arrive explaining al goreIt is an uncomfortable reality in the climate debate that the wealthy countries and individuals who contribute most to climate change are the last to feel its effects. Floods, droughts, heatstroke, and wildfires are already ravaging Pacific Islanders and American outdoor workers, but frankly, the incentives to reshape capitalism in a greener direction are tricky because the status quo is extremely lucrative. Now, a New England state university with an increasing reputation as a hotbed of progressive research has come up with a typically provocative argument for how to tackle the problem: using Milton Friedman’s economic theory.
Not only do rich people consume more carbon than poor people because they can afford to engage in high-emitting activities such as flying private jets, owning multiple homes and eating large amounts of meat, but they also benefit disproportionately from climate-damaging activities. Investing, the researchers found.The study was recently published in Public Library No. 1blaming the 1% for a major portion of emissions and proposing a tax on the shareholder class as a way to curb the influence of fossil fuel companies.
“The top 1 percent of the population emits more emissions than the bottom half of the nation,” said lead author Jared Starr, a sustainability scientist at the University of Massachusetts Amherst. Much.” “For top households, more than 50 percent of their emissions responsibility comes from their investment income,” he told us. wealth. “So if we want to change, we have to focus on this segment.”
Here’s how the raw data breaks down. For the top 1% of households with an average annual income of $1.5 million, roughly $600,000 of annual income could be tied to climate-damaging investments. For the top 0.1 percent of households, which average $6.8 million in annual income, about $3.8 million of that could be tied to climate-damaging investments. This group also includes the so-called “super emitters,” or about 21,000 households, each of which emits the equivalent of 3,000 tons of CO2 per year, 300 times more than the lower middle class in the United States.
That doesn’t mean the super-rich are pouring money into oil companies, Stahl noted, but that the figure assumes a typical balanced portfolio at each income level and then calculates carbon intensity based on aggregate data for the U.S. economy.
This is how it relates to Milton Friedman, and how left-wing studies at UMass rely on the famously conservative economics of the Chicago School to make their point.
Blame investors, not customers
The study upends recent research on emissions inequality by looking not at how people spend their money, but where their money comes from.This is becoming a trademark of the University of Massachusetts Amherst, which Department of Economics Known for leading the way on issues including minimum wage, price controland healthcare.For example, one of Starr’s co-authors, Michael Ash, has previously published about corporate pollution and Medicare for All; Another colleague, Arindrajit Dube, who was not involved in the paper, has been minimum wage.
Stahl argues that any hope of reducing carbon emissions needs to target the ultra-wealthy.
“Ultimately, we have to stop creating carbon pollution. If we don’t, this planet will be uninhabitable,” he said. “The question is, how do we provide the right incentives for corporate board members, executives and shareholders to change their behavior?”
One recommendation from the study is to tax investment products directly linked to how polluting they are. To him, it’s a logical outgrowth of the idea of shareholder primacy – an idea first popularized by Milton Friedman in the 1970s that “corporations exist to create value for shareholders.”
Friedman first articulated this provocative point in 1970 prose The company boldly declared: “Business has but one social responsibility—to use its resources and engage in activities aimed at increasing profits.” The foundations of a free society are clearly undermined by the nonsense published in its name by a businessman of power and prestige.”
The idea that businesses only need to care about making money overturns decades of softer, more nationalist management philosophy, in which business leaders pay lip service to balancing the needs of their employees. many voters– Shareholders as well as customers, employees and their communities.The Shareholder Is King Theory Pioneered What CEOs Have Chased For Decades high inventory Pricing through increasingly questionable methods, including complex acquisitionlayoffs, or sell entire businesses, eventually leading to a massive boycott of the company, a 2003 documentary claimed that Modern Corporation sick.
Shareholder Value Means Shareholder Responsibility
The UMass researchers espouse the theory of shareholder primacy, placing responsibility for corporate activities solely on the investor class.
“Why does economic activity happen?” Starr asked. “We start from the perspective of the consumer and think that it exists to make goods and services possible. Whereas in the United States, people think that companies exist to create value for shareholders. They do this by creating goods and services for people A little bit, but the ultimate goal is to create value for shareholders — so shareholders are a big part of why these emissions are happening.”
Taxing high-carbon investments would avoid potential broad-based pitfalls carbon taxThis, the paper argues, could penalize the poorest members of society and could be politically popular. “Since unearned investment income and asset ownership are heavily concentrated at the top of the income distribution, limiting carbon taxes on these projects could further focus them on those who derive the most economic benefit from (greenhouse gas) emissions, increasing public support, and reduce (greenhouse gas) intensive economic activity in a more direct way,” the paper said.
A positive side effect is that such a tax could send a clearer investment signal than current ESG rankings, which have been criticized for being opaque and difficult to follow, in addition to being caught in a political tug-of-war between parties. What’s more, an investment tax is relatively easy to avoid for the one percent interested in reducing climate impact.
“The barrier to entry for saying ‘well, I don’t have to invest in fossil fuel companies’ is pretty low,” Stahl said. “I don’t need to change where I live, I don’t need to change my job. I just have to choose not to invest in companies that are destroying the climate.”
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