Richard A. Musgrave is an H. H. Burbank Professor of Political Economy, Emeritus at Harvard University and an adjunct professor of economics at the University of California. He was born in 1910 and grew up in Germany. He studied at the University of Munich, Heidleberg, the University of Rochester, and Harvard. He joined the Research Division of the Federal Reserve Board in 1942. In 1948 he began teaching at the University of Michigan.
An unprejudiced view of the social scene tells us that the conduct of eocnomic affairs calls for cooperation between and interaction of a public and private sector. This interplay has several dimensions, three of which, pertaining to the operation of the public budget, have been noted here. Unnecessary to say, there are other respects in which the invisable hand of the market need to be supplemented by the visible hand of public policy. Imperfect markets require measures to maintain competition, financial institutions need supervision to protect investors, protection is needed to safeguard the environment, and so forth. Beyond such rules of economic conduct, public policy is needed in setting the very framework within which society can operate, ranging from its broad mapping by the Constitution to an array of specific rules, such as contract and liability law, the criminal code, and the rights and obligations set down by family law....As with all good things, however, the need for cooperation and government also carries its own risks.Some form of majority rule is needed to decide on common action, but a balance must also be struck between individual rights and majority wishes. Government should reflect and serve the interest of its citizens, but not permit ruling groups to impose their wishes....To make democratic society function, both need be made to operate properly in their respective spheres, and do so in a coordinated fashion."
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