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Wednesday, August 15, 2007

How to make screwing your kids into social justice

A lesson from the Cato Institute, in their argument against oil conservation (and gas taxes):
[Does] intergenerational equity demand conservation? We think not. The strongest normative argument against conservation is that it transfers resources from the relatively poor to the relatively rich. That’s because today’s generation is almost certainly much poorer than future generations will be. For instance, if per capita income grows at 2 percent a year, people 100 years from now will be approximately 7 times wealthier than we are today. Those concerned about intergenerational equity should worry more about standards of living today than about standards of living tomorrow.
You hear that? There's no need to conserve, because everyone will get richer. On the other hand:
  1. You forgot inflation, which also runs around 2% a year. So future generations might be 1 times wealthier than us.
  2. Will my children feel richer when they pay $5/gallon at the pump for unconventionally-derived gas? You suggest that the market will take care of supply as the price rises (by tapping unconventional sources like oil shale that are not economical today). Great, but more of my child's disposable income will go for transportation/food/etc as it becomes more expensive.
I think I'll conserve.

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