Question

To what extent should we balance market efficiency and fairness? Should we compromise one for the other?

Answer 1

In my opinion, it is important to balance out market efficiency and fairness. Before we discuss, lets define efficiency and fairness. A market is efficient when the market forces are fully free to act as they would naturally, without any intervention from the outside. So in an efficient market, the prices and quantities would be decided purely by market forces such as supply and demand. Fairness is more of an ethical concept, meaning that market must be such that it allows resources to people who otherwise wont be able to afford them- for example poor or disabled etc. Fairness argues against too much wealth to any one party.

From a general point, it is not hard to argue that some sense of balance between efficiency and fairness is necessary. If we dont focus on fairness at all, there will be many people who will be left out and behind in the economy. On the other hand, of we focus on fairness too much, it will discourage people from investing and working, resulting in losing the competitive edge and engine of growth. So, in my opinion, we should balance them out in such a way which ensures that basic requirements such as food and shelter are being fulfilled for everyone, but any luxury above the bare necessities must be decided purely by market forces- by efficiency. This balance of fairness and efficiency will ensure that no one is left behind, but we are also not being unfair to the investors and entrepreneurs and the job creators.

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