Most often the wide public’s perception of government is dominated for right or wrong reasons by images of monolithic positioning, inflexibility and appetite for taxes and control. Recent financial buffeting resulting in slashed budgets and staff culling made it even more difficult for governments to appropriate large public projects aimed at reaching grandiose goals.

Perhaps the current financial turmoil is an opportunity to re-invent themselves. They could become nimble and innovative operators and do-gooders again as they were back then when the land was vast, unpopulated and uncharted.

Public good initiatives are rarely the strong point of private enterprise. They are large, they require huge initial investment and they are difficult for profit extraction in a short time frame as demanded by corporate reporting requirements. This is an area where the government should and could excel. However, the voting system in a digital democracy has made this task extremely difficult even for a big government flushed with surplus money.

Public good doesn’t have to be created in form of portentous public spending as the traditional connotation might be tempted to suggest. Public good is… good distributed equally to the public at low or at no cost. For instance, low carbon economy is about promoting products and services with reduced the carbon dioxide emissions which are accessible to the public and for the public benefit. Other examples are: be green energy, important high impact medical discoveries, clean environment, public safety, etc.

What does the government do when these things start to become noticeably important in public opinion? There are two things the government has a preference for: raise the taxes or punish the companies to force them into providing certain products and services. The unifying theme here is that the focus of these actions is on the “push” side: cause a change on in the supply. This is expensive, artificial and it risks alienating both business and public in the same time. This type of action carries also the risk of damaging the country’s reputation for doing business. If the regulations are too unfriendly global suppliers will be reluctant to do local business and go elsewhere.

There are other alternatives which could lead to better results, but they require much more effort and higher skills. The government could focus on creating a “pull” force in the marketplace by stimulating the demand. This is more complex implementation of governing imperatives, but it is much more effective. This smart approach to design of policies and regulatory frameworks provides more certainty, it builds a foundation in which improvements could be added and it creates opportunity for prosperity for both business and consumers.

Smart regulatory frameworks require the government to think about ways in which fair competition between producers is promoted in a transparent way, the system of transmission is open and it offers the opportunities for standard product packaging and the distribution to the public is accessible by the public in a simple, no-hassle manner. This will stimulate the demand side but also the supply side which will have clear incentives to innovate.

This is what governments should become experts in. It is a bit difficult in the current state of affairs where emphasis is on short term polling satisfaction.