Sublime

Good policy uses incentives to channel behavior toward some desired outcome. Bad policy either ignores incentives, or fails to anticipate how rational individuals might change their behavior to avoid being penalized.

the private costs of my behavior are different from the social costs.

Self-interest makes the world go around, a point that seems so obvious as to be silly.

When an externality—the gap between the private cost and the social cost of some behavior—is large, individuals have an incentive to do things that make them better off at the expense of others.

the Laffer curve, which provided the intellectual underpinnings for the large Reagan-era tax cuts.