Efficiency vs Equity

In Reform is a delicate act of balance Ross Gittins has an interesting column on the need to balance equity and efficiency:

A lot of the problems the nation struggles with and argues over boil down to the considerable potential for conflict between what economists summarise as ''equity'' and ''efficiency''.

We act as though one is right and the other wrong but, in truth, sensible people want a mix of both. So, though we don't always realise it, the hard part is finding the best trade-off between the two.

''Efficiency'' means taking the scarce resources of land, labour and capital available to the community and employing them in such a way that they produce the combination of goods and services that maximises the satisfaction of the community's material wants.

And

Taken narrowly, ''equity'' refers to the fairness with which the proceeds from all this efficiency are distributed between individuals and households. Is income being shared more unequally between the top, middle and bottom, or less?