This lecture by Stiglitz explains how and why Pareto or near-Pareto improvement is difficult to achieve, through his experience on the Council of Economic Advisers for the United States government. First, Stiglitz writes about Adam Smith's invisible hand theory as an explanation of the conditions under which market equilibrium will be Pareto efficient, and discusses the importance of government intervention by writing that in the presence of imperfect information or an incomplete market , there will always be some intervention through which the government can improve everyone's situation. Stiglitz as an economist thought that if he can make a contribution, it would be to implement Pareto improvement. However, he found it extremely difficult to even pursue near Pareto improvement and throughout the lecture he explains the reasons why this was difficult. Before going on to explain his four hypotheses for how misaligned incentives can lead government officials to take actions that are not in the public interest, Stiglitz talks about the two reasons given by critics of the role of government that are inconsistent. The first is that Coasian bargaining will lead to an efficient solution, for which government intervention is not necessary. Stiglitz criticizes this reason, writing that this does not work in the public sector. Another reason given by critics is that the government is riddled with inefficiency. Then he goes on to criticize the way everything is done in the White House. He writes about how government often lacks empirical evidence and theoretical analysis, and not only do bad arguments drive out good arguments, but good economists adopt bad arguments for incentive..