Why economics needs ethics.

One of the points Broome has been keen to stress so far in the second half of his book on climate change is how narrow-minded economists can be about the limits of their work. Its use can only be wisely tapped into once it is informed and guided by underlying ethical principles.

He claims, for instance, that economists like to think their theories are not dependent upon value judgements, so they tend to assign value to things on the basis of the preferences of people which are implicit in market signals. This, they claim, is most neutral and democratic.

But this itself is a value judgement about how we should weigh up and decide upon the importance of different goods! Why take, for instance, the unreflective and likely selfish preferences of present people as sacrosanct when deciding upon energy policy? Is it right that the interests of future people are ignored just because current people do not care?

Broome quotes Stephen Marglin as an example of an economist demonstrating this sort of moral naivete:

I want the government’s [discount rate] to reflect only the preferences of present individuals. Whatever else democratic theory may or may not imply, I consider it axiomatic that a democratic government reflects only the preferences of the individuals who are presently members of the body politic.

And contrasts it with what I take to be the much richer position of Pigou:

There is wide agreement that the State should protect the interests of the future… against the effects of our irrational discounting and of our preference for ourselves over our descendants… It is the clear duty of Government, which is the trustee for unborn generations as well as for its present citizens, to watch over, and… defend, the exhaustible natural resources of the country from rash and reckless spoliation

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