appear as both “excludable” and “rival”. For example, spending on public education in a neighborhood school excludes residents living in other neighborhoods, and increasing public resource allocation to some schools is likely to rival resources for others. But society and its citizens may have preferences defined over the public good of “equal opportunities for all children, regardless of the accident of their birth”. Providing this good may require an array of unequal public spending policies such as progressive targeting of resources to schools in poor neighborhoods, or providing scholarships and social support to children from disadvantaged families.

Solutions to problems of market failures and public goods need not necessarily involve public policies of direct production or provision of services by government departments. Just like in the example of cap and trade regulation of pollution, public policies that aim to accomplish goals of redistribution or equal access to health and education services may provide incentives for markets to provide these services (Pinheiro and Schneider, 2017). This paper will be agnostic about what specific policy design works better than others to accomplish a policy goal. It will pursue the more abstract or meta question of whether society and government seek to address problems of public goods using the best available technical evidence about what policies work for the purpose.

Governments fail when its leaders deliberately and knowingly ignore sound technical advice about what public policies work better than others in pursuing public goods. Defining and measuring government failure is difficult because it requires first specifying what _are_ appropriate policies, and what are the public goods that governments should deliver, to then be able to assess whether leaders are failing to pursue those policies and deliver those goods. This paper will follow World Bank (2016) and characterize appropriate public policies in the abstract: as those policies that aim to fulfill the unique role of government to provide the public goods that create value for society but are not adequately provided by markets, debating the best available technical evidence for this purpose. Governments fail when leaders adopt and implement policies that they know are costly for the greater public good, despite the availability of alternative policies that are likely to yield improved outcomes. Governments can make inadvertent mistakes, when they do not have the right evidence, when there is uncertainty and disagreement among experts about the appropriate policies, or when the state of the world changes and they need to find out what to do to tackle new problems as they emerge. Such mistakes and uncertainties about appropriate public policies are not part of the problem of government failure that is tackled in this paper. Government failure is defined on the basis of purpose, intent, and incentives of leaders to pursue public policies in the public interest.

One example of government failure on which there appears to be a consensus is that of malfeasance and mismanagement within public bureaucracies and by political leaders: limited control of corruption; weak management practices that condone frequent absenteeism among public sector workers; the role of connections or nepotism in the recruitment and career concerns of public sector workers, which can contribute to lack of motivation to perform on the job; crony capitalism, whereby politically connected firms receive privileged treatment by public regulators and financial markets. The reason there appears to be consensus that corruption is socially costly is because the evidence suggests that where there is greater corruption, public policies confer concentrated private benefits on a few, at the expense of economic efficiency and more widely shared public benefits (World Bank, 2016 and 2017).

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