The 1980s were rich with extravagant claims about the superiority of markets and the incompetence of government to make economic decisions. After more than a decade of the experiment in deregulation, however, the reality seems far more complex than this stylized vision. The environmental problems and savings and loan failures that now confront us were not averted by dismantling activist government. Indeed, the case for abandoning government's role in the economy was never as strong as its advocates claimed. It is time, therefore, to think again about how government can realistically improve our national well-being.