I'll dare say that any role government plays in society's economics, other than its Godly one, will necessarily make the economy worse than were it left to laissez-faire. Its Godly role of punishing evil-doers, on the other hand, can indeed improve a society's economy somewhat over that of an anarchic one.

The only exception to my former assertion (of gov't making the economy worse) is for those rare few who grab and retain power (of force) over others. They stand to temporarily benefit from their meddling in an otherwise free economy. Were the personal economies of every individual summed, though, the overall effect would still be, and must be, significantly negative. This negative summary will have long-term effects to the detriment of even those in power.

Incidentally, society does not need to "allocate" people to various jobs like growing food or making clothing. Only an economic moron would propose such a scenario. The free market--that is, the market sans any forceful intervention--will naturally balance itself out in such "allocation" of jobs. For example, if too many people are growing food, then the supply will outweigh the demand, thereby dropping the value (price) of food. If the price drops too low, growers will begin to go out of business, effectively shrinking the food supply until it balances with demand. (Note there are many points of balance here. More food [but not too much] will just mean cheaper food. Less food will mean more expensive food. Both of these may be sustainable by society, especially in the case of food, since it's rather essential.) On the other hand, if there are not enough growers, prices will rise (more demand than supply). If growing becomes lucrative enough, it'll attract more to production. If nobody is lining up to strike it rich in the growing business (which flies in the face of human nature), the people will tend to have fewer children (else see them starve to death), again moving toward a natural balance between supply and demand. Only forceful (government) intervention can prevent such a natural balance (i.e., unorchestrated, unforced, unplanned) from being attained in rather short order.

It's pretty much a guarantee that when government intervenes and starts to control job allocation, the market will suffer by losing its natural balance and moving toward an unnatural one. The effects of an unnatural balance typically include shortages, runaway pricing, collapse of some markets--all things undesired by consumers and producers alike. (These effects of market meddling typically hit the consumers first and the producers later.)

For example, if there are too many growers, the free market would lower the prices of food and eventually shrink production to match demand. Government tends to intervene by offering subsidies to growers (either to grow or not to grow). Besides forcefully taking money away from the public in the form of taxes which are then redistributed to the growers (thereby removing those funds from the market), minus the government's inefficient expenses, the growers are artificially kept afloat which discourages any correction in the supply (to match demand) and so keeps prices lower and fueling a feedback loop of supply bloat. This feedback loop means prices remain low (because of too much food, too many growers), meaning profits drop, which causes growers to beg for more subsidy, which results in greater taxation to artificially fund the growers. Were the government's expenses negligible, one might possibly argue the result is economically a wash--aside from the immoral aspect of stealing from the public to pay the growers--but without a competitive profit motive, governmental expenses tend to soar without bound.

Another example of how government intervention harms everybody in the long run is price controls. Without intervention, prices will fluctuate based upon the ratio of supply and demand. The recent energy crisis--wholly of government creation--is a good example. It's difficult to know the true cost of energy, because this industry is so heavily regulated and taxed, that a huge portion of pricing is attributable to government intervention. That aside, if suppply remains the same or decreases while demand increases (or demand merely increases faster than supply), prices will rise. Government regulation of energy production (mining, digging, building plants, nuclear management, etc., are all under heavy control) drives the cost of doing business up. When the populations soars (say, from illegal migration), yet the supply cannot keep up, the prices will rise. When prices rise to the point the consumer is then willing to reduce his demand (e.g., not taking that vacation this year), balance can again be restored. However, when the government puts a cap on the price of energy, the demand does not diminish. When the demand remains high while the supply cannot compensate, a balance is not found. Instead, the supply becomes increasingly scarce causing shortages. When shortages occur and prices are artificially capped, the suppliers begin to go out of business. If they no longer have product or service to sell, they ain't makin' no mo' money. If the businesses start to go under, the supply shrinks further, again resulting in a feedback loop that can decimate the market. To prevent the businesses from collapsing, government can subsidize them. Again, more money is forcefully taken from the consumer--even those who would rather shrink their own demand for the energy, if allowed their choice--to pay for the subsidies. The increasingly missing funds (poorer consumers) can affect other markets as what fewer choices are left to the consumers are made to keep their families afloat. Couple this with inflation (another effect solely from government meddling) and the money itself becomes increasingly worthless each year. This means business fail faster (prices aren't allowed to keep up with inflation) and taxes must increase faster if subsidies are to be maintained. In all, the consumers are hit hardest first, but in the long-term, entire markets can be utterly destroyed by such intervention.

So why do governments meddle with the economy so much? Besides the lust for power such men tend to exhibit, they are not usually in office long enough to reap what they sow. There are tricks that can be played with these inferior economic models (e.g., Keynesian) that can make illusory, temporary improvements to the economy such that officials may "buy" the people's votes. The duration of these improvements may be weeks or may even be a few generations. Either way, the meddlers count on short memory, and the idiotic populace delivers. Having been successfully bribed, the people vote the idiots back into office, and they again enjoy a really easy job with tons of benefits.