Not long ago, economists argued in public over basic economic policy issues. Foremost among the debates was the clash over equity and efficiency.

Efficiency promotes economic growth and overall prosperity. Equity deals with how much of people’s income should be shifted to the less fortunate. Generally, more equity risks less efficiency, hence the so-called equity-versus-efficiency tradeoff that economists often debate.

Welfare transfers that provide a “hand up” can improve efficiency, but “handouts” might encourage unemployment. The taxes needed to pay for welfare transfers by themselves also generate distortions that raise inefficiencies.

Economists are now strangely silent while watching public policies unfold that are neither equitable nor efficient.

Take President Biden’s college loan forgiveness program. College-educated people earn more on average than the less educated. So how can loan forgiveness be justified on equity grounds? This giveaway is also inefficient because it will distort incentives and likely raise already too-high college costs.