Real-Life Decision Making
Economic consultants are often called on to advise big business and government. A corporation may hire you to analyze the cost and benefits of several different factory sites. The next week, a political candidate could approach you to help assess a tax program.
You are an economic consultant approached by a candidate running for political office. The candidate is proposing that taxpayers get better services for their money. You have been asked to prepare a tax program that does this while keeping taxes low. The problem is that your research shows taxpayers are already paying too little of the real cost of the services they receive.
You could submit a "get real" tax program that would include tax hikes to reflect the true cost of providing services.
Or, you could fashion a "soft-sell" tax program that would make the candidate look good and greatly increase his chance of election.
If you submit the "get real" program, the candidate won't be happy. Neither he nor his powerful friends will approach you again for economic advice. It would be a serious setback for your consultation business.
But you don't like the "soft-sell" tax program, either. You know the program would be politically popular but you have serious reservations about its long-term economic implications.
What do you do? Please yourself or please your client? The "get-real" program could seriously undermine your customer base. You worry the "soft-sell" program will undermine your credibility.
What are you going to do?