Governments play an important role in regulating and managing the societies they have been empowered to govern. Not perfect by any means. Nor particularly efficient either. No issues with those arguments. But, what do you think would have led to a greater waste of resources and loss of value over the past ten years. 1) Government playing a more active, regulatory role in areas like derivatives trading, leveraged debt offerings, hedge funds, mortgage backed securities. Or 2) The trillions of dollars of losses that have occurred in the last few months due to complete lack of oversight and regulation.
That was a trick question by the way. And while I'm on the subject of government playing a more active role. Social security. Education reform. Healthcare reform. Prison reform. These are NOT areas where free market forces alone will result in good solutions. Does a market based incentive model create a fair, just and efficient incarceration incentives and policies? Hardly! If somebody profits, and stands to profit big, from putting more people in jail, what will markets based incentives do? They will align and influence (with money) politics and public opinion to support putting more people in jail. The US has 5% of the world's population and 25% of the world's inmates. Isn't something wrong with that picture.
If one "good thing" comes out of the current financial crisis it's a willingness to question assumed truths and challenge the belief that market based approaches to public-good issues is a panacea. If nothing else, that is a BIG step in the right direction.