International Trade Theory and Policy
by Steven M. Suranovic

Trade 125-10

Maximum Benefit Fairness

The final type of fairness is the one that, arguably, does not really belong as a fairness category. Indeed, in economics there are considerable discussions about the trade-off between equity (i.e., equality or fairness) and efficiency (i.e., maximum productiveness).  Nevertheless, a desire to maximize profits or benefits or well-being is certainly applied as a normative principle.  Economists, and many others, often suggest that actions and policies be chosen so as to maximize the net benefits that will accrue to people.Thus, it makes sense to include this principle as one other typically used in evaluating policy decisions and other actions.     In addition, there is at least one instance where a concern about maximum benefits is associated with the concept of fairness.

This application occurs in situations where one is forced to discriminate among individuals.A typical case is a business’ decision to hire an employee to fill a vacancy. Suppose that there is just one job available but that many individuals apply for the job.  Clearly in making a decision to hire, the firm must discriminate among the applicants.  It cannot hire everyone. We might ask what is the “fair” way to do so, but first, let’s consider the unfair ways. It is generally accepted as unfair for the firm to discriminate on the basis of gender, race, or religion.   The reason is that these qualities in a person should have little to no bearing upon his or her ability to do the job. In other words, these characteristics are judged to be immaterial to the person’s ability to perform the job, thus, choosing, or excluding on this basis would be unfair.  What would be fair is to choose the employee based entirely on the person’s ability to perform the job.  If the most talented, most proficient, most educated, most able, person gets the job, most would accept that decision as a fair outcome in this circumstance. The implication is that the “fair” choice is the one that will serve the business the best; which will maximize its productiveness or the benefits that will accrue to it. It is in this sense that maximizing benefits is sometimes associated with the concept of fairness.

In the debate over globalization, maximum benefit fairness tends to be applied more frequently by economists and others who generally support movements towards freer trade and more open global markets.  The focus of most welfare analysis in economics is to identify policies that will maximize economic efficiency.  In essence this means maximizing the net benefits that will accrue to a nation.  Most economic models suggest that free trade provides the best chance to raise productiveness of the world economy and to raise the standard of living of the world’s peoples. In a world in which millions of people cannot provide even their most basic needs, configuring the economic system in a way to produce as much as possible seems, to globalization supporters, to be a reasonable, perhaps even “fair” course to take.

International Trade Theory and Policy - Chapter 125-10: Last Updated on 8/2/01