We've long known that firms can pay higher wages if they spend less on workplace safety enhancement. Libertarians ask, "If a worker is willing to accept higher wages in return for his agreement to exercise greater caution while performing his job, why should the government prevent him from making that choice?" It's a rhetorically powerful question, yet it overlooks the fact that the agreement in question will have adverse effects on others.

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.

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.

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.

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.

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.

Life is graded on the curve. It's not how big you are, how strong you are, how smart you are. It's how good you are at the things that count relative to the people around you.