private entrepreneurs get their funding from willing parties that acknowledge the high risks of such ventures, while governments get their money from millions of citizens, some of which would not want it to spend taxpayer money unnecessarily. By unnecessarily, I mean investing money in risky start-ups, something that private capital venturers usually do.

The decision whether governments should act more along the lines of private venture capitalist is unclear. There is opportunity of economic and innovation growth in doing so, but it does not come without a cost. The cost is accepting that government will undoubtedly fail here and there, losing taxpayer money. Is that something we should be okay with? Or is it something that we should leave to private venture capitalists?