Morality and economics

I seem to have run out of variations on Architecture and morality and Weasels ripped my flesh so I thought I’d drop the obscurity for once and use a simple post title which actually described the subject, rather than through several levels of indirection1.


The recent trigger to this was mt’s The Seventieth Generation wherein mt extolls the virtues of thinking of the future, even the far future, using as an example the building of cathedrals2. I’m all for thinking forwards, of course, but not so happy with mt’s climate change is an ethical problem, not merely an economic one, for reasons I’ve tried to explain before. I was largely unsuccessful then, and don’t expect to do any better now; so I’ll just note that having read my post and most of the comments, I don’t feel inclined to shift my position. I don’t, of course, mean to suggest that it is entirely an economic and not at all an ethical problem. I mean to suggest (see aforementioned post) that thinking about it primarily as ethical is unhelpful36. I hope you’ll also read the comments on mt’s post.

In the meantime not a great deal of new stuff has come by (do you think otherwise? Has time or experience refuted my arguments? Do tell me). The Great Persuasion: Reinventing Free Markets since the Depression provides further arguments (I say) for regarding it as desireable not to base your economics on ethics. See-also Talking with the taxman about carbon.


1. For example, I no longer have any idea of what Common people was actually about. But the law of conservation of obscurity obliges me to offer a difficult picture. If you can work out what it is without peeking, you’re doing well. If you can work out where it is without peeking, you’re doing exceptionally well.

2. It is a little known fact that I love cathedrals and their stonework, indeed all old stonework, and at one point considered becoming a stonemason. I didn’t because, well, “it would have been weird” given my life-trajectory to that point. I now build, or perhaps better said help to extend, 15 year old software; which by internet standards is perhaps mediaeval; it saddens me somewhat that my dimwit employers want to throw it away.

[Update: I was uneasy with the “cathedrals” example, and this comment crystallises why, as well as pointing out the dangers of failing to think like people did then.]

3. FWIW – though this isn’t my main point, which is why I relegate it to a note – I also disagree with mt’s diagnosis that the eternal has been systematically removed from public discourse though I may be somewhat misinterpreting his “eternal”. The days of the cathedral builders are so far distant from us their thought processes are not like ours, so it isn’t possible to usefully use anything they did or thought to help guide our own actions5. I think they expected to live in a static society whereas we expect progress, for example; that may not even be the major difference. As a side note, a few years ago we visited the Peloponnese and it occurred for me for the first time that the people who built this stuff had no thought for the likely lifetime of their work; they were building for forever. They made not the slightest attempt to “optimse” the expected lifetime of their work against its cost4


4. Though I may be idealising. Perhaps some did; in which case their “optimised for 100 year lifetime” work has not, of course, survived for my scrutiny.

5. Well, that’s too absolute of course. I suppose what I’m trying to say is that in order to “use” their example, you’d have to hedge around with so many caveats about the passage of time and the changing of patterns of thought and society, that you might as well start from scratch. But sitting in a dim cool cathedral and feeling the slow flow of time is an excellent use of anyone’s time.

6. If you’d like an academic paper that appears to directly disagree, then Economics, Ethics and Climate Change by Simon Dietz, Cameron J. Hepburn and Nicholas Stern (2008) may serve. For example Thus, although ethical considerations are an essential feature of all public policy debates, they are fundamental in a particularly direct and obvious way to climate-change policy. However, I don’t see that their preceding two paragraphs justify that conclusion. But their For instance, we are likely to have to face trade-offs between minimal rights today to a basic standard of living, which might plausibly be compromised by very strong, very rapid reductions in greenhouse gas emissions, and counterpart rights in the far-off future, threatened by climate change seems sensible.


* Building For The Past, Remembering The Future – TF also disagrees with mt, and may agree with me, it is unclear.
* Kevin Anderson provides an example of the sort of attitude that I think is stupid; note the magical thinking re regulations, inter alia.


  1. #1 Francis
    United States

    [Incivility redacted -W]:

    You have persistently failed to explain why climate change is an economic problem. You (in England) and I (in California) live lives of extraordinary comfort and privilege. Why do anything about climate change at all? Why tax ourselves at all, no matter what mechanism chosen?

    [I’m not really interested in discussing details so basic. If you’re unfamiliar with the roots of the problem, then you need to cure your ignorance. There are any number of places you could do that. [[Global warming]] is one; is another -W]

    Economics, properly conducted, is utterly amoral. It does not tell us what to do; at best it tells us whether our methods (that is, certain very narrow methods) will achieve particular goals (that is, certain very narrowly construed goals).

    Until you have addressed the threshold question of whether climate change is even a public health issue at all, there is no basis for bringing an economic analysis to bear on possible solutions.

    (See also, for example, public financing of health care delivery. Why should those who can afford privately-provided health insurance care if their fellow citizens cannot afford health care?)

  2. #2 Francis

    [Incivility redacted; don’t do it again, there’s a good chap -W]

    In this post and the one above you are assuming your conclusion. Until such time as you (or someone) has persuaded the majority of Americans (and Brits, and Canadians, and Australians inter alia) that the 2.0 C (or 1.5 C) threshold is one that is worth pursuing, then you have failed (as has everyone else) in reducing the moral problem to an economic one.

    [You’re talking about the practical problem, which is a different one. That the population is not persuaded (USA) or only weakly persuaded (UK) might be true, but not the subject of attention here. Note that it is reported that a majority of the USAnians favour gun control, but that doesn’t mean their pols will provide it -W]

    Put another way, American political leadership does not believe that it should tax its citizens so as to capture the externalities of carbon emissions. You do. In fact you feel so strongly that you accuse French politician who does not share your approach of being an idiot.

    [You have misunderstood. Macron is an idiot because his methods (ETS) contradict or rather are not really compatible with his stated goals (a minimum carbon price). Or perhaps even that isn’t true; the ETS is probably now amongst his “goals”, in a strange way -W].

    If Macron is an idiot, what is Trump and the GOP leadership? Morons? Or people who do not share your moral beliefs regarding the importance of addressing greenhouse gas emissions? (how about both?)

    [In terms of GW, they are functionally morons, indeed. Overall, Trump is I think worse -W]

  3. #3 Kevin ONeill

    I wasn’t around here in 2011, but going back and reading that post I didn’t find any surprises. You were wrong on discount rates then as you are now.

    In IAMs, the discount rate (as pointed out by James Annan back in 2011) is the moral factor. And within the formula for discount rates it’s specifically the pure rate of time preference.

    As economist Frances Wooley said over on Worthwhile Canadian Initiative last year:

    The most fundamental public policy choices we face involve trade-offs between current and future consumption: the desirability of tax cuts and deficit finance; the value of reducing greenhouse gas emissions; the advisability of investing in infrastructure. If you want to know an economist’s views on things that matter, forget about minimum wages or free trade. The most important question of all is “what is the social discount rate”? The moral argument for discounting the well-being of future generations has always been dubious. The opportunity cost argument might have seemed convincing during the heady days of the tech boom. But now that negative interest rates are a serious possibility, even the opportunity cost of capital argument for discounting seems questionable.”

    And rather than the Stern report using a discount rate too high, it’s actually *higher* than that believed to be appropriate in every recent survey I’ve seen of economists. More important, his PRTP rationale is dumbfounding. He says there’s no moral justification for the PRTP being > than zero – – and then makes it greater than zero!

    More and more economists are actually starting to believe that a negative discount rate is appropriate in these situations.

    Of course I’ve cited the economic literature to you several times before and tried to correct your notions that markets can tell us the the appropriate discount rate to be used in an IAM, to no avail.

    Your 2011 post shows perfectly that you believe observation and experience can tell us the appropriate discount rate. Wrong then. Wrong now.

    [You’ve said the same unconvincing things before, indeed. You’re fully aware that Stern used a rate criticised as too low, but it bounces off -W]

  4. #4 Kevin ONeill

    WC writes: “[…You’re fully aware that Stern used a rate as criticised as tool low, but it bounces off -W]

    I know you can make arguments better than this. Mann and Jones have been criticised for their temperature reconstructions. So I guess they were wrong.

    [In almost anything – climate and economics, certainly – there is a wide spread of views expressed. Some of those views are so stupid that anyone “in the know” knows they are wrong, even though an ill-intentioned or simply badly read person can fool someone new to the scene with what look like respectable argument for their foolish position. Much of the criticism of MBH – for example, Wegman – falls into that category. Your views on the minimum wage do, too. But the criticism of Stern was by mainstream economists, and doesn’t. I can’t decide if you’re so out of touch with the mainstream that you don’t know where it is, or if you’re being deliberately misleading -W]

    Jesus, you are over the deep edge.

    I’ve quoted you the literature that economists today believe Stern’s discount rate was too *high* – that’s data. You’re the one the data is just bouncing off of.

    In that 2011 post you spoke of observation and experience being able to determine the appropriate discount rate. For the sake of argument let’s assume that’s true. What do the past dozen years of observation and experience tell us?

    Or should they be ignored because they can’t take the place of the mudshark in your mythology?

  5. #5 Kevin ONeill

    Paul Krugman in his blog post yesterday:

    ” So, rationality is a lie. But in some parts of economics it seems to be a bit of a nobble lie, useful as a guide for thinking as long as you keep your tongue firmly in your cheek. In other parts however, it’s a disaster.

    The past dozen years have provided a real-world laboratory experiment not often available to economists. The results are ignored by the side that was completely dead wrong. And many of those same people accuse others of ignoring history. It really is the equivalent of ClimateBall applied to economics.

    [Irrationality is indeed rife; we see pols everywhere, and even blog commentators, defending protectionism and tariffs; others know better -W]

  6. #6 Kevin ONeill

    WC writes:” […But the criticism of Stern was by mainstream economists, and doesn’t. I can’t decide if you’re so out of touch with the mainstream that you don’t know where it is, or if you’re being deliberately misleading -W]”

    You keep parroting yourself on this point

    [No, sorry. We’re talking past each other. Whether that’s your fault or mine I leave for others to judge. The rest of this comment is available here -W]

  7. #7 Kevin ONeill

    WC – go read the Wikipedia entry on the Stern Review, specifically the section on “Inherent Discounting”