A monopolist who practice price-discrimination actually allows the economy to achieve an allocative efficient equilibrium. The problem is that it upsets distribution severely. Yet economics have little to say about optimal distribution in the economy. Besides, it doesn’t give a clear indication of the specific identities behind who should receive more, or less. Social policy however, needs to care about distribution to certain extent. It promotes a sort of well-being that keeps the society together to be able to continue generating economic fruits.
Now the social policy that cares about distribution will need to treat people differently; that there has to be some kind of discrimination. And this discrimination is going to be rather subjective to some extent other than being able to articulate the set of criteria. Being able to say the criteria beforehand can give a guise of objectivity to it. And of course, being able to articulate who falls into which category and why will bring the transparency up a notch.
However, policies can’t be all case-by-case, even if we are able to articulate and explain why it serves one person rather than another; or even justify why a particular party should benefit more from the policy than another. But at the end of the day, a policy cannot possibly serve everyone; and in fact, any policy that is laid down basically has its own defined set of winners and losers. The hope is that the aggregate gain is more than the aggregate losses (in whatever mysterious way one might like to work out the aggregate). So then when we uphold a policy, when we force people into the ‘standard’, are we clear about why we are doing so, and who are the winners or losers? I’d challenge public servants especially in the frontline to be absolutely clear about this – that they may uphold policies with a clear conscience.
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