Economics versus Politics

Abstract

In Chapter 6, it is argued that a dollar should be treated as a dollar to whomsoever it goes to achieve efficiency, leaving the objective of equality to the general tax/transfer system. This proposition of ‘a dollar is a dollar’ can be generalised to show the Pareto inferiority of any efficiency-inconsistent alternative A, not just an equality-oriented one. Interpreting this generalisation widely, the principle of ‘a dollar is a dollar’ can be applied to areas outside the traditional confines of economics. Then, what prevents the application of the simple efficiency principle from being used in political issues like the election of a president or members of a parliament, where the principle of one person one vote seems to be universally accepted?