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if you really believe I am wrong please try and create a rational argument as to why Your comments in this thread have been haphazard and difficult to follow.

• Retric 16y ago
  I say: "Economists have no problems talking about economic efficiency when a few benefit at the cost of many." However, for clarity many means society at large including them. Vs his argument: I distinguished in last week’s post between changes in public policies (reallocations of economic welfare) that make some people feel better off and none feel worse off and those that make some people feel better off but others feel worse off. The first type of policy can unambiguously be said to enhance social welfare. But no such claim can be made for the second He ignores magnitude of change. His actual argument is if any one person is worse off then it's not an economic argument. So, if one person lost 1$ and 1 billion people gained 1 billion dollars then according to his argument it's outside the scope of economics. And yes that is his argument. He disagrees with: the Kaldor-Hicks criterion and the efficiency criterion amount to the same thing. When Jack gains $10 and Jill loses $5, social gains increase by $5, so the policy is a good one. When Jack gains $10 and Jill loses $15, there is a deadweight loss of $5, so the policy is bad Because: Evidently, on the Kaldor-Hicks criterion one need not know who Jack and Jill are, nor anything about their economic circumstances. Edit: There is actually a lot of research into both corruption and monopoly's and the negative effects both have on an economy. Farm subsidies are another example of a harmful policy that benefits a few people which has been well researched. PS: Yea, I am tired, but I this guy is so out there I can't help but wonder if it's some sort of parody that I am missing.
  • silverlake 16y ago
    > this guy is so out there I can't help but wonder if it's some sort of parody that I am missing. I think you wildly misunderstood Reinhardt's simplification to express a simple opinion. Unfortunately, your writing is very unclear and difficult to follow. Since I'm waiting for the delivery guy to bring dinner, I'll add my dim understanding of Reinhardt's post. Landsburg writes, "When Jack gains $10 and Jill loses $5, social gains increase by $5, so the policy is a good one." Reinhardt disagree that this is always "good". Society must make a value judgement about Jill's loses: if it's her last $5, is the policy still good? And if Jack is a billionaire, would that $10 gain offset Jill's suffering? He's not saying that economists never think about this problem. He's saying that economists often will make a policy recommendation (lower tax on capital, higher tax on income) that presumably raises social welfare, while skipping over the ethical issues (higher tax on the poor, lower tax on the rich). We want to pump $10 billion into the economy now. Should we give tax rebates as a % of taxes paid (more to rich, less to poor)? Or should we cut the payroll tax by a few thousand dollars (same for everyone, but more meaningful for poor)? The result is the same ($10B), but Reinhardt says there's a value judgement in the choice. This issue pops up everywhere, particularly in health care.