Climate change and inequality are two equally weighty issues facing the entire world today. Both phenomena possess significant impacts for the present and the future. Although climate change has its impacts being witnessed in the present, its most grave implications will be felt by the future generations. On the other hand, inequality is an issue whose impacts are being felt in the present and hold the potential to impact the future generations through its effects on productivity and economic growth. The importance of these two issues necessitates the government to set aside funds meant to address them and find solutions to combat their impacts. The allocation of funds to address these phenomena has raised opinions on which phenomenon should be given priority; whether to prioritize on prevention of climate change or reducing inequality. Stephen A. Marglin expressed his opinion in The Social Rate of Discount and the Optimal Rate of Investment. In his statement, Marglin expressed his opinion that the government should allocate resources to address present issues affecting the present generation that is making the sacrifices other than to the preferences of the coming generations who will enjoy the sacrifices of the current generation. This statement will form the basis for this essay. The paper will discuss how economists and economic reports can be of use in the decision of whether to prioritize resource allocation to preventing climate change or to reducing inequality.
As mentioned earlier, inequality in the distribution of income and wealth is an existing phenomenon in the world today. This inequality is experienced across countries, within countries at household levels, as well as between males and females. This inequality gap was created in the history of economic development of nations and has continued to widen rather than be bridged. This gap can be witnessed by comparing the economic status of the developed countries which have continued to grow extensively over the years, as opposed to the condition in the developing countries, otherwise known as the third world countries, which have continued to struggle with their economies over the years. Within individual countries, there exists a wide gap between the rich and the poor, with the difference broadening over time. The countrys wealth is accumulated and controlled by a minority group while the majority of citizens struggle to make ends meet. Additionally, in the job market, the distribution of jobs and pay is different for the males and females. A 2017 economic report on inequality, fairness, and justice showed that the salary received by men at all the different age levels was higher than that of females on the same levels.
The drivers of inequality across the board usually originate from economic, political, and social factors. These include taxation which provides exceptions that disproportionately favors the wealthiest; inequalities in education where private institutions enjoy excess resources at the expense of public schools; removal or frustration of labor market institutions which result in stagnation of wage share and household incomes; non-standard work which offer lower incomes and impairs capital accumulation as well as inhibit the access to other forms of wealth accumulation; decline in the value of transfer payments whereby falling incomes are experienced at the bottom end; and the interaction between growth and wealth. Under this, where economic growth is rapid, inequality is likely to be reduced. The result of inequality in countries is felt in all the aspects of life such as in education outcomes, access to quality healthcare, increased general insecurity, reduced social cohesion between individuals in the extreme ends, as well as reduced economic growth due to decreased productivity.
Climate change is another phenomenon whose effects are being felt in the present world with projections that it will be more impactful in future. This issue is of great importance as it has resulted in changes in the atmospheric conditions as well as weather patterns (Tol, 2009). This condition is associated with the emissions of chemical substances in the atmosphere which damage the protective ozone layer, opening up the atmosphere to harmful rays from the sun. The impacts of climate change include increased temperatures, changes in precipitation, risks of life due to the heat which can result in death, damage and loss of resources such as rivers and biodiversity, damage to property due to calamities such as floods, and generally increased cost of living. With the many industries, factories and mines in the world which carry out activities that release gases, primarily carbon dioxide, in the air, climate change is deemed to continue affecting the world. This, therefore, calls for the attention of all the nations of the world to join hands and together find means to minimize these effects and provide solutions to safeguard the present as well as the future generations. Nevertheless, the question remains whether priority should be given to climate change or to reducing inequality in the nations.
Any allocation of government funds affects the citizens who are the tax-payers of any country. Therefore, the priorities given to certain matters should put into consideration the preferences of these citizens. According to Marglin, the preferences of the present generation should be prioritized since they are the ones making the sacrifices. He says that the decision on whether to save the future generation lies with individuals and they can carry it out through decisions on saving versus consumption. However, if they feel indifferent about the condition of the future generation, then the government should not counter their preference by conducting interventions on behalf of future generations. In the case of this discussion, both inequality and climate change have impacts on the present and in the future. However, the economic impacts of these two issues carry different weights, and the damage resulting from either differs in magnitude. These impacts and magnitude of damage, presently and in the future, should be the factors informing the decision on resource allocation. Although inequality is a weighty issue in the world, its effects are not as adverse as those of climate change (Tavoni, Dannenberg, Kallis, & Loschel, 2011). A solution can also be found more quickly if the government and all the stakeholders would be willing to enact policies that steadily bridge the gap. For instance, policies enforcing equal treatment of individuals in a country would ensure all individuals benefiting from the resources of their country in equal proportion. On the other hand, the effects of climate change could be adverse and could result in indescribable damage both in the present and future. For instance, changes in weather patterns will affect production in areas of agriculture and other industries. Natural calamities, as a result, could have lasting effects for generations to come. In light of this, preventing climate change should be given priority in decisions about resource allocation in every nation of the world.
In summary, reducing inequality and preventing climate change are issues of concern which require resource allocation in addressing them. Their effects are felt in the present and will carry on into the future generations. The impacts of climate change stand to be more adverse as compared to those of inequality. Therefore, in the allocation of resources, governments should give preventing climate change priority to reducing inequality.
ECON853 Economics of Public Issues
Tavoni, A., Dannenberg, A., Kallis, G., & Loschel, A. (2011). Inequality, communication, and the avoidance of disastrous climate change in a public goods game. Proceedings of the National Academy of Sciences, 108(29), 11825-11829.
Tol, R. S. (2009). The economic effects of climate change. The Journal of Economic Perspectives, 23(2), 29-51.
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