As we do not live in a perfect world, how useful are economic theories based on the assumption that we do? Second-best theory, set out in 1956 by Richard Lipsey and Kelvin Lancaster (1924–99), looks at what happens when the assumptions of an economic model are not fully met. They found that in situations where not all the conditions are met, the second-best situation – that is, meeting as many of the other conditions as possible – may not result in the optimum solution. Indeed, reckoned Lipsey and Lancaster, in general, when one optimal equilibrium condition is not satisfied all of the other equilibrium conditions will change. Potentially, the second-best equilibrium may be worse than a new equilibrium brought about by government intervention, either to restore equilibrium to the market that is in disequilibrium, or to move the other markets away from their second-best conditions. Economists have seized on this insight to justify all sorts of interventions in the economy, ranging from taxing certain goods and subsidizing others to restricting free trade. Whenever there is market failure, second-best theory says it is always possible to design a government policy that would increase economic welfare. Alas, the history of government intervention suggests that although the second best may be improved on in theory, in practice second best is often least worst.