I was recently drawn into a debate about governance and someone raised the point that law and order is only one spoke of the wheel of services which the government should provide.

I beg to differ.

I don’t know where I came across this, but:

As soon as the people who create value get to keep the money they make, the role of the government is over.

In other words, as soon as people find it safe and profitable to create value, these people will take care of all other indices of development and prosperity.

I suspect that all other duties of the government are ancillary and exist either because of inefficiencies or because we do not understand humans well enough to craft good laws.

Update (21 April, 2014): After some discussion with the economists Madhav and Shreyes, I came to realise that this idea resonates best with the Classical economics which was promoted by Adam Smith in Wealth of Nations.

However, that idea has been now replaced by neoclassical economics. Here, the government is tasked with maintaining law and order and building infrastructure which yields returns over a very long term, i.e. decades. Such infrastructure includes building roads and education. The assumption is that the entrepreneurs will not be altruistic and have enough foresight to invest in progress in such areas.