Transport Economics, Management and Policy series
Chapter 5: The economic instruments of security policy
We will bankrupt ourselves in the vain search for absolute security Dwight D. Eisenhower. Harry H. Truman, the post-Second World War President of the United States, had a plaque on his desk highlighting that the ‘Buck Stops Here’. This signified that the responsibilities of government, as personified by the President in this context, are extensive. At a more detailed, economic level it also confirms that government determines the parameters of markets, and whether markets should indeed be the main mechanisms for resource, including security, allocation. Essentially all markets for security, as we have seen, function within institutional boundaries, and in addition to this there are numerous command-and-control mechanisms that government can use to influence security resource use and allocation. There are two broad stereotyped approaches to economic regulation. The Anglo-Saxon approach considers that market forces are largely the best way of meeting economic efficiency objectives and that interventions are only justified if it can be demonstrated that they produce a superior outcome. Simply showing that any market for security does not work efficiently, under this scenario, is in itself not a justification for regulation or government provision. At the other extreme is the Continental philosophy that argues for government control unless the market can clearly provide a better outcome.
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