Enter the greens, from stage left. They have long held that proper policy should tax "bads", not "goods". Pollution and the consumption that causes it are bad; work and jobs are good. Therefore, tax the consumption of polluting products such as the motor car, and reduce income tax, which is levied on work.

Similarly, the GDP fails to assign any value to declining fish stocks or disappearing forests. It's as if these negatives simply don't exist. The GDP measures 'goods' but not 'bads.'

The second important caveat introduced by welfare economics is that there are goods and "bads" which are not allocated by the market system. Certain "externalities" are not taken into account in the production of and demand for the market goods to which they relate — eg, noise, dirt, dangerous emissions and other kinds of environmental damage, or the reduction of any one of these by introducing a new process or moving the factory (whether workplace or power station or airport or whatever) away from a residential or congested area.