The free market is a wonderful device for coordinating our productive activity to maximize the satisfaction of our needs. It encourages people to cooperate both with those they know and with strangers. Since markets foster both prosperity and personal liberty, communism has been consigned to the dustbin of history except in places like North Korea. Nevertheless, except for a few anarchists, we understand the need for government.

Americans overwhelmingly believe in private initiative with a dollop of government. How big that dollop should be, however, is subject to lively dispute. To be sure, there are areas of general agreement about the proper role of the State. Conservatives of all stripes would agree with liberals that the army, police, and courts should defend us against foreign invaders and others who would use force against us, as well as those who would take our property by fraud. Beyond that, however, things start getting dicey.

In defending us from invaders, does government serve our interests by initiating an immense garrison state? Progressives and libertarians fear that the War on Terrorism is open-ended, and that wartime historically results in a contraction of individual liberties. Beyond that, the openness of America always has been a large part of our Nation’s allure and vitality. Security measures that restrict student and tourist visas to our country and turn our embassies and reading rooms abroad into fortresses may isolate us, ultimately doing more harm than good.

In defending us from fraud, might regulators go too far, and try to defend us from our own improvidence as well? Unscrupulous mortgage brokers did mislead some into signing documents containing fraudulent statements and featuring teaser interest rates. Many people, however, counted on ever-rising house prices to bail them out from the consequences of mortgage payments they couldn’t possibly afford. Many “victims” are victims only of their delusions.

Sometimes it is hard to separate government actions that protect the public from harm from those that benefit the public, or, more often, favored segments of it. Starting with easy cases, government inoculations against highly infectious diseases benefit not only the recipients, but also all who come into contact with them. Public payment for schooling through grade eight ensures universal basic literacy, which is necessary to protect the polity from citizens who cannot vote responsibly.

Government payment for high school is slightly more problematic. Ultimately, it is grounded on protecting society from those who otherwise would not acquire the skills to lead a productive life; those who instead likely would rely on the public dole or engage in a life of crime. Public payment for college and professional school is more dubious, since higher education primarily provides recipients with enjoyable interludes between high school and work, lifelong appreciation of the arts, and careers providing above average incomes. Nevertheless, a state legislator would have to be brave indeed to assert that the State has no obligation to provide the children of longtime voters with a chance for the good life.

From kindergarten through the doctorate, government payment for education does not necessarily entail government schools. Conservatives starting with Milton Friedman have observed that private schools are more responsive to consumer needs than their public counterparts, which tend to be more accountable to teachers’ unions and colleges of education. The stringent mandate for “fairness” imposed on public school administrators makes them chary of exercising subjective judgment and eager to shelter behind relentlessly uniform standards. Private schools can take more of a chance on innovative paths to quality, knowing that quick feedback from tuition paying, or voucher bearing, parents would follow.

That said, however, the notion of community is beguiling to conservatives in the tradition of Edmund Burke, who find reliance upon local communities both the path to wisdom and freedom from the domineering state. The village is a natural community, being the inclusive home for all who dwell within. The possible loss of such inclusive communities, however, makes some conservatives blanch from tuition vouchers that might be operated by narrow religious sects that they find threatening.

Progressives have an affinity for community as well, although for different reasons. They transmute inclusivity into equality of condition. They also tend to usages such as “the arts community,” or a particular ethnic “community,” which turns the word “community” into what the Founding Fathers knew as “factions.” The circle is squared, however, by operation of the progressive drive towards equality upon these disparate communities. This is manifested by identity politics, which reserve for each such “community” a proportional share of government largess.

Health care is an area where the battle is intense, and replete with cries of “heartless exploitation” and “socialized medicine.” Few regard the provision of health care as purely a private matter, with no public assistance to the medically indigent under any conditions whatsoever. Likewise, few would regard public voting on what diseases are to be investigated or treated and the details of how hospitals are to be administered as a very effective way to spend tax dollars or provide medical care.

The problem is compounded by the fact that two entirely different and often antithetical concepts are given the same name, “insurance.” “Actuarial insurance” refers to the product sold by companies in response to the desire of strangers to band together to protect themselves from unknown risk. On the other hand, “social insurance” refers to the operation of community solidarity that impels members to protect neighbors in dire need. Someone who had a severe heart attack last year is not a good candidate for actuarial insurance this year, since the risk is high and known all too well. However, the withdrawal or denial of coverage by a private insurance company precisely because of that recent affliction seems to many an intolerable breach of the social contract.

Individuals have a large stake in obtaining proper medical care—one that sometimes literally means life or death. Also, healing is both a complex science and an art. This requires that patients place considerable trust in physicians and health care institutions, while accepting uncertainty about the eventual outcome. These factors make health care not the typical market good, and add to the pressure for government involvement.

The choices seem to be private insurance in which those with preexisting adverse conditions often cannot receive adequate coverage; a national health service, where formal equality is belied by special interest group chicanery and unresponsive service; or some amalgam of private and public provision, in which subsidies by taxpayers and the healthy are used to provide efficient private care for the sick.

While our nation seems to have adopted the third approach, its effective implementation would be daunting. The removal of many billions of dollars of waste from the health care system equates to the removal of many billions of dollars of income from groups that are well financed and would resist at every turn. On the other hand, many millions newly entitled to health care, now largely served only in theory, will impose staggering new demands on the health delivery system. Groups asserting insufficient care for their particular illnesses or localities will demand redress, as well. For better or worse, Congress has proved highly susceptible to such demands in the past.

There is a good argument that wealthy societies should spend higher percentages of their income on health care as they prosper. However, government has many other pressing obligations. Those whose hard work produced the income appropriated by government will resist tax increases. Furthermore, without adequate business investment, we cannot continue to prosper.

While the role of government is necessary but limited, defining its proper boundaries does not come easy.