Analyzing a business

Suppose there are two companies, A and B. A and B have their head offices in the same wealthy
country. They make virtually the same products; they have the same number of employees, and they pay the
same wages. They are equally profitable, they have the same number of shareholders, they pay their
shareholders the same dividends. But A’s factories are located in the wealthy country, and B’s plants are
located in an underdeveloped country. The results of B’s operations are as described in the paragraph from
O’Neill on which were directed to rely. Suppose further that in the wealthy country, a proposal is made impose
a special tax on the shareholders of companies like B – who profit from their investment – in order to raise
money for transfer to poor majority in the underdeveloped country who are seriously economically
disadvantaged by the presence of such companies as B, whose manufacturing operations are located in the
underdeveloped country. (a) from the perspective provided by the difference principle, is this a good idea? (b)
Would a libertarian object to this? If so, why? Offer explanations.

Sample Solution