The author considers the inadequacies of governmental activities from a particular point of view: inefficiencies and inequities that result from the conditions of demand for government activities in Western democracies, especially the United States. Criteria for evaluating the conditions of demand for government activities are identified. The author concludes that profound distortions can result from politically effective demands for government action or inaction. As a result, government programs may be initiated or expanded even though they are inefficient in a static sense, as well as inequitable in conferring special gains and privileges on politically effective groups, while imposing greater costs on politically less effective ones. Other programs may be expanded to a level where they become inefficient in a dynamic sense by undermining the incentives on which the economy's longer-term growth depends.