>Yes, Posner's wealth maximization principle at work. The problem
>with that is it privileges economic efficiency as a value over
>everything else including especially distributive justice. For
>the L & E crowd including Posner, Pareto's optimality principle
>is everything, even though all that principle says that a
>given allocation of resources from the standpoint of efficiency
>if no one's welfare can be improved except at the expense of
>someone else. As Paul Samuelson (hardly a flaming revolutionary)
>used to point out in his textbook, the translation from Pareto
>optimality to what is socially optimal requires us to assume
>that the initial distribution of resources is normatively acceptable.
>Pareto's optimality principle cannot tell us if that is so or not.
>Thus the application of the wealth maximization principle to
>the law by judges like Posner in effect privileges as a matter
>of principle, the existing distribution of resources and the
>economic system which is responsible for it. To ignore
>questions of distributive justice is to enshrine exisiting
>economic injustice.
It's much, much worse than that. There's actually not much wrong with the Pareto principle itself -- all it says is that if a decision can be made which makes someone better off and no-one worse off, then it that decision should be made.
But, of course, in a case where the Pareto principle was applicable, why would anyone bother taking it to court? As a practical rule of justice, it's just miles too weak.
In order to support "overall maximisation" as a goal, you have to make the much stronger assumption that there is no diminishing marginal utility -- that a dollar is a dollar whether it goes to Bill Gates or to an ordinary worker. This is junk economics -- it has provably false implications for people's risk-taking behaviour. And, of course, it's morally repugnant.
And in any case, if you could find a wealth-maximising solution that involved the breach of someone's property rights, I somehow doubt you'd find Posner on your side. Just look at the scientific and economic hoops that the L'n'E crowd jump backwards through to convince themselves that environmental regulation is inefficient.
dd
>Me thinks that perhaps our Justin may have fallen in
>with a bad crowd. -:)
Jim F.
>
>Marta Russell
>
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