This chapter offers a practical decision-making framework describing conditions that will favor the adoption of alternative ways to deliver key services: generally speaking, privately managed activities, public–private collaborations, and public (state-owned) organizations, in their multiple forms and varieties. The chapter compares these forms based on their relative ability to generate effectiveness and inclusion, as well as with respect to their perceived legitimacy.

This chapter concludes by considering the four main themes of the book: 1) How public spending has evolved over time, initially focussing on sound rules of the game and essential public goods and services before shifting more and more to welfare spending while debt grew to record levels.2) The huge differences in government performance and efficiency, the reinvigorating role of expenditure reforms and the pragmatic ‘optimal’ size of government, that does not require public spending of more than 30–35%, perhaps 40% of GDP.3) The main fiscal risks in the social and financial sphere from an ever-growing ‘insurance role’ of the state, which has contributed to rising debt and could put stability and sustainability at risk. 4) The case for strong rules and institutions to contain public spending, debt and fiscal–financial vulnerabilities. If governments focus on their core tasks and do them well, they underpin a well-functioning market economy with prosperity, freedom, opportunity and trust. This is the message of the social market economy model and it holds for the challenges related to the Coronavirus crisis which had broken out when this book went into publication. Not heeding this message in the past has contributed to governments being over-burdened and over-indebted today. We will all benefit from a lean, efficient and sustainable state.

Governments should provide value for money from public spending. They do so when they perform well on core tasks and ensure efficiency by spending wisely. Core tasks on which we measure performance and efficiency include the quality of public administration, education, health and infrastructure, as well as economic stability, prosperity and income distribution. The picture for performance and efficiency is very mixed across countries. The three ‘small’ governments of Switzerland, Australia and Ireland perform best overall, with a 50% higher score than the worst performers. Efficiency differences are even greater. ‘Small’ governments as a group tend to do best as regards public administration, the economy and overall. ‘Medium’-sized governments perform least well on the whole but show a wide divergence: some of them are very efficient in providing education, health and infrastructure. ‘Big’ government countries show more equal income distribution but at the ‘price’ of higher taxes and unemployment. Needless to say, this analysis is illustrative and needs to be taken with a grain of salt.