Tag: equity

Efficiency: First Among Equals

~ purplesage41 ~ Leave a comment

Brace yourself, dear readers.  My economist self wants you to hear my confession.

For many years I taught introductory economics, as well as more advanced classes. I taught the introductory classes because a colleague and I had a multi-edition principles text, and it was important to road test it regularly. In one of the earlier chapters it was customary to introduce the claim, which was in most mainstream textbooks, that economics was value-free. Economics was just a set of tools for making choices about how to use resources wisely that was useful for all of us as workers, owners, consumers and citizens. A few pages later, we introduced them to goals, which we insisted were not values.  Microeconomic goals (WHICH WERE ASSUREDLY NOT VALUES!! were efficiency, equity, and freedom. The next semester, students were introduced to the macroeconomic goals (WHICH WERE ASSUREDLY NOT VALUES!!) of full employment, price stability (as opposed to inflation) and economic growth.

Having defined the goals, it was easy to discover and implement decisions processes, anticipate the effects of changes in the marketplace or in government policy, and prepare our students for life in a capitalist society.

If economics were a religion (which it might be), my heretical self might be seeking penance for the sin of inflicting this mindset on innocent adolescents, but I was just expounding on doing what my colleagues and I routinely taught.  If I were to start over, I would hope that some of those students would question who set these goals.  At least for macroeconomics I had an answer. The Employment Act oi of 1946 created a Council of Economic Advisors to serve the president and guide him in pursuing these “self-evident” goals.  Actually, I feel less penitent about the macroeconomic goals, although the powers that be seem to worry more about price stability than full employment and never question the conflict between growth and sustainability. But it is the microeconomic goals that I feel called to challenge, and especially the presumed incompatibility of efficiency and equity.  (Freedom we will save for another day.).

Not all goals are created equal.  Efficiency is the primary goal, equity gets a greeting card on some holidays, and freedom is loosely defined and somewhat hard to pin down.  Efficiency is defined in economics in either of two ways getting the most (most WHAT?) out of our available resources or satisfying our wants/needs/desires at the lowest possible expenditure of time and effort. Want to insult an economist? Just tell him (more hims than hers) that his proposal or idea pr practice is INEFFFICNENT.  You will not get nearly the same reaction if you claim it is inequitable.  In fact, Economist Arthur Oken argued that these two goals are constantly in conflict. Equity means a leveling of incomes and assets, but it threatens efficiency because it reduces work incentives.  Some of those who pay more taxes to provide benefits and those who receive more government benefits will just drop out of the labor force. A  nation of idlers! Parasites on those who continue to work and pay taxes! Reducing work incentives Is clearly inefficient.

Efficiency versus equity is another false binary.  We need both.  As a result of this false idolatry of efficiency we have an income distribution that is more like that of a third world oligarchy than a prosperous democracy.  The very rich can use their wealth to redirect government policies to their benefit rather than the needs and desires of the confused and misled majority.  We have outrageously expensive health care costs and a severe shortage of affordable housing, a minimum wage that has not been increased since the Clinton administration, falling life expectancy and a growing environmental crisis.  Other nations that choose to strike a healthy balance between these two goals are more prosperous and more democratic.

When we name these “goals” as the values that they are, values that are the driving forces in our political economy, the choices are much clearer.  The values of efficiency and equality that both support a healthy economy and a democratic polity are not enemies, but partners.

Read my 2023 book, Passionately Moderate: Civic Virtues and Democracy, available from amazon in paperback and Kindle formats.

Diversity, Equity, and Inclusion

~ purplesage41 ~ 3 Comments


In 1967, I was a 26-year-old newly hired part-time assistant professor of economics at a southern state university. I just happened to be in the neighborhood because my husband was a new faculty member in the physics department. Part-time was my choice: I had two daughters, ages three and one, and a dissertation to finish.
I sat down for a chat with my department head. Holley, he said, you know that you are the only woman among six men. I nodded, and he went on. “You are liberal, we are conservative. You are a Yankee, we are Southerners. Your degree is from a Northern University, we ae all products of southern Universities.” He paused, and I waited. Finally, he said, “You know, if you were just black, you’d be perfect.” I wasn’t a “DEI hire,” as far as he was concerned. I was just a blessing that had dropped unexpectedly into his domain, and he was grateful.
In the late 1960s, acceptance of diversity as a desirable situation was widely affirmed, especially in colleges and universities. What went wrong? What made DEI the official abbreviation for highway to hell?
Diversity is a fact, something that can be described and measured. Equity is a value, an affirmation that as a society we believe that everyone should have a fair chance at opportunities. Inclusion is an act, an effort to make everyone welcome in the candidate pool. Later came measurement and with measurement, quotas. What percentage of your faculty/staff/student population is nonwhite? Female? How do you accommodate people with disabilities? DEI became a slogan for governments, firms, and organizations. Look, we have a black CEO! You can trust us.
Then it became a game, and beyond that, a backlash. Many years after that chat with my department head, I had another conversation late in the evening with a younger male friend who felt that DEI had shortchanged him. He said, I wanted to go to Princeton, and I had a1300 on my SAT, but they gave that place to some woman instead. I paused for a moment and said, “I really wanted to go to Yale in 1959, and I had 1500 on my SATs, but Yale was not admitting women until ten years later.” There is no easy way to counteract the effects of past discrimination. Life is short, and changing attitudes, beliefs and misconceptions is slow work, with a temptation for governments to respond with mandates and measurements.
My own education was enriched by learning from professors and colleagues of a different culture (southern), gender (men), age, and political values. It was also enriched by student diversity, especially in the last 15 years of my long career when I was teaching students from all over the world in a Ph.D. program in Policy Studies.
The backlash against DEI has been a long time in coming, but today it is in overdrive. For those of us who believe that equity is a value that addresses the fact of diversity that is best served by efforts to include a more diverse array of employees, customers, investors, colleagues, etc., what can we do?
First, we can share our own positive experiences of diversity, and I do whenever there is an opportunity. What stories do you have to tell?

Second, as an economist, I believe in the power of money. We can shop with and invest in firms that are intentionally inclusive. The president administration has done us a great favor by making clear who is and who is not on board with DEI so that we can direct our dollars accordingly. We know that Target, Walmart, amazon, the Washington Post and Lowe’s do not share DEI value and have in fact deleted the ones that were once part of their corporate credo.

On the investing side, there are three kinds of positive signals from companies, mutual funds and other investment instruments> DEI, ESG, and B-corporations. ESG stands for environment, social, and governance—a commitment by the form to minimize environmental damage in their work, to be attuned to the needs of communities, minorities, workers, and suppliers, and to practice transparency and accountability in their governance. A B-corporation actually has environmental and social goals written into its corporate charter and is required to account for them annually to their shareholders. If you are interested in the investment side, google socially responsible investing and see what you can find. A number of mutual funds offer socially responsible investing in both their own management activities and in choosing what firms to invest in.

Third, there is money that we give away. Some of it can go to organizations who do good work among the “outcasts”—immigrants, former convicts, impoverished families, victims of domestic abuse, global giving to help people in other countries. Charity Navigator can help you evaluate which nonprofits to support. Other nonprofits like ACLU will direct your funds toward resisting the backlash, as will your campaign contributions to candidates who represent or support e inclusion as an action that acknowledges diversity and values equity.

Sexism, racism, xenophobia, ageism, and other forms of targeting marginalized groups is not new. It has been around at least since the Greeks referred to all non-Greeks as barbarians. But the facts of life can be changed by the determined efforts of good people who care about the world we are handing off to future generations. DEI backlash is only a symptom of a much deeper malaise, but for me, it is a good place to strengthen and deepen my work for The Resistance. I hope the same is true for you.