The question is how you can tell whether the benefits to
some people outweigh the costs of others.
Economists didn't want to decide one choice that helps millions of people
is better if it still hurts thousands; how can you tell whether the help to
some outweighed the hurt to others? John R. Hicks came up with a compensation
test to decide that. The test was
whether the people helped could compensate for the losses of others and still
be better off, whether they actually did help or not. If they could, then the decision is
good. For example, free trade in cars
helps millions of consumers but hurts thousands of workers. But using the compensation test, it was found
that the amount gained by buyers was far greater than the amount lost by
workers and stockholders, so therefore free trade in cars is good. The graph indicates that the price of new
cars has been falling an average of 2.5% every year. This link gives more information in support
of free trade in cars:
"John R. Hicks." : The Concise Encyclopedia of
Economics. Liberty Fund, Inc., 2008. Web. 15 Dec. 2012.
Perry, Mark J. "CARPE DIEM." CARPE DIEM.
Blogspot, 4 Apr. 2010. Web. 15 Dec. 2012.
No comments:
Post a Comment