Shifting Gears: The Way Forward

The Trump administration accomplished many good things and many bad things (especially in the trade and foreign policy areas). Trump himself belongs in jail in my opinion. Hopefully, with the new Biden administration we can turn our attention to policy issues and stop calling our policy opponents nasty names. We must state the positive case for why our policy views are more appropriate–why they are better for our country. These are the sorts of public debates that we have been missing for a while and to which we should return.

One of our most fundamental principles is America’s commitment to equal treatment under the law for everyone regardless of race, religion, sexual orientation, or preferred hair style. Equal treatment is extended to everyone whether they or their ancestors came from Asia, Europe, Africa or Ireland (yes, even Ireland). We have never fully measured up to this principle, but it remains, and should remain, the objective to which we continually strive. It means that our accomplishments and “place” in society largely reflect our own talents and efforts. We are a nation of individual liberty. We are free (to a large extent) to make our own decisions. Our policy disputes often concern where to draw the line between what we decide for ourselves and what the government decides for us. My blog last week on our response to Covid-19 provides an example: https://wcoats.blog/2021/03/06/the-unnecessary-fight-over-covid-19/

Equity (equal outcomes) was the fundamental principle of the Soviet Union, though its outcomes fell far short of the principle. Between these extremes of equity (communism/socialism) and equality (equal treatment under the law) is our actual world of governments with more intrusive or less intrusive rules and dictates on our behalf, with broader or narrower social safety nets, etc.  America continues to debate where and how to set these boundary’s, but one of our great strengths, and a source of our broadly shared affluence, is undertaking the debate from the side of (and with the presumption of) self-reliance (with family and friends) and equality under the law.

The distinction between equity and equality is sharply contrasted in the following WSJ oped.

THE  WALL  STREET  JOURNAL.

Friday,  March  5,  2021.

Section A, Page 17, Column 1

‘Equity’ Is a Mandate to Discriminate

The new buzzword tries to hide the aim of throwing out the American principle of equality under the law.

By Charles Lipson


On his first day as president, Joe Biden issued an “Executive Order on Advancing Racial Equity and Support for Underserved Communities.” Mr. Biden’s cabinet nominees must now explain whether this commitment to “equity” means they intend to abolish “equal treatment under law.” Their answers are a confused mess.

Arkansas Sen. Tom Cotton raised the question explicitly in confirmation hearings. Attorney General-designate Merrick Garland responded: “I think discrimination is morally wrong. Absolutely.” Marcia Fudge, slated to run Housing and Urban Development, gave a much different answer. “Just to be clear,” Mr. Cotton asked, “it sounds like racial equity means treating people differently based on their race. Is that correct?”

Ms. Fudge’s responded: “Not based on race, but it could be based on economics, it could be based on the history of discrimination that has existed for a long time.” Ms. Fudge’s candid response tracks that of Kamala Harris’s tweet and video, posted before the election and viewed 6.4 million times: “There’s a big difference between equality and equity.”

Ms. Harris and Ms. Fudge are right. There is a big difference. It’s the difference between equal treatment and equal outcomes. Equality means equal treatment, unbiased competition and impartially judged outcomes. Equity means equal outcomes, achieved if necessary by unequal treatment, biased competition and preferential judging.

Those who push for equity have hidden these crucial differences for a reason. They aren’t merely unpopular; they challenge America’s bedrock principle that people should be treated equally and judged as individuals, not as members of groups.

The demand for equal outcomes contradicts a millennium of Anglo-Saxon law and political evolution. It undermines the Enlightenment principle of equal treatment for individuals of different social rank and religion. America’s Founders drew on those roots when they declared independence, saying it was “self-evident” that “all men are created equal.”

That heritage, along with the lack of a hereditary aristocracy, is why claims for equal treatment are so deeply rooted in U.S. history. It is why radical claims for unequal treatment must be carefully buried in word salads praising equity and social justice.

Hidden, too, are the extensive measures that would be needed to achieve equal outcomes. Only a powerful central government could impose the intensive—and expensive—programs of social intervention, ideological re-education and economic redistribution. Only an intrusive bureaucracy could specify the rules for every business, public institution and civic organization. Those unhappy implications are why advocates of equity are so determined to hide what the term really means.

Americans have demanded that all levels of government stop giving special treatment to the rich and powerful. That is simply a demand for equality. Likewise, they recognize that equal treatment should begin early, such as with adequate funding for K-12 students.

Since the New Deal, most Americans have supported some form of social safety net for the poor and disadvantaged. But this safety net doesn’t demand that out-of-work coal miners receive the same income as those who are working. The debate has always been about how extensive the safety net should be and how long it should last for each recipient. There is broad agreement that no worker should be laid off because of his race, gender or religion. Again, that is a demand for equal treatment.

What we are seeing now is different. It is the claim that the unfair treatment of previous generations or perhaps a disadvantaged childhood entitles one to special consideration today as an adult or young adult. Most Americans, who are both generous and pragmatic, have been willing to extend some of these benefits, at the margins and for limited periods. They don’t want to turn these concessions into large, permanent entitlement programs, giving substantially different treatment to different groups, even if those groups have suffered historical wrongs.

One measure of how unpopular these unequal programs are is how often their proponents need to rename them. “Quotas” were restyled as “affirmative action.” The goal was still to give special benefits to some groups to achieve desired outcomes. Now “affirmative action” has also become toxic, rejected most recently by voters in deep-blue California. Hence, the new name, “equity.”

Instead of making their case openly and honestly, advocates of equity twist and turn to avoid revealing their radical goal of re-engineering society through coercion. If the results fall short, as they inevitably would, the remedy is obvious: more money, more rules and more indoctrination. Why not tell us who will receive these special benefits and for how long? At whose expense? Who will administer these programs? Who will judge whether the outcomes are fair enough? When will it all end?

Since the ultimate goal is achieving equal outcomes, these evasions raise the hardest question of all. Isn’t equity just a new brand name for the oldest program of achieving equal outcomes? Its name is socialism.

Mr. Lipson is a professor emeritus of political science at the University of Chicago, where he founded the Program on International Politics, Economics, and Security.

About wcoats

I specialize in advising central banks on monetary policy and the development of the capacity to formulate and implement monetary policy.  I joined the International Monetary Fund in 1975 from which I retired in 2003 as Assistant Director of the Monetary and Financial Systems Department. While at the IMF I led or participated in missions to the central banks of over twenty countries (including Afghanistan, Bosnia, Croatia, Egypt, Iraq, Israel, Kazakhstan, Kenya, Kosovo, Kyrgystan, Moldova, Serbia, Turkey, West Bank and Gaza Strip, and Zimbabwe) and was seconded as a visiting economist to the Board of Governors of the Federal Reserve System (1979-80), and to the World Bank's World Development Report team in 1989.  After retirement from the IMF I was a member of the Board of the Cayman Islands Monetary Authority from 2003-10 and of the editorial board of the Cayman Financial Review from 2010-2017.  Prior to joining the IMF I was Assistant Prof of Economics at UVa from 1970-75.  I am currently a fellow of Johns Hopkins Krieger School of Arts and Sciences, Institute for Applied Economics, Global Health, and the Study of Business Enterprise.  In March 2019 Central Banking Journal awarded me for my “Outstanding Contribution for Capacity Building.”  My most recent book is One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina. I have a BA in Economics from the UC Berkeley and a PhD in Economics from the University of Chicago. My dissertation committee was chaired by Milton Friedman and included Robert J. Gordon.
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