Friday, January 16, 2015

Prime Minister Modi's answer to the question - Why do we need the state?

At the star-studded (Krugman, Bhagwati, Taleb included) Economics Time Business Summit, Prime Minister Narendra Modi provided an answer to American Libertarians and Republicans.

Why do we need the state? There are five main components:

.. The first is public goods such as defence, police and judiciary.

.. The second is externalities which hurt others, such as pollution. For this, we need a regulatory system.

.. The third is market power, where monopolies need controls.

.. The fourth is information gaps, where you need someone to ensure that medicines are genuine and so on.

.. Last, we need a well-designed welfare and subsidy mechanism to ensure that the bottom of society is protected from deprivation. This especially includes education and health care.

These are five places where we need government.

Read more at:

PS: more excerpts from Modi's speech here.