[Borodog]

And what, might I ask, is supposed to be the coercive intervention that "resolves" this "paradox of liberalism"? Who is the third party that will force Bob and Alice out of their logical inefficiency and into the movie theater at gunpoint? How, exactly, does he know what Bob and Alice's personal preference scales are, beyond what they reveal after the fact by their actions?

Furthermore, from the wiki article:

[ QUOTE ]
The example shows that liberalism and Pareto-efficiency conflict and cannot be attained at the same time. Hence, if liberalism exists in just a rather constrained way (see Sen, 1970a), externalites could arise . . . For instance, one individual is free to go to work by car or by bicycle. If the individual takes the car and drives to work, whereas society wants him to go to work by bicycle there will be an externality. However, no one can force the other to prefer cycling. So, one implication of Sen's paradox is that these externalities will exist wherever liberalism exists.

[/ QUOTE ]

This is more of the "externality" claptrap that I have talked about before. Under this definition of "externality" any action at all can have both positive and negative externalities, since such an "externality" is completely subjective. One neighbor hates my rosebushes; I should be taxed to compensate him! My other neighbor loves my rosebushes; he should be taxed to subsidize me. The only sense of "negative externality" that has any founding in the objective world is if physical property is damaged.

Not to mention, "Society" wants me to ride a bicycle, does it? Come on. You've got to be kidding me. "Society" doesn't want any more than Alice and Bob "jointly prefer". Methodological individualism FTW.