Equity and Efficiency.

The choice between equity and efficiency is the central issue in

every public policy. To many, efficiency is producing good results with minimum effort and cost,
but for an economist, it goes deeper. Efficiency is when resources are used within a certain
period of time that makes it impossible to increase the well-being of an individual without
reducing the well-being of the other person. While equity is the perceived fairness in the
allocation resources among the society.
Some people, especially in the context of the Philippines, inequality is the central
problem of the society or of our country and equality should be minimized even putting
efficiency in jeopardy. I beg to disagree with this notion and support the claims of some that
efficiency and productivity is the central problem of our country and in order to help the poor, in
the long run, we should not worry too much how to distribute the goods of the country, but rather
increase productivity and enlarge the pie that we all share.
The Philippine government, in my point of view, has been focusing on equity rather than
on efficiency. There are some of programs of the government that leads to losses in efficiency.
First. The Subsidy in MRT and LRT. Government provides fare subsidy for the commuters of
these urban trains in metro manila, but not to other urban cities such as cebu and Davao. The
subsidies in these trains loss efficiency by allowing them to charge a price operating at a loss
and contributing tax distortion since the subsidy came from the taxes of people not only Metro
Manila, but from different cities and provinces throughout the country who do not benefit from
this train fare subsidy. Also, programs like the price support in rice production by the NFA is a
kind of programs that promotes equity but putting efficiency at stake.
However, there are also programs set by the Philippine government promoting efficiency.
For an example, the amended six tax bill is promoting social efficiency especially its provision
on cigarette because the tax makes people to pay the social cost of smoking. Another is the
Philippine version of Progresa-Oportunidade, the 4Ps. The Pantawid Pamilyang Pilipino
Program, just like other conditional cash transfer, encourages change the behavior patter of the
poor by giving subsidy for certain conditions improving human capital and well-being.
The trade-off between equity and efficiency is really a complex issue. Nevertheless, in
my point of view, if we cant have best of both worlds, its better to choose efficiency.