Can an environmentalist focus solely on sustainability or are they drawn into wider issues such has how fairly the material product of the economy is distributed?

Perhaps heightened by the leadership contest in the Green Party, there appears to be a debate going on about where environmentalism fits into the political spectrum. I am not a member of the Green Party (nor any other, for that matter) but I have been struggling with how the environment fits into the general history of New Zealand which I am writing. Along with resources, the environment is integral, of course, especially if you are coming from an economics perspective, but they are frequently overlooked.

 

There are a number of problems associated with the interaction between the environment and the market economy. Let’s look at only one, sustainability. A market works on the basis of dollar votes, that is, the number of dollars an individual spends influences the market outcomes. Those who have no dollars have no votes. That includes those who are yet to be born. Frequently, but not always, we use our dollar votes in a way that ignores their interests. The outcomes include environmental destruction and resource depletion which ,later generations will regret.

 

The solution is not automatically a non-market one. Children and the yet-to-be born dont have much political clout either. Those countries which were part of the Soviet Empire with economies which largely over-ruled the market had deplorable environmental records. In comparison it makes one proud to be a New Zealander, but only in comparison; our historical record ain’t too good either.

 

What we have tried to do as we became increasingly aware of the environmental damage we were causing, is to restrain the private market by government actions. There are many examples, but a good illustration is the Resource Management Act with its provisions for sustainability. What exactly that means is a matter of fraught debate, but one way of thinking about it is that it gives the interests of the yet-to-be born some weight. Whether it gives them too little or too much is contested. The constant pressures to undermine the sustainability provision of the RMA come from those who seek dollar votes. They are offset, in part, by the green lobby who give greater weight to outcomes which do not reflect the market, giving more weight to the interests of the young and yet to be born.

 

The implication is that one dimension – not the only one, I add – of the environmentalist concern is a distributional one. It is an intergenerational conflict which economists find difficult to analyse except at a simple level.

 

But they can be provocative. Famously Larry Summers, the most qualified economist to have ever headed the US Treasury, signed a World Bank memorandum which remarked that ‘the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable’. The person who wrote it for him, Lant Pritchett, insists that it was intended to be ‘sarcastic’. (Summers has a reputation for making provocative statements intended to open up debate.)

 

Read the memo in full and you will have no doubt it was ironic. The very last paragraph indicated its real intention. It was to remind the Summers team that the arguments listed in the parenthesis all deserve weight in their decisions:

 

‘The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.’ 

 

Let me write a parallel statement (please dear reader, it is ironic to get a point across): ‘the economic logic behind dumping a load of toxic waste for future generations to deal with is impeccable’. Change the term ‘toxic waste’ to some other environmental degradation and we have the case for castrating the RMA; the last paragraph of the Summers memorandum says ‘dont be silly’.

 

Is the issue solely an intergenerational distribution one? The memo is about rich and poor countries but equally it could be about rich and poor regions or rich and poor people.

 

To put it more elaborately, should we protect the interests of future generation at the expense of the poor of this generation? After all, the average level of material consumption of those yet-to-be-born is likely to be higher than that of today’s poor?

 

That does not mean that we should sacrifice the environment today in order to give the poor a better deal. (That is an implicit argument used for some environmentally degrading projects, but careful analysis shows they are typically of much greater value to the rich.) Rather, it says that the moral logic of promoting the interest of the yet-to-be-born leads one also to be concerned about the poor.

 

This is just one example of a general issue of green politics. Unless it is extremist extremist, it cannot ignore the rest of the political issues which confront us. I’ve done this only on the distributional policy dimension. There are other issues such as the nature and outcome of the growth process, the valuation of intangibles not valued in the market, imperfect information and the quality of life, where the same conclusion broadly applies.

 

What this means for the Green Party is for them to decide, Even if you do not belong to the party  you also have to cope with the challenges.