Explain how the goals of equality and efficiency can conflict when designing public policy.

Efficiency is a comparative idea. It is a way of judging the merits of different ways of doing things. Efficient people are ones who get a lot done in a little time. Efficient allocations of resources are ones that yield the most total value for society from existing resources. Efficient choices are ones that result in the largest benefits for the same cost or the least cost given the benefit (Stone, 2002).

According to Stone (2002), advocates of market mechanisms for policy making might argue that an exchange is efficient if it maximizes welfare at the present moment; inhabitants of the polis live over the long run and consider the time dimension a crucial part of most decisions. Another broad set challenges from the polis question, that an individual makes exchanges on the basis of full information about the objective alternatives and their subjective preferences. The challenge is impossible to have the type of information necessary for voluntary exchanges to result in efficiency. The market model requires accurate and complete information. But in the polis, information is always incomplete, interpretive and deliberately controlled. People can never have full information about the alternative available for satisfying their goals. Even if the money cost of information were zero, there would still be enormous time costs to process all the free information. Long term consequences are at issue in many public policy decisions as well-whether to use nuclear power as a major source of energy, whether to stake national defense on space based weapons or whether to treat welfare as a federal entitlement or a matter of state discretion.

A third set of challenges focuses on market theory equation of societal welfare with individual welfare. These challenges reject the idea that there is no meaningful concept of social welfare other than the aggregate of individual situations. Individual welfare is influenced not only by the welfare of others but also by all complex activities and decisions of a community. Indirect or hard to determine some side effects might be that economists conceptual boundaries around exchange are necessarily artificial and they are often used to deny the significance of effects beyond those boundaries. To ignore side effects or to pretend that externalities are a defect in a minuscule are of human affairs is to undermine the ability of public policy to achieve efficiency in any important sense (Stone, 2002).

Many goals of public policy cannot be broken down into situations of individuals: community survival, the security and pride that come from membership in a community, social trust, camaraderie, and the enrichment and dignity of participating in collective decisions are examples. The whole enterprise of proving that markets lead to efficiency is predicated on the idea that efficiency is objectively determinable (Stone, 2002).

Stone, D. (2002). Policy paradox, the art of political decision making revised edition. New York and London: WW Norton & Company[pic]