post by Paul Kelleher
The short version: Tim Mulgan thinks John Rawls's A Theory of Justice has limited value for thinking about moral issues associated with climate change. I disagree. I describe the role that discounting plays in cost-benefit analyses of climate change, and argue that Rawls's discussion of discounting is useful and of lasting importance.
Philosopher Tim Mulgan thinks that John Rawls may go the way of "paisley shirts and psychedelic music":
[O]ptimistic assumptions allow political philosophers to ignore the future. Consider Rawls himself. His magnum opus (A Theory of Justice) devotes just ten pages to justice between generations; and even then his focus is tellingly limited. As we accumulate wealth, we must decide how much to consume for ourselves and how much to invest for the future. For Rawls, the only ethical question is: How much better-off should we leave our descendants?
Rawls wrote in 1971. Like paisley shirts and psychedelic music, his complacent approach has not aged well. We no longer take it for granted that we will leave our descendants better-off, or even that we can. And future people are no longer an afterthought. They have moved centre stage, both in popular debate and in moral philosophy.
Mulgan may well be correct that the majority of A Theory of Justice does not speak to the issue of inter-generational justice. Nevertheless, I believe that what Rawls does have to say is of lasting importance. Consider the seemingly academic issue of discounting. In cost-benefit analyses of climate-related plans and projects--and in cost-benefit analysis generally--it is common for economists to discount the value (or disvalue) of goods (or bads) that occur in the future. Depending on the discount rate used, we--here and now--can have stronger or weaker duties to prevent health shocks that will occur in the far future. If we discount the goodness of future health and the badness of future ill-health, then it seems to follow that we have commensurately less pressing reason to prevent those shocks from occurring. After all, no one thinks that it's morally required for current generations to take on great burdens to prevent one hangnail in 200 years. Since the nature of our obligation clearly turns on the size of the future benefit or burden we're talking about, discounting has the potential to turn a future moral tragedy into something not that important.
The economist and philosopher John Broome illustrates the importance of getting the discount rate right:
Stern's conclusion differs from Nordhaus's principally because, on ethical grounds, Stern uses a lower "discount rate." Economists generally value future goods less than present ones: they discount future goods. Furthermore, the more distant the future in which goods become available, the more the goods are discounted. The discount rate measures how fast the value of goods diminishes with time. Nordhaus discounts at roughly 6 percent a year; Stern discounts at 1.4 percent. The effect is that Stern gives a present value of $247 billion for having, say, a trillion dollars' worth of goods a century from now. Nordhaus values having those same goods in 2108 at just $2.5 billion today. Thus, Stern attaches nearly 100 times as much value as Nordhaus does to having any given level of costs and benefits 100 years from now.
In a forthcoming short paper on discounting, I describe two different kinds of discounting and the main reasons why one might support them. Here they are in brief:
Kind 1/Reason 1: When individuals save money in bank accounts, they are trading present consumption for future consumption. But many individuals would not do this unless they were given an incentive in the form of an interest rate. Therefore, since individuals need to be in effect bribed to put off present consumption, individuals have a preference for consuming now rather than later. Some economists see this as revealing individuals' ethical opinion that future well-being is morally less important than present well-being.
Kind 1/Reason 2: There is a second reason that some people offer for discounting the moral importance of future benefits. The argument goes like this: unless we discount the value of future benefits (and the disvalue of future bads), current generations will be forced to make unreasonable sacrifices. After all, since what we do here and now will have effects that radiate out in the far future, a large sacrifice now will certainly create benefits in the future that outweigh the sacrifice we have to make. The only way to release ourselves from these surely tyrannical obligations to future generations is to count their well-being for less. Thus, we need to discount to protect ourselves from overdemanding duties.
Kind 2/Reason 1: Any use of current resources has opportunity costs---that is, we could have used them for other purposes, and these other uses may have yielded even greater benefits. Economists in general would like us to put scarce resources to their most efficient possible use. One possible use is a financial investment: we could invest the resources now and let them grow, at prevailing interest rates, to a certain size in the future. If it is impossible to achieve that same sized gain by investing current resources in environmental projects, then funding the environmental project "leaves resources on the table," so to speak. That is, we could give future people a larger benefit if we just invested the money and gave them the pin number to the bank account than if we funded the environmental project. To choose between projects, economists tell us to discount the future environmental benefits at prevailing interest rates. This discounted value is the amount we'd have to invest now to deliver future benefits of the same value as the environmental benefits. If it would cost more to deliver those benefits via an environmental project, then (the economists argue) we should go with the bank account instead.---The perceptive reader will notice that this second reason for "discounting" doesn't support discounting the moral importance of future well-being. Rather, it holds the moral importance of future benefits fixed and simply tells us how to deliver those benefits most efficiently. That is why I (following Dominic Rosser [pdf]) call it "discounting" and why I consider it a different kind of discounting from the first kind discussed above.
As regards the first reason for Kind 1 discounting, Rawls would surely argue that when individuals are making their own private investment decisions, they should not be taken--nor do they take themselves--to be expressing a moral stance on whether the well-being of future people matters less from a moral point of view. It is Rawls's view that moral deliberation must be explicit and sensitive to specifically moral reasons. At least that's what I take the his argument from the Original Position to entail.
The short discussion of inter-generational justice in A Theory of Justice actually provides an explicit and decisive refutation of the 2nd reason for Kind 1 discounting. Rawls notes that duties to promote future well-being would be tyrannical only if we had a basic duty to maximize well-being. But that duty is questionable, and is only supported by the consequentialist moral framework he is rejecting in the book. The consequentialist framework is, however, the framework that many welfare economists use when constructing cost-benefit analyses, and this is why many of them are led to embrace discounting. If Rawls is correct that we do not have a simple duty to maximize well-being, then Kind 1 discounting is not needed to release ourselves from that duty.
Finally as regards the reason for Kind2 "discounting," Rawls seems willing to grant that it may have something to be said for it. He writes, "[T]he rejection of pure time preference [i.e. Kind 1 discounting]...does not rule out using an interest rate (in either a socialist or a private-property economy) to ration limited funds for investment" (TJ, p. 294 [Original 1971 edition]). In my forthcoming paper I offer some moral reasons for being troubled by Kind2 discounting, but like Rawls I am willing to admit that it may be useful in some cases.
If Broome is right that the issue of discounting is crucial for properly understanding our duties to future generations, then A Theory of Justice--and especially the ten pages on inter-generational justice--may contain more that is of lasting importance than Mulgan's discussion would suggest.