Project-Syndicate
NEW YORK – Mitt Romney’s
income taxes have become a major issue in the American presidential
campaign. Is this just petty politics, or does it really matter? In
fact, it does matter – and not just for Americans.
A
major theme of the underlying political debate in the United States is
the role of the state and the need for collective action. The private
sector, while central in a modern economy, cannot ensure its success
alone. For example, the financial crisis that began in 2008 demonstrated
the need for adequate regulation.
Moreover,
beyond effective regulation (including ensuring a level playing field
for competition), modern economies are founded on technological
innovation, which in turn presupposes basic research funded by
government. This is an example of a public good – things from
which we all benefit, but that would be undersupplied (or not supplied
at all) were we to rely on the private sector.
