Over at Econolog, TCS writer and right-wing hack Arnold Kling reports, under the headline The Stern Swindle , that Cambridge economist Partha Dasgupta criticizes the Stern report for applying a very low discount rate to the interests of future generations. Kling writes:
What Dasgupta is saying is that the approach Stern uses to evaluate intertemporal trade-offs would, if applied generally, suggest that our consumption should drop from over 80 percent of GDP to 2.5 percent, in order to leave the target legacy to our children. What Dasgupta’s comment does is crystallize for me the magnitude of the intellectual swindle that Stern is attempting to pull off. Any time you assign a far-from-plausible interest rate to a long-term intertemporal problem, you get distorted results.
What Dasgupta actually says :
I have little problem with the figure of 0.1% a year the authors have chosen for the rate of pure time/risk discount….(p. 6)
Dasgupta’s real argument is that Stern shouldn’t adopt the egalitarian approach it does to intergenerational well-being whilst being at the same time indifferent to inequality among members of the present generation. Dasgupta thinks the well-being of the actual poor should take priority over climate change abatement. Of course, we’ve heard arguments along these lines before, but Dasgupta, as someone with a record of concern for development and the well-being of the global poor, is someone who should be taken seriously when voices them and might be expected to devise and support policies that benefit the worst off. Right-wing hacks, are, needless to say, a different matter.
(Dasgupta’s critique seems to me to support the idea that economies like China and India shouldn’t be pressured into climate change abatement because the value of the benefits their growth brings to the poorest outweighs the harms to future generations. It doesn’t look anything like so plausible to claim that the least advantaged would be similarly harmed by the wealthier countries cutting back their carbon emissions.)