I’ve been reading some wonderful stuff on the Stern Report, which was a seminal report on global warming released last year.
The Stern Report says that we should invest now so that we don’t have to pay through the nose later. It all sounds sensible–an ounce of prevention et cetera.
The report, though, is fascinating and complicated and interdisciplinary. It stands at the intersection of philosophy and economics. Stern makes clear ethical assumptions, which lead to clear economic prescriptions. This is quite unusual as economics papers go.
Stern is quite bold. The report says, if I’m not mistaken, two quite radical things: all future generations should be valued equally to our own, and all people’s incomes should be valued equally. These are ethical judgments that lead to strange, strong, economic implications. They are also judgments that expose the old ethical underpinnings of economics.
Brilliant critics like Nordhaus and Dasgupta argue that these two ethical assumptions lead to an absurd economic result: that we should save an enormous portion of our present income for the benefit of future generations. They say, sensibly, that the absurdity of this should lead us to reject the premises (and therefore his conclusions).
This is hasty. Stern’s philosophical and economic premises lead to absurd conclusions, that is for sure. Logically, then, something is wrong in the system–but it may not be the most obvious premises that are faulty. Maybe, instead of rejecting the philosophical premises (that we are all to be counted equally) we should reject the economic theory. It could be something in the math, something along the chain of reasoning that is broken, and not necessarily the starting point. The starting point is only the most obvious culprit.
Rejecting the economic theory is harder. It is bigger. It is clearer. It is more elegant. It is more prestigious. And yet, yet… it just could be wrong.There are, I think, some preliminary reasons to think that economic theory is the culprit. I’ll try to think through more when I’m done moving.
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