Economists love tradeoffs. Indeed, their basic model of the world breaks down where such tradeoffs don’t occur. Lucky for them since the world really is full of tradeoffs. If you want more carrots, you’ll have to do with fewer of something else. Here they’re substitutes. But, to use an ugly word which first became faddish in the 1980s, where there are synergies between things that you’re after, you’re in a wonderful world.
Economists love arguing that there is a tradeoff between equity (or perhaps equality of income) and efficiency. Of course there are such tradeoffs. If you tax work at high enough rates, especially of more productive people who are likely to be earning more, if you buy yourself sufficient equity between their own take-home pay and those who are less productive, you may also buy yourself less work from your most productive people – a classic equity/efficiency tradeoff.
But of course the world is full of synergies between efficiency and equity.
One of my faves is the Toyota production system in which power (and income) is more decentralised than in ‘Taylorist’ production where the managers (representing the owners) and their process engineers and designers call the shots. And guess what? Decentralising authority and autonomy at least according to a regime as disciplined as the Toyota production system is much more productively efficient as well as being ‘fairer’, more equitable and those within the system tend to be happier.
Often when one sees such things they bring a kind of immediate delight – something that Adam Smith reflected on “the beauty which the appearance of Utility bestows upon all the productions of art, and of the extensive influence of this species of Beauty”.
Anyway, I thought of this when I came upon this article (pdf)- from which the table above is taken. The rise of women in the workforce is an excellent example of the promotion of equity and efficiency in the workforce. Likewise early childhood intervention programs where they are successful. They save those at risk of leading horrible lives and get them to lead much less horrible lives – to the benefit of the people immediately involved and all those around them – including their governments, who are more likely to be receiving more revenue and paying out less in doles and/or prison capacity. I expect lots of basic health programs and population based health measures generate the magic double of gains in efficiency and equity.
Anyway, I wanted to ask Troppodillians for their favourite examples of policies that promote both equity and efficiency.