Wednesday, January 10, 2007

I think it's time that TS listed some global warming contracts

This post, by Arnold Kling, quoting Jane Galt, is what got me thinking this way:

'Jane Galt' writes,

As I read it, the Stern Report basically assumes that there are low diminishing returns to income (it sets the elasticity of marginal utility of consumption, or η, to 1). It strikes me as odd to see the left half of the blogosphere supporting this proposition; I'm fairly sure that John Quiggin, who is a social democrat, thinks it is higher than that.

Once again, I feel the urge to try to get rid of the jargon and the Greek letters and explain what's going on. If person A has $1 million in wealth and person B has $10,000 in total wealth, and you can increase "total" wealth by doing something that takes $10 from B (the poor chap) and giving $11 to A (the rich guy), should you do so?

The position of someone on the Left would ordinarily be, "No." But when it comes to the issue of how much environmental damage we should leave it for our wealthy descendants to clean up, the Stern report is saying "Yes, increase total wealth." See my earlier post. And many on the Left are cheering them on.

Read the whole thing. Suggestions on contract formation most welome in the comments!

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