Abstract
Abstract ‘A good way of governing is to agree on objectives, discover what is possible, and to optimize’, writes Mirrlees (1986). This chapter is about how to agree on objectives. Many of us would certainly agree—at least after reading only standard textbooks on welfare economics—that if we could find the income tax structure, say a, that is preferred to b by all individuals we should adopt a. This choice, based on the Pareto principle, is not necessarily entirely innocent. First, it has to be remembered that, although the Pareto principle is a weak value judgement, it is a value judgement. Secondly, we know from Sen’s famous paradox that the Pareto criterion may easily conflict with individual rights. In any case, economic situations (for example, income distribution) cannot be socially ordered without someone making prior value judgements.
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