What is Equity Economics?
We all like things to be fair right? Whether it’s the last piece of pizza or someone butting in a queue, fairness is something that we all have opinions on and the majority of us strive to achieve. Equity essentially means fairness and economics is dealing with money. So put simply equity economics is fairness with money.
But we’re not looking at whether you’ve been written into your grandparent’s will or not, we’re looking at something far bigger than that, at how nation’s distribute their wealth evenly because when they don’t you often end up with a very select few very rich people and the majority of the public fighting for scraps below. The world’s wealth distribution is far from an ideal equity model. ​Half of the world's net wealth belongs to the top 1% which I think we can all agree is far from fair.
Although, is that actually the case? The majority of the world lives on a spectrum of a free market economy, meaning that people are encouraged to go out and find ways to make money with limited government interference. This plays into the classic American dream where the thinking was that if you had an idea and a great worth ethic you could make yourself something from nothing. There’s a school of thought that encourages this gathering of wealth and some may argue that it’s fairer to have the potential to earn millions if you have the talent rather than being restricted to keep things equal for everyone.
So what are the ways that nations traditionally keep things fair. There are two ways - horizontal equity and vertical equity. Horizontal equity is when you treat everyone exactly the same regardless of their background. 2 people earning the same would pay the same amount of tax regardless of any special circumstances. Taxation remains the same percentage throughout the system. Think of this as the Karl Marx approach of keeping everyone on the same level and distributing evenly.
Vertical equity is more of a Robin Hood philosophy and is the one that the west is used to dealing with, albeit with the odd tax break here and there. Essentially the more you earn the more tax you pay, money is skimmed off from those that can afford it to help pay for those who can’t. In theory this still leaves the rich rich and doesn’t penalise the poor. Most people who live in this system know it’s not as simple as that and governments need to tread a fine line between keeping the rich happy so they keep money in the country but also taxing a fair amount.
But why is equity in economics important. Well without equity it’s very easy for most people to go without and when most people don’t have the resources to live it’s very difficult for them to contribute to the economy at all. Equity is all about making sure the right people pay the right amount so as many people as possible can stay happy, contribute back into the economy as well as contributing to a just and fair society.
Thank you for liking and subscribing, let us know in the comments below, any other subject related to equity economics that you may want us to upload, we love suggestions!

свернуть