UC Berkeley

Available evidence taken from the experience of many countries strongly suggests that bad governments and institutions have been serious, if not the most serious, obstacle to economic growth; and all public sectors pursue a mix of both predatory and productive activities—bad governments emphasizing the former, and good governments finding a way of promoting the latter. Depending on your perspective, unfortunately or fortunately, participants in the public-sector policy process generally pay little attention to the advice and counsel of the economics profession. This, in part, is explained by the confusion that emerges from our profession over the role of the public sector. Some would have us believe that the government, or the public sector, is nothing more than a "clearing house" while still others advance frameworks that treat the public sector as a benign pursuer of the public interest.