Take another look at the political compass (note that it is now upside down :)). When we have different preferences we have violated the assumptions that underlie the first and second fundamental theorems. This means that perfect competition does not and will not lead to efficiency. So how do we get as much efficiency as possible in a situation like this?
As Okun points out in Efficiency and Equity, there must be many trade-offs from all sides in order to reach an effective point of equality. People must be willing to make compromises so that efficiency can be reached.
ReplyDeleteThis reminded me of the president's announcement of the big news. People had varying expectations which resulted with different reactions when the news was announced. It's impossible to please everyone even if it's a big surprise that benefit the group from a communal prospective.
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