Politicians love to talk about how they're going to make us better off. They'll give the middle class a tax cut, or declare War on Poverty, or stimulate the economy or spend money and create jobs.
But most of what they do is just a shell game, moving money around. It's either Robin Hood (taking from the rich to give to the poor), Robber Baron (taking from the disenfranchised and giving to the powerful), or just plain robber (taking hard-earned money from people who earned it and giving it to lazy people who don't deserve it), depending on your point of view and whether or not you belong to the party that won the last election.
In the grand scheme of things, it's all about productivity. We are wealthier than our ancestors because our parents and grandparents figured out how to be more productive-- how to produce more with less. We produce more food on an acre of land, more cameras with less raw materials, and drive further using a gallon of gasoline than before.
Our environment is cleaner and healthier than it used to be, too, because they figured out cleaner, safer, more efficient ways of producing goods and energy and entertainment.
Whenever I think about what the government should be doing in the current financial and economic crisis, I try to see things through the "productivity lens"-- what policies will make us more productive?
Does increasing the minimum wage make us more productive? (no, it looks like it just raises teenage unemployment, and unemployment is bad for productivity.)
Does lengthening unemployment benefits increase productivity? (these researchers say yes, although these ones find that it is mostly wealthier people who take advantage of extended unemployment insurance-- and since everybody pays into the unemployment insurance system lengthening benefits might just end up being Yet Another Regressive Tax.)
Does spending money on public works projects make us more productive? (yes, if they're fulfilling an actual need and aren't just make-work projects or pork-barrel projects designed to make politically connected contractors rich.)
Is it better for productivity to tax when money is spent or earned, or does it not matter? (I don't know. I do know that a simpler tax system would make us all more productive, because we'd spend less time and money on the unproductive task of filling out forms to make the IRS happy.)
The economy is a huge, complex, chaotic system that nobody fully understands. I think the best the government can do is create policies that will encourage and reward productive behavior, and then stand back and get out of the way.