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Provision of goods and services

All modern governments participate directly in the economy, purchasing goods, operating industries, providing services, and promoting various economic activities. One of the indispensable functions of government—national defense—has made governments the most important consumers of goods, and they have not hesitated to use their resulting pricing, purchasing, and contracting powers to achieve various economic aims. In efforts to avoid dependence on private sources of strategic goods and defense materials, some governments have taken a further step and established their own military production plants. In wartime, governments have assumed control over entire industries and have subjected the work force to military direction in addition to rationing goods and regulating prices.

In nearly all political systems, certain functions are recognized as primarily public, or belonging to the government, although some aspects of these services may be handled by the private sector. In addition to national defense, public functions include the maintenance of domestic peace, public education, fire protection, traffic control, conservation of natural resources, flood control, and postal services. Many governments have assumed responsibility for additional commercial operations, even in nonsocialist countries. The sale of electric power, for example, is one of the established enterprising functions of national, state, and local governments in the United States and Canada. Municipally owned power utilities exist in many cities in North America; a number of states in the U.S. have public power districts; and the U.S. government markets power through the Tennessee Valley Authority, the Bureau of Reclamation, and several other agencies. Another range of functions, such as lending and insurance, are performed by other national agencies, including the Veterans Administration, the Federal Deposit Insurance Corporation, and the Federal Housing Administration.

Other miscellaneous enterprises in which governments are involved include the provision of health care, the operation of public transport facilities, the development of public works, airport and port maintenance, and water-supply systems. In Great Britain the government operates hospitals and provides medical care under the National Health Service. In the United States many state and local governments operate hospitals on a commercial basis, although providing some charity care. At the local level in the United States, the Port Authority of New York and New Jersey constructs and operates bridges, terminals, and airports. The states in the Delaware Basin joined in a compact to establish an agency to control the use of water from the basin, institute programs to prevent pollution, provide recreation facilities, transmit and sell hydroelectric power, and provide watershed management. Cities in the United States and Canada operate dozens of urban transit systems, hundreds of municipal gas utilities, and thousands of water-supply systems. Cities are also generally responsible for garbage disposal, and many cities manage parks and recreational amenities, such as golf courses. Finally, a number of state governments control the distribution of alcohol.