Apart from some conventional sniping from behind improvised footnotes, the counterattack mounted by David Winch and Mel Krauss has the apparent aim of recapturing for Harry Johnson the right to continue to use producers' surplus in his analysis of the welfare effects of tariff protection. Since they do not appear to dispute the main thesis developed in the text of my paper (that producers' surplus is either a misnomer or a conceptual error), their gallantry in attempting to secure a special dispensation for the use of producers' surplus in the gains-from-trade case also involves a certain awkwardness; one that is, not surprisingly, reflected in their arguments. Broadly speaking, their tactics are first to churn up a terminological smokescreen so as to obscure traditional notions of consumers' surplus and rents, and then, while the innocent reader is blinking at the resulting swirl, to produce for him concepts guaranteed to be slippery enough to meet any contingency.

None of the existing methods of evaluating loss or saving life, or assessing an increase or reduction in accidents resulting from investment projects, is satisfactory for a number of reasons. This is so chiefly because they are all inconsistent with the Pareto base of existing allocation theory and benefit-cost analysis. Strict application of the Pareto principle to changes in accidents and fatalities involves a calculation of the compensating variation associated with the changes in risk bearing regarded as external effects. Several of these external effects are discussed at length.