Vito Tanzi, an economist of international renown, served for twenty years as Director of the Fiscal Affairs Department of the International Monetary Fund in Washington, DC with which he was affiliated for nearly three decades. Dr Tanzi is the author or editor of over 25 books, including Government Versus Markets (2011) and Public Spending in the 20th Century (2000, with Ludger Schuknecht). A former Undersecretary for Economy and Finance of the Italian Government, he was President of the International Institute of Public Finance (IIPF) from 1990 to 1994. Dr Tanzi is known for the Tanzi effect, or Olivera-Tanzi effect, which refers to the diminished real value of tax revenues in periods of high inflation due to collection lags. He has served as a consultant to the World Bank and the United Nations and previously taught at George Washington University, Washington, DC, and American University, Washington, DC.

Part I. Changes in the Economic Role of the State in the Twentieth Century: 1. The age of laissez faire; 2. The role of the state between the world wars; 3. The coming of the welfare state; 4. When economists thought they had found Nirvana: welfare policies; 5. When economists thought they had found Nirvana: stabilization policies; 6. Barbarians at the gates: challenges to Nirvana; 7. General rules to guide governments; 8. Giving more freedom to markets; 9. A minimum economic role of the state?; 10. Implications of excessive government withdrawal; Part II. Complexity and the Rise of Termites: 11. The growth of termites; 12. Termites in regulations; 13. An inventory of policy tools; 14. A closer look at regulations; 15. Modernity and growing market termites; 16. The allocation role in modern economies; 17. Public goods and intellectual property; 18. The state and its economic objectives and institutions; 19. The state and the distribution of income; 20. Market operations and income distribution; 21. Poverty, inequality and government policy; 22. Market manipulations and economic outcomes; 23. Termites in the stabilization role; 24. Modern government role and constitutional guidelines; 25. The quality of the public sector and the legal framework; 26. The quality of public institutions; Part III. Equity and Inequality: 27. Wealth creation and government role; 28. Recent concerns about inequality; 29. How should governments intervene?; 30. Intellectual property and income distribution; 31. Historical background on intellectual property; 32. Tax rates, tax structures and tax avoidance; 33. Summing up of past developments; 34. Why worry about income distribution?; References; Index.