The Role of the Public Sector

There is little agreement on the proper role for the public sector, especially as it relates to specific policies. However, there is general agreement that the public sector should focus on protecting the rights established in the Constitution and on assuring the security of the nation. The debate typically centers around how these goals are best achieved.

Government and defense

The federal government is given the authority and the duty under the U.S. Constitution to provide security for the nation against foreign threats. Traditionally, foreign threats have been the militaries of foreign nation states. However, increasingly, foreign threats have come from organizations based more in ideology and less in geography. Al Qaeda is a prime example.

Government and civil order

Similar to the need for security from foreign threats to the nation, local, state and federal authorities are responsible for maintaining order domestically. This includes policing, but it also includes the judicial process of determining guilt or innocence of those accused of crimes. Generally speaking, criminal acts cause some level of harm to others in the society; so, the public sector helps prevent the harm caused by criminals.

Government and public goods

Some activities are beneficial for society but will not be undertaken to sufficient degree without public sector involvement. The most obvious example is roads. Roads would not generally be built by single companies or individuals, but they are clearly needed. Government is the most practical source for these public goods.

Disputes about role of government

The role of the public sector is subject to much debate. Conservatives and libertarians generally call for less government involvement, especially as it relates to business activity. Liberals tend to support a more active public sector role. Likewise, there is some variety in the role of the public sector across regions. The U.S. Northeast tends to have a larger role for the public sector than does the American South. Europe as a whole tends to have a larger role for the public sector than the United States does.

Public sector and the economy

The public sector can significantly affect the economy. Generally, the two major tools available to the public sector are fiscal and monetary policy. Fiscal policy is the expansion or contraction of government spending to affect the levels of employment and inflation. Monetary policy relates to interest rates and the supply of money. Increases in the supply of money can increase employment, but it also drives inflation upward. The opposite is true as well.