There's no indication that middle-income families feel resentful about the bigger mansions and yachts. But the near-rich, whose social circles intersect those of the rich, are subtly influenced by them.

Once firms had to pay to pollute, they became incredibly inventive at figuring out cheaper ways to eliminate their SO2 emissions.

Every group spends more when its income grows.

Prescriptive regulations, such as telling electric utilities what kinds of coal to burn or what kinds of scrubbers to install on their smokestacks, were not only intrusive, they were also grossly inefficient.

Virtually all families in the middle of the earnings distribution aspire to send their children to a school of at least average quality. (We'd think ill of any parent whose aspirations were lower.) The rub is that the best schools tend to be located in more expensive neighborhoods.

In almost every instance, air and water quality goals were met more cheaply and quickly when we taxed pollution than when we tried to regulate it directly.

Ever since the Great Depression, economists have known that demand shortages tend to persist in the wake of severe financial crises like the ones that happened in 1929 and 2008.