On Fairy Tales

by CASS R. SUNSTEIN

Consider the following tales:
1. In the Great Society, government ofªcials are well-informed, well-motivated, and very wise. They are not vulnerable to the power of self-interested private groups. They are fully able to correct market failures, to produce optimal redistribution, and to promote public aspirations.

2. In Olympus, federal judges are especially good at moral and political philosophy. When they are asked to think about the rights that people have, they are unerring. They understand that self-government is among the relevant set of rights. They always respect self-government, properly understood.
3. In Benthamville, regulators have hedometers; they are able to measure with perfect accuracy the welfare effects of various policies. In a neighboring city, Aristotleton, regulators have eudiameters, with which they can measure with perfect accuracy the effects of regulatory policies on human nourishing.

4. In Paretoville, people do not lack information or suffer from bounded rationality. Their willingness to pay (WTP) for a speciªc good perfectly captures the welfare that they would receive from that good. The citizens of Paretoville certainly care about the well-being of others, especially their own children, and their WTP fully rejects their concern. In Paretoville, there are no externalities and no collective action problems.

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