Monday, November 05, 2007

Some Inconvenient Questions: How Much Should We Sacrifice Today for Future Billionaires?

From economist Steven E. Landsburg's recent column ("Save the Earth in Six Hard Questions: What Al Gore doesn't understand about climate change"):

There is nothing particularly peaceable about Gore's rhetorical approach to climate policy. At his most pugnacious, Gore has depicted the fundamental trade-off as one between environmental responsibility and personal greed. Of course, as everyone over the age of 12 is perfectly aware, the real trade-off is between the quality of our own lives and the quality of our descendants'.

In other words, climate policy is almost entirely about you and me making sacrifices for the benefit of future generations. To contribute usefully to the debate, you've got to think hard about the appropriate level of sacrifice. That in turn requires you to think hard about roughly half a dozen underlying issues.

Here are two of Landsburg's inconvenient questions:

1. Many people (myself excluded, however) believe we should care more about our countrymen than about a bunch of foreigners—hence the sentiment for a border fence. If we are allowed to care less about people who happen to be born in the wrong country, why can't we care less about people who happen to be born in the wrong century?

2. If you expect economic growth to continue at the average annual rate of 2.3%, to which we've grown accustomed, then in 400 years, the average American will have an income of more than $1 million per day—and that's in the equivalent of today's dollars (i.e., after correcting for inflation). Does it really make sense for you and me to sacrifice for the benefit of those future gazillionaires?

MP: And if the economic growth rate is 2.5% instead of 2.3%, the average American would make more than $2 million per day in 400 years. Increase economic growth to 3%, and income for the average American would be $15 million per day in 400 years, in today's dollars!

Further, IBD reported in March that the average American household has a net worth of about $487,000. If real net worth grows at only a modest 2.5%, the average American household in 400 years would be multi-billionaires, with a net worth of almost $10 billion.

Question: Most people favor income redistribution from the wealthy to the poor through progressive taxes, estate taxes, etc. Isn't it then inconsistent for those people to show concern for the future rich, and advocate that the relatively poor (people living today) make sacrifices today for the relatively rich of the future (people living 100 years from now)? Won't that be a transfer of wealth and income from the poor (today) to the rich (tomorrow)?

And if one's position is that we should care about the rich in the future and make sacrifices today to leave them a cleaner environment, why doesn't he or she treat the rich living today with the same respect and concern, e.g. advocate a flat tax on income instead of a progessive income tax?


At 11/05/2007 2:32 PM, Anonymous Anonymous said...

For some people, no matter what the question is, the answer is a totalitarian socialism.

One of the telling responses from the warmingmongers was, "Well, these are things we should be doing anyway."

The "things we should be doing" were to promote socialism.

At 11/05/2007 3:14 PM, Blogger Unknown said...

I could not have said it any better. I'm told by fairly wealthy people that I need to change my life, yet the guy telling this to me (Gore) has a $1200/month electric bill. (I wish I kept the link)
And the powerplant that he pulls from is coal powered.
I'm not selfish, but I wish I had people going around tell others to change their lives for me.

At 11/05/2007 3:35 PM, Blogger thomasblair said...

In a podcast last November, Jerry Taylor of the Cato Institute made similar observations in response to the IPCC report's release.

At 11/06/2007 12:34 PM, Anonymous Anonymous said...

The beauty of the situation is: If we go ahead and make the sacrifices today, then the inhabitants of the future won't be so rich; so it won't be as much of a transfer from (relatively) poor to (relatively) rich. All we have to do to make it equitable is to bring down the growth rate.


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