By a series of unanticipated events and an unknown tie to royal blood, Pareto found himself suddenly King Pareto. So he assembled the wisest social scientists he could find to serve as his council of advisors, and prepared a campaign of progress for his new nation.
The first pillar of his reign would be the petition, for he needed to stay in touch with the common people. It also afforded him an opportunity to share his wisdom with them, to their obvious benefit.
The pair before him were a typical case. They were neighbors; one had let his lawn grow uncontrollably, hurting the value of adjacent properties.
“But my bones ache and it takes me a terribly long time to mow the lawn,” said the accused.
“The old King would levy a fine in these cases, your majesty,” said the accuser.
“The old King was a reactionary,” King Pareto said dismissively, “we must reach an arrangement which makes neither of you worse off than you already are. Does the accuser have a task that the accused could complete, in exchange for the accuser himself mowing the lawn?”
“Well I’m far behind on the paperwork for my business…”
“I would far prefer to do that to mowing the lawn, though I warn you, you could probably complete your paperwork more quickly on your own.”
“That’s OK. I hate paperwork, and I can mow lawns pretty fast. This arrangement works for me.”
“Well done, your majesty,” Advisor Ricardo praised him.
Many similar cases passed through, with the King guiding his subjects to mutually agreeable solutions. The last one for the day proved the most challenging. He had just sent off a pair of businessmen with nuisance claims against each other to have the appropriate property rights sorted out with Advisor Coase. No sooner were they gone than a man with the most bruised and beat up face the King had ever seen entered, followed by a normal, if angry looking man.
“Why have you come?” Asked the King.
“I…I’ve come…” the injured man began.
“He’s come to deny me my lawful right!” interrupted the other man.
“What right is that?”
“He…he beats me each day!” the injured man explained.
“Such is my right, under the law,” huffed the abuser.
“Is this true?” Pareto asked his council.
“Under the current…barbaric law, social superiors are allowed to physically abuse inferiors however they deem fit,” Advisor Mill said with evident disgust, “you can guess which legal group each of these men belongs to.”
“I only give him one good wallop a day, no more,” said the superior, “it helps me cope with the burden of my duties.”
“But come now man, you must stop this, it is terrible!” Pareto cried.
“Is that your order? Will you put me in jail if I disobey?”
The King hesitated.
“This is our law. To take this right away is no different than levying a discriminatory tax against my people specifically. I thought you were just, and only made rulings that made people no worse off than they already are.”
“But surely you won’t be made worse off if you don’t wallop this man tomorrow.” Pareto said.
“Would you make the same argument about future income from current employment, Your Majesty?”
“Fine, fine. Could you be paid to stop, for good? Or could this man perform some task in exchange for which you would freely give up this right?”
Pareto was dumbfounded. “Why on Earth not?”
“This is an important part of my people’s identity. It has been our right since time immemorial. I know you, an outsider, judge it inhumane, but preserving such essential heresies against vulgar decency is exactly what keeps us free.”
“Perhaps we should be a little more specific about the content of the agreements people are allowed to come to…” Advisor Arrow said nervously.
“No,” King Pareto said somberly, “no. The only possible justice is that which leaves no one worse off than they were before. To change the rules unilaterally would unfairly harm this man by taking what had been his. We cannot let superstitious notions about what a social order ought to look like blind us. That is just prejudice, it is theocracy. Either no one loses from a change, or there must be no change. I am truly sorry.”
“That’s OK,” sighed the abused man, “I suppose I’m used to it.”
3 thoughts on “In the Kingdom of Pareto”
Click to access Snow%20-%20Abolishing%20Transitional%20Gains%20Traps.pdf
What is the silliest economic idea that actually gets taught in low level econ classes? Pareto optimality is certainly a candidate, as are Giffen goods or perhaps the Walrasian auctioneer (if it makes the syllabus). Pareto optimality is either tautologically true (because anything that makes everyone better off has already been done), or too impossibly high a standard ever to achieve, since any actions makes someone worse off. For concepts like this, my strategy is simply to ignore them and hope they go away, and be dismissive when people bring them up.
That was basically Russ Roberts’ strategy by the time I took his MA level micro class.