The Impact of Equity-driven Policy Measures of the Equity of the State

  • J. G. Backhaus


During the last decades, the idea that government can and should be an effective instrument for the attainment of social justice and other ideals dear to social economists has come under powerful attack. Sometimes the attack is doctrinaire, designating areas in which government should or should not intervene. In economics, this often is done in the tradition of identifying areas of ‘market-failure’. Sometimes the attack is fueled by the serious shortcomings of well-intentioned government action leading to poor results. Some economists have tried to identify these areas of poor government policy in terms of theory of governmental failure. In this paper, a different route is chosen. Building on traditional public finance theory, the concept of public equity is developed as a measuring rod with which to judge the outcomes of policies guided by considerations of social equity or justice.