Some political economy

"Equity-efficiency trade-offs" are a staple of textbooks.  Best to keep it in quotes because "equity" and "efficiency" are not simple.

Beyond that, there are many cases where there is no trade-off.  End farm subsidies, for example.  The average subsidy recipient is better off than the average taxpayer.  And the efficiency of ending this pork is pretty clear. 

In our crony-capitalism world, there are surely many other subsidy programs that could be ended with similar win-win consequences.  This is apt in light of the current "fiscal cliff" situation.  It is still widely presumed that just about every tax dollar flows to good causes.

I just listened to Russ Roberts' interview with Casey Mulligan at econtalk.  Mulligan's research points to an explanation for high unemployment: a generous safety net.  There is more to the current recession than the standard credit crisis story.

I have yet to read Mulligans' book, but the discussion was interesting and provocative, to say the least.  He depicts cases where there is a high cost from policies that "help people."  Mulligan is careful not judge that the cost is too high.  He simply wants to document the fact that this time there is a trade-off.

While I am on this topic, I just finished Mark Pennington's Robust Political Economy.  It is a superbly written and up-to-date summary of how and why an understanding of classical liberalism is essential in these post-2007 years when markets-misunderstood is the cudgel used to push us deeper into debt and mess.

Knowledge and benevolence are in short supply.  This applies to "private" as well as "public" sectors.  But only the former allows (and punishes) failure -- if we let it.  That is all we have.