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 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.

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.

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.

Questions like, "Is my suit OK?", or "Is my job performance satisfactory?", are impossible to think about in the absence of a suitable frame of reference. For an interview suit to serve its purpose, it must make you look good relative to other candidates for the job you want. For your job performance to be satisfactory, it must compare favorably with the performance of others who want the same promotion you do. As Charles Darwin saw clearly, much of life is graded on the curve, and conventional economic models completely ignore that fact.

We're in a classic demand-shortfall recession. There aren't enough jobs because total spending is too low. Consumers won't lead the way because they're busy paying down debt and are fearful they'll lose their jobs, if they haven't already. Businesses, which are currently sitting on mountains of cash, won't spend either, because they already have sufficient capacity to produce more than people are willing to buy.

Pass down values every day through your actions, your words and your time with your kids.