'Market failure' is a term widely used by politicians, journalists and
university and A-level economics students and teachers. However, those
who use the term often lack any sense of proportion about the ability of
government to correct market failures. This arises partly from the lack
of general knowledge -- and lack of coverage in economics syllabuses --
of Public Choice economics. Public Choice economics applies realistic
insights about human behaviour to the process of government, and it is
extremely helpful for all those who have an interest in -- or work in --
public policy to understand this discipline. If we assume that at least
some of those involved in the political process -- whether elected
representatives, bureaucrats, regulators, public sector workers or
electors -- will act in their own self-interest rather than in the
general public interest, it should give us much less confidence that
government can 'correct' market failure. This complex area of economics
has been summarised in a very clear primer by Eamonn Butler. The author
helps the reader to understand the limits of the government's ability to
correct market failure and also explains the implications of public
choice economics for the design of systems of government -- a topic that
is highly relevant in contemporary political debate. This text is an
important contribution for all who seek to understand better the role
that government should play in economic life.
