More Government or Less?

With the election of Donald Trump and his agenda to dismantle public services while curtailing federal government intervention, a pressing question looms large: Can the regulation of negative externalities truly function without the guiding hand of the state?

Negative externalities—those adverse effects left unaddressed by free markets—cast a long shadow over modern economies. Pollution, climate change, biodiversity loss—these byproducts of profit-driven enterprise often go unchecked. Add to this the structural consequences of market economies, such as the poverty of the weakest and inadequate access to healthcare, and the stakes become even higher.

Public services, funded through taxation, are the backbone of collective goods: defense, education, health, environmental protection, and safety nets for society's most vulnerable. Taxes do more than simply fill government coffers—they regulate market-driven economies by internalizing externalities and redistributing resources, aiming for sustainability and equity. Beyond taxation, governments wield another powerful tool: the establishment of regulations and norms designed to protect the common good.

The self-regulation of negative externalities is a comforting illusion, but one that crumbles under scrutiny. While individual acts of social responsibility—like a corporation pledging to cut emissions or a billionaire funding a climate initiative—may generate headlines, they are sporadic and insufficient to tackle systemic crises.?Without state intervention, these externalities persist, with devastating consequences. Regulation is not just a bureaucratic nuisance; it is society's safeguard against exploitation, ensuring that those who profit also bear the costs of their actions.

The question of whether the free market can independently produce sufficient public goods has a straightforward answer: no. In a market economy, the primary drivers of behavior—whether for businesses or individuals—are profit and utility, both measured in monetary terms. The reality is that only state intervention has the capacity to amass the funds required to adequately finance public goods. Without it, the result is inevitable: a chronic underproduction of essential services.

This underproduction would create a stark divide. Wealthier individuals could afford private alternatives for healthcare, security, education, and even pollution control—tailored to their needs and priorities. Meanwhile, those with fewer resources would be left to rely on whatever minimal provisions the state could offer: lower-quality services, fewer choices, or, in many cases, no services at all.

In the absence of robust public funding, the burden would likely fall on non-governmental organizations (NGOs), foundations, and charitable groups to fill the gap. But these entities rely heavily on philanthropy from corporations and individuals—contributions that are often driven more by the desire for social recognition than a commitment to systemic change. And this generosity has its limits. Few, if any, are willing to discreetly fund services at the massive scale required to meet real societal needs.

While economics has long explored concepts like altruism, aversion to inequality, and aversion to inequity, the sobering reality is that such traits are neither widespread nor dominant. If they were, many of the world's most pressing issues—malnutrition, environmental destruction, and beyond—could be addressed through equitable contributions: the wealthy giving more, the poor giving less, and everyone doing their part.

Yet human greed remains a persistent barrier. Without state intervention and the enforcement of fiscal policies, the production of public goods and services will inevitably fall short. Proponents of lower taxes on wealth and corporations often argue that such measures will spur job creation, attract investment, and encourage charitable giving. Even so, history tells a different story. Time and again, these policies fail to generate adequate contributions from those who benefit most from these fiscal breaks. Sacrificing for the greater good—especially for strangers whose struggles remain distant and abstract—is not a priority for many.

As the world often looks to the United States for direction, there is a real concern that Donald Trump's push to reduce state intervention could inspire similar moves elsewhere. The consequences would likely be dire: widening inequalities and further environmental degradation in a world already on the brink. This is a critical moment that calls for more collective action and funding to address global challenges—not less. Believing that the market economy alone will someday, as if by magic, solve all societal problems is not just na?ve—it is disingenuous. Such thinking often serves as a convenient pretext for those seeking to maximize personal profit while ignoring the broader consequences for society. The stakes are too high to indulge this dangerous myth.

It would be unfair to claim that entrepreneurs are indifferent to the world's challenges or that individuals lack empathy or the desire to assist those in need. Many people genuinely want to make a difference. However, self-interest is deeply ingrained in human behavior, and history demonstrates that only public authorities, when uncorrupted, have consistently had the capacity to undertake large-scale projects such as building infrastructure, providing healthcare, alleviating poverty, and regulating environmental harm.

The presence of NGOs is a clear acknowledgment of the state's shortcomings—an observation few would contest. Nevertheless, reducing the government's role would place an untenable burden on society. While various groups tirelessly strive to address gaps in public services, they simply do not have the scale or resources to take on the full responsibilities of the state. The hard truth is that the generosity and accountability of businesses and individuals, though commendable, cannot replace what the state achieves through taxation and regulation. Without public intervention, essential societal needs will go unaddressed, leaving the most vulnerable to face the harshest consequences. This is a risk we cannot afford to take.