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A Paradox of Sustainability

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When discussing Malthus, I said that we don’t need to worry about “overpopulation”, because there are no global food shortages in the foreseeable future.  A natural response to this is that we may be able to feed more people, but they would consume other resources and pollute in an unsustainable fashion.  I have previously expressed several reservations about the idea of sustainability, and I stand by those.  Most environmental problems are not necessary results of overpopulation or a high discount rate that undervalues future generations.  I cannot think of an environmental problem that is not caused by externalities or a lack of property rights, and thus could not be solved by the proper application of Pigouvian taxes or property rights.  Many of these solutions would work fast enough to be worth it to current people at current discount rates; we should have higher gas taxes and property rights in fish regardless of “sustainability”.

Of course, even with these fixes, there will still be increasing amounts of some pollution.  Part of this is due to discounting  the future, which could be reduced in an non-distortionary way by lowering taxes on saving and investment.  Even at a zero discount rate, though, we may still leave the world more polluted than we found it, for instance with more carbon dioxide.  Would this be “unsustainable”?

One definition of sustainability is “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.  In economics terms, this means we should have no time rate of preference (we should care about the future as much as the present); in Rawlsian terms, we should arrange society as we would if we didn’t know which generation we would be born in.  I have previously argued that high pollution and consumption can be sustainable because future generations will probably be richer and we aren’t sure how much they will value our actions.  In finance terms, this is like taking out loans instead of saving because you think your income will be higher in the future and because investments are risky.   Such an individual would take out loans even if they value their present and future selves equally.

All of these criticisms simply reduce the scope of sustainability; but it is still reasonable to reduce some pollution and consumption if you think future generations will be poorer than us and you have a good idea of what they will value (though I think they will be much richer than us).  The actual contradiction comes when we consider “overpopulation”.  It is often said that people today should have fewer kids because a higher population is not “sustainable”.  If we have fewer kids, there will be more resources per person; each person in the future will be able to pollute and consume more.  How is this a problem?

Robert Solow pointed out one contradiction of sustainability (though he was kind enough to call it a “paradox”) when he said (page 7, it is worth reading all 9):

“I want to mention what strikes me as a sort of paradox- as a difficulty with a concept of sustainability.  I said, I kind of insisted, that you should think about it as a matter of equity…. how productive capacity should be shared between us and them, them being the future.  Once you think about it that way you are almost forced logically to think about not between periods of time but equity right now…. the paradox arises because if you are concerned about people who are currently poor, it will turn out that your concern for them will translate to an increase in [current] consumption”

This is one contradiction, that we want equity across generations, and we achieve it by worsening current inequality.  We tell poor Brazilians not to clear land for their farms, poor Chinese not to burn coal to light their homes, poor Africans not to use DDT to protect their health; all so people in the future can enjoy more species and a stable climate.  This seems to be a transfer from poor to rich in the name of equity.  But Solow, right after pointing out one contradiction, stumbles into another, saying “control of population growth would probably be the best available policy on behalf of sustainability”.

This creates another kind of inequality.  Say a future generation can safely consume and pollute 10 units, spreading this over 10 people, so each person gets one unit of “exhaustible GDP”.  Are we being equitable if instead we control population so that there are only 5 people and they can each have 2 units of goods?  No, we are making the rich (who get to experience life) richer with an extra good per person, while the 5 “poor” don’t get to exist at all or consume anything.

Further, the only ways to explain away the problem are blocked by the logic of sustainability itself.  One could say that the people who don’t exist shouldn’t be counted; but the whole point of sustainability is to speak up for future generations who don’t yet exist and so can’t speak for themselves.  One could say that a life that is allowed little pollution or consumption of exhaustible resources is not worth living; but the whole strategy of sustainability is to tell people that life is still good when you pollute little, consume little, and draw enjoyment from things besides consumerism and materialism.

So an argument that we should have fewer kids to be sustainable and equitable is really an argument for increasing inequality in the future.  It does not make sense on equity grounds; sustainability needs to drop the idea of population control to be logically consistent (except insofar as it does prevent famine and musicals).  The new growth theory and a host of empirical work have also established that it doesn’t make sense on efficiency grounds, since the externality of a marginal child is positive.

There are lots of good reasons not to have kids, but a worry about sustainability is not one of them.

Written by James Bailey

June 3, 2011 at 8:42 pm

Sustainability and the Death Tax

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The “death tax” or estate tax is being debated in the U.S. Congress.  Most popular discussion revolves around how “fair” it is.  In typical economist fashion, I will ignore this question to talk about its efficiency and distortion.

The government has to raise money somehow.  The ideal taxes either distort the economy in a good way (Pigovian taxes) or distort it as little as possible (lump-sum tax, height tax).  Most actual taxes distort the economy in a bad way.  Payroll and income taxes discourage work, sales taxes discourage consumption, capital gains taxes discourage investment.  So what about the estate tax?

The estate tax gives a minor reason not to earn income, and a major reason to consume rather than save.  Like direct taxes on saving and investment, the estate tax encourages people to expend resources in the present rather than saving them for the future.  Lowering these taxes would lower the discount rate.

It is odd that I have never heard (non-economist) environmentalists who claim to value “sustainability” advocating lowering any of these taxes.  It is one sure way to make many people value the future more relative to the present.  Perhaps the fact that it would largely help rich people is so repugnant that it should be avoided even if it benefits the environment and the future.

One thing I think everyone can agree on, though, is that this is one tax that should change little from year to year- lest it distort the economy in a murderous way.

Written by James Bailey

May 9, 2010 at 11:18 am

I time-traveled here from 1987 to say: You future people like weird things

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(Continuing from my previous post, Does the  idea of sustainability survive sustained inquiry?)

Sustainability means preserving good things for future generations.  But as Bob Solow notes, we have no idea what the preferences of future generations are; we are likely to think they are weird.  After all, if someone in 1800 were trying to make people in 2009 better off, what would they do?  Burn less coal?  Would these 2009 people prefer to have more cities, or farms, or picturesque villages, or wilderness (but who likes wilderness? We haven’t had a romantic movement yet, and Thoreau hasn’t even been born)? Certainly we would leave them better off by exterminating dangerous and destructive animals like tigers and wolves.  And we are going a great service to future generations by spreading Christianity and civilization to the backward tribes of the world!

Clearly, it would be pretty hard for a well-meaning person in 1800 to do the right thing from our perspective.  Presumably, the future is also pretty hard for us to figure out.  Solow wisely notes this, then promptly ignores his own advice.

Most blatantly, he says that “control of population growth would probably be the best available policy on behalf of sustainability.”  If he is considering the average utility of the members of future generations then this is at least plausible, although I would not bet on it as the best policy to please weird future people.  But if he is considering the total utility of future people (as I think is proper), then then this is probably nonsense.  A future with 10 billion people will have more happiness than a future with 9 billion people unless those additional people push the world over into famine and resource exhaustion, which seems to me at least highly implausible.  And total utility is the right measure, because considering average utility leads to even more serious moral problems than utilitarianism generally; for instance, it implies that we should euthanize depressed people, or taken to its logical extreme we should euthanize everyone but the happiest person on earth.

But this is an isolated case of Solow being wrong.  Now for the more general theory of his wrongness.  He notes rightly that it is hard to know whether future generations would prefer for us to invest or to preserve the environment, since both are likely to benefit them.   The problem is that he then asserts that both should be categorically superior to present consumption, which can only benefit the current generation.

This disdain for current consumption is at best an oversimplification.  First, we need to distinguish the consumption of non-renewable resources from all other consumption.  In general, this is the consumption that actually makes future generations worse off (by eliminating resources they could have used), and Solow’s idea to count it is a good one (we could subtract the consumption of nonrenewable resources from total GDP to get a measure of “sustainable GDP”, just as economists have sometimes tried to separate out GDP generated from the depreciation of the capital stock).  In some special cases, of course, this consumption could still benefit future generations: the technologies developed for mining are applied more generally, or if today’s resource becomes tomorrow’s nuisance (invasive species?), or if the byproducts of consumption are actually beneficial (say, if future people like a warmer earth then they would appreciate that our consumption lead to CO2 emissions [there is probably a better example of this idea]).

But most consumption does not involve (at least directly) the use of nonrenewable resources.  If I consume a lot of perishable, rival goods like corn or trees, people in the future could simply grow more.  This sort of consumption is something people in 100 years would, in most cases view neutrally.

Most interestingly, there is the consumption of non-rival goods.  Will people in 100 years be worse off because I read too many books, or watched too many movies, saw too many plays, listened to too many concerts?  Not at all.  In fact, to the extent that such consumption encourages the creation and preservation of such non-rival, not-very-perishable goods, it actually benefits future generations! Again of course there are exceptions, many people in the 20th century would have been better off if Lenin et al hadn’t bought Karl Marx’s books, and it is hard to imagine much current music being of any benefit to future generations.  But in general the consumption of art and writing can be of great benefit to future generations.

Back to the general theory.  Think of someone living in Athens in the golden age of Greece.  What could they do to be of most benefit to future generations?  Solow suggests that we would value their environmental protection and their investment.  Well, I certainly don’t mind that they invested; I’m sure they enjoyed operating capital-intensive olive oil businesses.  I suppose it is good that they protected their environment, though I might enjoy Greece more if they had turned more non-renewable marble into buildings and statues.  But what I, weird future-person, value most from average ancient Greeks is their consumption- the fact that there was a market for Plato’s dialogues, Aristophanes’ plays, and Herodotus’ histories.  This same applies to Renaissance patrons of the arts, classical concert-goers, the book-buying public of the Enlightenment and the modern era.

In a way, I suppose this blind spot for the incredible power of ideas, information, and other non-rival goods should be expected from Solow, whose namesake growth model sees technology as exogenous!  But given that the development of ideas and technology really does depend partly on the knowledge that people will pay to consume them, I am glad that people in the past undertook that consumption and left us with the treasure trove of ideas we have.

Written by James Bailey

September 4, 2009 at 8:59 pm

Does the idea of sustainability survive sustained inquiry?

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In Bob Solow’s 1993 “Economist’s Perspective on Sustainability“, it survives as a “necessarily vague, but useful” idea.  He notes that sustainability has been conflated with other moral ideas about environmental protection, but that sustainability itself does not necessarily mean preserving species or wilderness.  Instead it is about “distributional equity” between the present and the future.  This means that we should be comparing general standards of living- how much are we better off because we make future generations worse off- rather than only the status of the environment.

To Solow, this means that future generations will value our investments as well as our preservation of resources, so they would not necessarily want us to preserve resources at the expense of investment; but he does say that both investment and resource preservation should be preferable to consumption.

His best idea is to clarify all this by looking at the sustainability of past generations.  We are talking about doing well by future generations, but to past people we are one of those future generations!  Are we happy with how sustainable our predecessors’ economy was?

Well, they killed off the dodos and mammoths, used up most of the oil in the continental US, and left a lot of toxic chemicals lying around; so in the purely environmental sense, they did not do very well.  But in a broader sense, they did fine by us; in fact, I think we got the much better end of the deal.  We have a vastly higher standard of living than people did 50 or 100 or 10000 years ago; inter-temporal distributional equity would actually entail more past environmental degradation insofar as it allowed our very poor ancestors a higher standard of living.

This same logic implies that we should worry less about developing countries like China raising their living standards though industrial pollution, since future Chinese people (as well as current and future moralizing Westerners) will have better living standards even after resource degradation and pollution has been accounted for.

Certainly, I am happy that past generations built Philadelphia rather than leaving forests, built Paris rather than leaving plains, built Boston rather than leaving us swamps to enjoy.  I would like to have mammoths around to look at in zoos (or hunt?!!), but I am sure that prehistoric hunter-gatherers got a lot more enjoyment from not starving than I would from having a better zoo.

Perhaps there is some inherent moral value to not polluting, or to preserving wilderness, or (most plausibly) to not causing species to go extinct.  But this is a different thing than sustainability for the sake of future generations of humans; it is instead about valuing other species, or the environment generally, inherently and for their own sake.  Which is another discussion entirely!

Through all this I am on board with Solow.  In my next post, I will show how Solow gets things a bit wrong through oversimplification.

Written by James Bailey

September 4, 2009 at 7:34 pm

Fear the Enviro-Pirates

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I had never heard of the Sea Shepherd conservation society and was pretty incredulous when I was pointed to their history.  They sound like a super-hardcore version of Greenpeace, and indeed they were founded as a splinter group of Greenpeace.

One of the most hardcore parts of their story, additionally interesting for showing that radical environmentalists are not all Commies, was when they bombed the Soviet spy ship with paint and threatening messages.  Bombed, from a plane.  Generally lots of naval warfare and trouble with authorities.

Written by James Bailey

March 10, 2009 at 10:38 pm