In the context of a re-examination of the conceptual and political foundations of merit/demerit goods, this paper attempts to identify how far they might take us in understanding, explaining, and providing normative justification for, public sector intervention. If merit/demerit influences are to be discovered in actual policies they must be capable of being isolated, at least at the margin, from other policy influences, such as conventional sources of market failure, pure paternalism, and pressure group activities.

This article focuses attention on the distinctive characteristics of economic and social policy in West Germany during the last four decades. It will be argued, that the distinctiveness of state intervention in West Germany resides in a combination of policies of conversative-reformist, liberal and social democratic complexion. The policy of the middle way which results from this combination differs from the extreme poles that are marked by the model of Social-Democratic welfare capitalism on the one hand and market capitalism on the other, but it also comprises elements of both types of political economies. The emergence and the maintenance of the policy of the middle way can largely be attributed to distinctive characteristics of the policy process, and of processes of learning from historical catastrophes.

Terrorists act rationally; one of their dominating goals is to attract public attention to their cause. As a consequence, the authorities should refrain from attributing a particular terrorist incident to any one group. They should stress that many different actors must be considered as the possible perpetrators. Such an information policy sharply reduces terrorists'rewards. The terrorists are therefore likely to cut down on such activities or must undertake riskier acts, which increase their chance of being caught. The approach suggested is complementary to the policies currently in use; it does not make police measures unnecessary. The strategy is, however, active while the traditional approaches are passive responses to terrorist activities. In contrast to other anti-terrrorist measures, it does not violate human liberties, civil rights or the freedom of the press.

French medicine is organised with dialectical relation between the public and private in health and welfare policy; there is also an ideological impact of public/private confrontation. The article retraces the history of the profession and shows how it was set up both with and against the state, emphasising two ideas at once: the idea of the small independent entrepreneur, guarantor of individual liberty, and the idea of the great state servant, guarantor of the public interest. Public/private confrontation is only rhetorical and bears no relation to the real content of the dualistic health system.