ABSTRACT
This chapter describes the stage for discussing ethics in fiscal administration by drawing a distinction between the public and private sectors. Reality dictates a role for government, even if private markets could deliver most goods and services. The goods and services that people use daily come from a myriad of sources, including private businesses, nonprofit organizations, and government agencies. When services are moved from the public to the private sector, the measure of success can shift from service to profit. In the private sector, a key indicator of success is the value of the business to its owners, be it a sole proprietor or shareholders. Consequently, government tries to offset the market failures caused by externalities by subsidizing low-emission vehicles and/or imposing additional taxes on poorly maintained cars and trucks. In the private sector, when monopolies rise to power, they can drive out competition, charge unjustifiably high prices, and position themselves as unopposed in the marketplace.
