The link between rational individual behavior and collectively desirable outcomes is extremely tenuous.

A good school is a relative concept, and the better schools are located in more expensive neighborhoods. But when everyone bids more for a house in a better school district, they succeed only in bidding up the prices of those houses. As before, 50 percent of all children will attend schools in the bottom half of the school quality distribution. As in the familiar stadium metaphor, all stand, hoping to get a better view, only to discover that no one sees better than if all had remained seated.

We could curtail private spending by several trillion dollars a year without requiring painful sacrifices from anyone. That would be more than enough to rebuild our crumbling infrastructure and eliminate government indebtedness once and for all.

For the three decades after WWII, incomes grew at about 3 percent a year for people up and down the income ladder, but since then most income growth has occurred among the top quintile. And among that group, most of the income growth has occurred among the top 5 percent. The pattern repeats itself all the way up. Most of the growth among the top 5 percent has been among the top 1 percent, and most of the growth among that group has been among the top one-tenth of one percent.

When people bump up against one another in the course of pursuing their goals, it is in everyone's interest to resolve any resulting problems in the least costly ways possible.

No one could argue with a straight face that the couples getting married today are much happier just because their wedding celebrations cost three times as much as those in 1980. Bigger mansions and costlier parties are wasteful in the same sense that larger antlers on all bull elk are wasteful. The good news is that simple changes in the tax system can eliminate much of this waste without having to deny people the right to decide for themselves how best to spend their money.

The fact that many private expenditures are mutually offsetting actually happens to constitute a remarkably good bit of fiscal news. Mutually offsetting spending patterns are wasteful in the same way that military arms races are. In such situations, if each party spends less, nothing is sacrificed, yet resources are freed up that can be put to much better uses.