Gender equality: Why economics has it wrong

NEARLY EVERY public policy, economics class or trip to a city market, will show you that supply and demand are real things. As the demand for any product goes up there will be an eventual increase in supply and then price, till equilibrium is reached. Not only is this natural it is also efficient, and more importantly, rational.

Sunday, January 19, 2014
Adam Kyamatare

NEARLY EVERY public policy, economics class or trip to a city market, will show you that supply and demand are real things. As the demand for any product goes up there will be an eventual increase in supply and then price, till equilibrium is reached. Not only is this natural it is also efficient, and more importantly, rational.

However, when it comes to gender equality not only does this rule not hold true but we find that irrationality may be the norm. So Rwanda’s government efforts to increase female participation are not only right but necessary to buck the trend. Government intervention is more often than not an undesirable situation. The price of commodities best serves the community when the markets set the price. Price controls tend to lead to shortages and black markets. The efficiency argument would maintain that mandating that certain proportion of an institution like Parliament should be female, should not only be unnecessary but will lead to a variety of other problems. It’s a tough pill to swallow for an entire school of thought to be so wrong but as they say "numbers don’t lie.” Not only are equality mandates necessary but they are fundamental to break human irrationality. It is fair to argue, holding all things constant, that women and men are equally productive. So once employers realize that women today in the United States make 77 cents for every dollar a man makes, the natural reaction should be to fire the men and hire these ‘cheaper’ females. Over the long run, men would lower their pay requests because women can do the same job for cheaper and women would increase their salary expectations to be commiserate with the work they do. Eventually equilibrium would be reached. This, however, is not happening. So in the world’s most advanced economy where money markets rule, people are behaving irrationally. In Sub-Saharan Africa, according to Imperial College London, women make over 50% of the labors in agriculture and over 80%, at the same time, of the domestic chores.  One can debate endlessly the reasons for this; sexual discrimination, false perception of productivity, or even historical bias of the part of females to not enter certain fields. Finding the answer is beyond the scope of this article. That being said, it is beyond question that women aren’t being treated fairly by market mechanisms. Gender equality isn’t simply a goal but an economic imperative. Ensuring that half of any nation’s population is skilled, productive and participating, should be pivotal for all governments. But market forces have been shown to not be trust worthy in insuring this takes place. Rwanda’s gender policy not only stresses inclusiveness but mandates it. A Parliament where 64% of the members are women reflects that determination. This seems to be the case in numerous high ranking government spheres, such as cabinet where eleven (including the Ministers of Foreign Affairs, Agriculture and Health) of the twenty nine ministers are female. More countries should follow Rwanda’s example and impose quotas. Societies are at their best when individuals have a sincere belief that they are only held back by their own abilities. Former United States President Ronald Reagan claimed that the countries that have seen the greatest level of development have been those that have embraced the power of the market place.

By and large he was correct, but when it becomes necessary for the government to intervene where the market place cannot, the government should. Insuring gender disparity in influence and finance end is one of those imperatives.