The balance between present and future will be determined not by moral philosophy or economic models but by the decisions of ordinary savers, investors and voters.
Why should I do anything for posterity? What has posterity ever done for me?
Groucho Marx describes one end of a spectrum of opinion. The only obligation we owe to future generations is to sell them assets to pay our pensions. Sir Nicholas Stern’s climate change report takes an opposite view. Governments must value the welfare of all present and future citizens equally and give no special preference to current voters. The issue at the climate change summit in Bali, of how governments should balance the claims of present and future generations, is fundamental to all discussion.
Economists frame the question in terms of the social time preference rate: what number should policymakers use to discount future costs and benefits? The power of compound interest is such that the answer makes a large difference. At a rate of 5 per cent, which most investors would think disappointing, a cent today would be worth more than a dollar a century from now. The choice of a social time preference rate is relevant not just to environmental choices, but to the design of fiscal policy, the shape of pension provision and the appropriate level of public and private investment.
If Groucho’s position is morally indefensible, Sir Nicholas’s is operationally impossible. The problem of weighting the present and the future equally is that there is a lot of future. The number of future generations is potentially so large that small but permanent benefit to them would justify great sacrifice now. If we were to use this criterion to appraise all long-term investment, the volume of such investment would impoverish the current population. No government advocating it would ever be elected. The burden of caring for all humanity, present and future, is greater than even the best-intentioned of us can bear.
Most normal people feel sympathy and solidarity. But the intensity varies with the closeness of the relationship. Closeness may be familial, linguistic and cultural, or the product of shared attitudes or physical proximity. We care about the suffering of others, but less about the suffering of those in far continents, are ready to make sacrifices for our grandchildren, but less for their descendants. We care more about dogs and cats than about newts or flies. We care about the environment, but more about the buildings we have seen and the mountains we might hope to see than about states of nature in remote locations we will never visit.
The modern culture of rights, and the value system that proclaims discrimination the greatest of public policy evils, finds it difficult to cope with this plain reality. It leads to an intellectual blindness that empathises with humankind in general but not in particular. He loves mankind, Voltaire wrote, therefore he does not need to love his neighbour. Many religious leaders and moral philosophers seek to extend our natural, but not unlimited, capacity for solidarity with others by calling on sacred texts and abstract principles. They are rarely very successful in this endeavour, and their efforts are usually most effective when they provide validation of their followers’ instincts.
Governments cannot be expected to do more, and should not be permitted to do less, than express the concerns their citizens really feel. History illustrates the harm done when the fundamentalism of faith or abstract reasoning overtakes pragmatism as political principle.
George W. Bush sends troops to Iraq to promote democracy; thousands fly across the world to draw attention to climate change. The European Union promotes the windy rhetoric of its Charter of Fundamental Rights but fails to frame a statement of European solidarity or an assertion of distinctive European values.
But it is a particular merit of democracy that its leaders are – not always quickly enough – forced to confront the world as it is rather than as they would imagine it. The balance between present and future will be determined not by moral philosophy or economic models but by the decisions of ordinary savers, investors and voters. Economic and political marketplaces ultimately rule policy, as Groucho’s realism recognised.