As economists have long noted, the puzzle is not that so few people vote, it's that so many do. After all, no individual's vote has ever tipped the balance in a presidential election.

The primary source of waste in government is that legislators are often under heavy pressure to vote for projects that will benefit their campaign contributors, even when those projects fail a simple cost-benefit test. But with the Supreme Court showing little interest in permitting tighter rules on campaign contributions in recent years, there is little reason to be optimistic that we'll start curbing this kind of waste any time soon.

If the search is for examples that contradict the predictions of standard economic models, a good rule of thumb is to start in France.

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.

In short both the things we feel we need and the things available for us to buy depend largely—beyond some point, almost entirely—on the things that others choose to buy.

Unless we can act collectively, there would be no way to defend ourselves, no way to define or enforce property rights. We couldn't curb congestion or pollution or build and maintain public infrastructure.

If top marginal income tax rates are set too high, they discourage productive economic activity. In the limit, a top marginal income tax rate of 100 percent would mean that taxpayers would gain nothing from working harder or investing more. In contrast, a higher top marginal rate on consumption would actually encourage savings and investment. A top marginal consumption tax rate of 100 percent would simply mean that if a wealthy family spent an extra dollar, it would also owe an additional dollar of tax.