The Case for Exporting Pollution and Importing Kidneys

The case for exporting pollution and importing kidneys is actually a familiar one: trade makes people better off. One person wants the kidney more than the money; the other wants the money more than the kidney. Both people can be made better off by trade.

Similarly, it’s not surprising that the rich are willing to pay the poor to take some of their pollution. On the margin, the rich value health more than money and the poor value money more than health, so both can be made better off by trade.

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What’s wrong with these trades? Plenty, according to many people who argue that economic reasoning ignores important values. Economists, it has been said, know the price of everything and the value of nothing.

Some of the objections to standard economic reasoning that we will examine are:

  1. The problem of exploitation.

  2. Meddlesome preferences.

  3. Fair and equal treatment.

  4. Cultural goods and paternalism.

  5. Poverty, inequality, and the distribution of income.

  6. Who counts? Should some count for more?

Let’s consider each in turn. You can think of these as the major reasons why not everyone thinks that voluntary exchanges are, in every case, a good idea.