This paper surveys the economic wreckage created by Wall Street's decision to manufacture and sell trillions of dollars of financial securities, which we now call toxic. And we call them toxic, not because they were risky, but because they were fraudulent. Rather than address the fundamental...

Public finance has both normative and positive elements, and moving between theory and practice requires attention to help us understand both what policies government should adopt and whether it is likely to do so. We should not be surprised when bad policies are adopted in spite of better...