the government protects sugar, and the government subsidizes corn. As a result, more foods get made with high-fructose corn syrup, and more cattle get fed corn, meaning more cattle get fed antibiotics. The quantity of high-fructose corn syrup thus goes up in our diet, and the prevalence of dangerous bacteria goes up as well. And in complicated ways

If any of the great corporations of the country were to hire adventurers who make market of themselves in this way, to procure the passage of a general law with a view to the promotion of their private interests, the moral sense of every right-minded man would instinctively denounce the employer and employed as steeped in corruption, and the employ

Between 1974 and 2008 “the average amount it took to run for reelection to the House went from $56,000 to more than $1.3 million.”3 In 1974 the total spent by all candidates for Congress (both House and Senate) was $77 million. By 1982 that number was $343 million—a 450 percent increase in eight years.4 By 2010 it was $1.8 billion—a 525 percent inc

These clear and strong rules cushion skepticism; they make trust possible because they give the public a reason to believe that the institution will act as it has signaled it would act.

Ten percent of the recipients of farm subsidies collect 73 percent of the subsidies—between 2003 and 2005, $91,000 per farm. The average subsidy of the bottom 80 percent? Three thousand dollars per farm.28 And

as Raghuram Rajan puts it, “What is particularly alarming is that the risk taking may well have been in the best ex ante interests of their shareholders.”

to more rational souls, the charade is a signal: spend your time elsewhere, because this game is not for real. Participation thus declines, especially among the sensible middle. Policy gets driven by the extremists at both ends.

Negative externalities impose costs on others. Positive externalities create benefits for others, even if, as with competition, they make some people worse off.

Derivatives serve a valuable purpose. As with any contract, their aim is to shift risk within a market to someone better able to carry it. That’s a good thing, for the market, and the economy generally. That we’ve just seen an economy detonated by derivatives gone wild shouldn’t lead us to ban (as if we could) these financial innovations. It should