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.

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.

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.

No one could argue with a straight face that the couples getting married today are much happier just because their wedding celebrations cost three times as much as those in 1980. Bigger mansions and costlier parties are wasteful in the same sense that larger antlers on all bull elk are wasteful. The good news is that simple changes in the tax system can eliminate much of this waste without having to deny people the right to decide for themselves how best to spend their money.

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.

No society has ever succeeded without a decent government.

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