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“Moral debt” is classic watermelon politics

Do left-wing economists believe that there is anything to which wealth redistribution is not the answer?

Artillery Row

I was taught to always be wary of suspiciously round numbers, for they usually indicate that somebody has thought up a particular sum, and then worked backwards via some nebulous reasoning to construct an ad hoc justification for it. So alarm bells immediately started ringing when I saw economist Esther Duflo claim that she had run the numbers and worked out that the rich world owes a “moral debt” to poor countries of bang-on half a trillion US dollars.

Duflo reaches the figure by combining three distinct calculations. She takes the estimated impact of one tonne of carbon emissions on global warming, multiplied by the effect of higher temperatures on mortality, then multiplied by the monetary value of a statistical life. This figure represents the monetary value of the cost of carbon in the air and is estimated to be $37 a tonne. Multiply that by the yearly carbon emissions of the “rich world”, which Duflo restricts to just the US and Europe, and you get $500 billion per year. 

Though Duflo is an economist by background, she explicitly justifies her proposal with the language of moral philosophy, not the economist’s vernacular of costs and benefits, externalities and market failure. The $500 billion figure represents a “moral debt”, what the rich world owes the poor world, “not what it would cost to adapt [to climate change]”. 

Suggestions for redressing the disparate impact of climate change are by no means new, and a whole field known as “climate justice” has emerged to offer philosophical justification for various courses of action. Proposals usually fall within two conceptions: the polluter pays principle, and the ability to pay principle. The former applies pleasingly simple logic: the costs of emissions should be paid for directly by the emitter. The latter takes the logic of progressive taxation systems — those with the broadest shoulders ought to bear the biggest burden — and extends it to the global effort against climate change, meaning that the rich ought to make an outsized contribution regardless of their actual emissions.

The difficulty and controversy with both principles arises when it comes time to decide exactly who ought to pay. Under the polluter pays principle, less developed countries argue that all historic pollution ought to be included, not just future emissions, to account for the greater share of historical emissions richer countries are responsible for. With the ability to pay principle, there is disagreement over whether the ability should be defined collectively or individually — whether rich nations should be made to pay collectively, or rich individuals should foot the bill regardless of their national origin. 

Her construction of a global “moral debt” is … a tenuous justification for a political project to which she was already committed

Duflo messily mixes the two principles, on the one hand arguing that a direct moral duty arises from emitting carbon, and this duty justifies the imposition of compensatory payments, yet on the other hand only extending this duty to the arbitrarily defined “rich world”, suggesting that the duty is concomitant on having attained a certain level of wealth, irrespective of actual carbon emissions. But nitpicking Duflo’s moral reasoning is ultimately an irrelevant academic exercise, for her construction of a global “moral debt” is not borne of a genuine commitment to the moral principles she invokes, but as a tenuous justification for a political project to which she was already committed.

The means by which she proposes to raise the yearly half a trillion dollar moral debt are revelatory, lacking the pretence of having been derived from the principles she constructed, instead falling back upon familiar methods for wealth transfers that have been championed for decades. Duflo calls for an increase in the global minimum corporation tax from 15 to 18 percent, which should raise around $200 billion, and a 2 percent yearly tax on wealth for the 3,000 richest people in the world, which raises the other $300 billion of the “moral debt”. Once raised, a “big outlet for the fund” would be direct cash transfers to the bank accounts of those in the poor world who experience “climate events”, alongside “automatic payments to governments in response to disasters”.

The use of these two methods of revenue generation is justified due to the relative ease at which Duflo thinks they could be implemented, and due to her belief that the current rate at which the world’s ultra-rich are taxed is “fundamentally unfair”. In doing so, Duflo shows that her scheme is yet another attempt to impose duties upon the rich world (defined here as the US and Europe) to fund the poor world. Sometimes the justification is historical injustices, sometimes it is global inequality, and sometimes, as in this case, redress for climate change. The solution remains the same — enormous fiscal transfers directly from the rich world to the poor world. 

Duflo could have drummed up support for her proposal on the basis of it being the charitable, benevolent thing to do for those most vulnerable to climate change. Instead, she makes the grandiose claim to have identified a duty, carrying with it far more onerous moral implications. But her reasoning is muddled, and the proposed means of fulfilling this duty suggests that rather than being a breakthrough in moral philosophy, Duflo is merely engaging in a form of watermelon politics — green on the outside, red at its core — as a way of cloaking familiar left-wing calls for wealth redistribution with the language of environmental ethics. Her pronouncements should be treated accordingly.

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