He (King Raghu) used to collect taxes from the people for (spending the revenue for) their welfare alone, (just as) the Sun takes water from the sea (only) to return it, thousand-fold.

This couplet from Kalidasa, an ancient poet of our country, contains the modern economic principle of ‘maximum social welfare, through a budgetary transfer of purchasing power from the rich to the poor’. The Sun draws water from the seas, (which they have in plenty), to be transferred to far off places in the interior. At those places, water being relatively scarce, is much more valuable than that in the sea. The loss of water to the sea, due to this transfer, is much less than the gain from the availability of water to the land and the life forms in the interior. Thus, there is an increase in the value of the water, transferred by the Sun and wind to the far off lands in the interior.

Similarly, transferring say, Rs. 100 from a well off person, earning Rs. 10,000 by a tax, is a loss to that taxpayer of only 1% of his income. When the same Rs. 100 are spent on a poor family, earning Rs. 100, it is a tremendous gain of 100%. Hence, there is a big increase in the total social welfare.

Question: Identify the big assumption made by this principle of maximum social welfare, which does not always stand the test of validity in the world.