Economics starts with one very important assumption: Individuals act to make themselves as well off as possible.

This phenomenon, whereby taxes make individuals worse off without making anyone else better off, is referred to as “deadweight loss.”

The insurance company studies its new pool of middle-aged men and reckons that the annual premium must be raised to $1,800 in order to make a profit. Do you see where this is going? At the new price, more men—the most healthy of the unhealthy—decide that the policy is a bad deal, so they opt out.

It recognizes the benefits of the free market in making our lives better and shows why centrally controlled economies ultimately fail to increase the living standards of their citizens.

The market is like evolution; it is an extraordinarily powerful force that derives its strength from rewarding the swift, the strong, and the smart.

Roger Ferguson, Jr., former vice chairman of the board of governors of the Federal Reserve, explains, “Policymakers who fail to appreciate the relationship between the relentless churning of the competitive environment and wealth creation will end up focusing their efforts on methods and skills that are in decline. In so doing, they establish

The Federal Reserve regulates commercial banks, supports the banking infrastructure, and generally makes the plumbing of the financial system work.

First, government should not be the sole provider of a good or service unless there is a compelling reason to believe that the private sector will fail in that role.

Human capital is the sum total of skills embodied within an individual: education, intelligence, charisma, creativity, work experience, entrepreneurial vigor, even the ability to throw a baseball fast.