Climate Change and Income Inequality

http://www.futureofcapitalism.com/2010/01/climate-change-and-income-inequality

The Web home page of the Wall Street Journal this afternoon is touting a blog item with the headline "Climate Change May Increase Income Inequality." The angle is reminiscent of the old joke about the New York Times headline after a nuclear armageddon; "World Destroyed; Poor, Minorities Hardest Hit." It's not bad enough that the global warming folks predict we are all going to drown from rising sea levels; even worse, there might be an increase in income inequality! People were worried when Rupert Murdoch bought the Wall Street Journal that he was going to turn it into the Fox News Channel; sometimes I wonder if the real danger is that he is going to turn it into the New York Times. The blog item is totally unskeptical. All five comments that were posted on the item on the Wall Street Journal site by late this afternoon thought the item was essentially ridiculous. One aspect of it that is ridiculous is the obsession with relative poverty. Isn't it bad enough that global warming would hurt the poor without having to frame it as a story about the gap between the rich and the poor? It's as if the existence of the rich makes poverty somehow worse than it would be without the rich. There's a whole world-view on display here, complete with an ideology, that goes far beyond a mere report on an economics paper. The economics paper, for what it is worth, "Climate Shocks and Exports," by Benjamin Olken of MIT and Benjamin Jones of Northwestern, concerns not rich and poor individuals but rather rich and poor countries, which the paper defines by "whether the country is in the bottom or top half of the world per-capita PPP income distribution in the first year GDP data is available." By this definition, on a list of 100 countries with 1 being richest and 100 being poorest by per capita GDP, if you are 49th on the list you are rich but if you are 51st you are poor. And if you were 51st on the list one year but move up to number 3 for the next and all subsequent years, you are still "poor." This is a definition so far afield from reality that only an economist could come up with it. One Wall Street Journal commenter referred to it as "the problem of using static models to make long-term inferences in a dynamic world."

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by Editor  |  Jan 5, 2010 at 4:59 pm Related Topics:  Energy, Income Inequality, Press receive the latest by email: subscribe to the free futureofcapitalism.com mailing list