The Economic Rationale for Investing in Children: A Focus on Child Care. Won't the Market Achieve Optimal Provision of this Service in the Most Efficient Fashion?


The traditional economist's approach to discussion of any government expenditure or regulation is to ask: why wouldn't this be better left to the market to accomplish? The demand is always to specify the nature of the market failure which requires government intervention to correct. The presumption is that, in the absence of clear indication of market failure, the free interplay of market actors will lead to a more efficient allocation of resources. By more efficient allocation of resources we mean the market action will generate greater output (of whatever the good or service) at a given cost of resources or the same output at a lower resource cost. The economist's rationale, then, for any government activity is a litany of potential cases of market failure. I will therefore proceed to such a litany as applied to government intervention in employment and training activities.