Governments reform policies in order to improve their efficiency and respond to changing social priorities. Reform is resisted when concerns exist about those who may lose out in the process, or when other policy goals are negatively impacted. Compensation can remove barriers to reform by addressing this resistance, and can contribute to adjustment by speeding its process but may itself impede the reform process if it masks the market signals that lead to adjustment. Compensation is not always necessary or appropriate, and should not be seen a prerequisite for reform.
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