The private sector is first of all much larger than the public sector. The waste we see in that sector does not result from the fact that people spend their money carelessly. Mostly, it occurs because what one family must spend to achieve its goals often depends heavily on what other families spend.

When the economic pie grows larger, it's always possible for everyone to have a larger slice than before. So it's really in all of our interest to make the economic pie larger by eliminating waste whenever and wherever possible.

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

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.

All parents want to send their children to the best possible schools. But because a good school is a relative concept, a family cannot achieve its goal unless it outbids similar families for a house in a neighborhood served by such a school. Failure to do so often means having to send your kids to a school with metal detectors at the front entrance and students who score in the 20th percentile in reading and math. Most families will do everything possible to avoid having to send their kids to a school like that. But because of the logic of musical chairs, they're inevitably frustrated.

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.