Imagine, for a moment, that I am in front of Sally's house, preparing to break in and steal all of her possessions. A local policeman sees what I am about to do, and pauses to calculate how much Sally would be harmed if I carried out my plan. He approaches me and says, "If you pay Sally the amount that you would harm her, then you may rob her house. She will be made no worse off, and you will get to do something you want to do." I think about this for a moment. It doesn't seem like it would be completely fair to Sally, but I can see a kind of logic behind it. Besides, I really want Sally's stuff; I don't really care how she feels.
Overhearing our conversation, though, the policeman's partner interjects, "I can see that you want to rob Sally enough that you would be willing to pay her for the damage. Since the benefit to you from robbing Sally's house is greater than the harm that would be caused to Sally, you should just go ahead and rob her." Hearing this, I can't help but feel that this is even more unfair to Sally. But again, I'm a robber; I don't mind.
However, before I have a chance to accept the proposal, the police chief walks over with a glimmer in his eye. He says, "Why don't you pay me the amount that Sally will be harmed, and then you may go ahead and rob her house." I can't help but marvel at the evil genius of his plan. I would get to rob Sally's house, he would get a whole bunch of money, and only Sally would lose.
But I turn to the police chief and say, "Surely you can't get away with this sort of thing. If the general public finds out you're doing this, you'll be run out of town!"
He thinks a moment and replies, "They support pollution taxes; what's the difference?"