Only the federal government has the power to spend beyond its current revenue. It shouldn't do that when the economy is at full employment. But it's an essential step for an economy mired in recession.

Only the federal government has the power to spend beyond its current revenue. It shouldn't do that when the economy is at full employment. But it's an essential step for an economy mired in recession.

As John Maynard Keynes taught us in the 1930s, in such situations, government is the only entity with both the motive and the ability to boost total spending by enough to put people back to work. As it happens there are long lists of important public projects that cry out to be done.

If government is inevitable, the challenge is to come up with the most effective one possible.

Rising inequality hasn't really accomplished anything of value for its ostensible beneficiaries, the top one percent. They've all built bigger mansions and staged more lavish parties. But in so doing, they've simply raised the bar that defines what's considered adequate in these categories.

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.

The most glaring deficiency in traditional economic models is that they completely ignore the role of context in evaluation.