The world is a mesh of complex interlocking systems that concentrate power at the top of the economic pyramid, widening the gap between the haves and have-nots. The ultra wealthy have historically held more political influence, but in recent decades they have lobbied the government to ensure the system continues to work in their favor. Pareto efficiency shows that it is impossible to benefit one individual without making another worse off; today one individual can make millions worse off. There are 3 systems where this influence is especially transparent: taxes, energy and banking.
The U.S. tax code has been appended over decades for the benefit of corporations and individuals at the top of the economic pyramid, who have the legal and financial resources to take full advantage of tax loopholes written in their favor. This ruling class funnels money into political contributions to ensure the continuation of these entitlements; the Koch brothers as are notable example. The resulting maze of regulations is nearly impossible to reform or retire and the government has a self-interest in not streamlining the tax code.
Energy companies are privately held public utilities, which provide a basic and necessary service. People generally have no energy alternatives; electricity is expensive to produce and distribute so energy companies have a natural monopoly. However, they still receive subsides from the U.S. government to defray their costs. Power generators have ensured our continued dependence on fossil fuels and have little incentive to offer renewable alternatives; energy transition will be expensive for them in the short term and hurt the bottom line. Meanwhile some companies, including Exxon, have gone so far as to intentionally mislead the pubic about the cause of climate change to retain control of the market and generate enormous profits.
The economic crisis of 2007-08 showed the world that the banking system is broken. Many large banks took on too much risk and leverage, offered products that were not fully understood by the industry, and lined investors pockets. The bank’s increasing size, complexity, and integration into the global economy generated profits and political power until the markets turn against them. Instead of taking losses for the bets they had made, most banks were bailed out. Bankers who had made the investment decisions that nearly collapsed the banking system were rewarded with bonuses while homeowners were evicted by those banks.
Looking and climate change through this lens of inequality allows us to view the wealthy countries that have reaped the benefits of industrialization while causing the most environmental damage. They have not taken action to reduce consumption or greenhouse gas (GHG) emissions both of which have increased over the last 50 years. The developing countries, who on the whole have lived with a low carbon footprint, have the majority of the world’s population and are feeling the greatest impact from climate change. They did not share in the economic benefits of industrialization and do not have the resources to respond to climate change.
The overlapping themes of responsibility and financing lay at the heart of many sustainable development treaties, including the Paris Agreement, which went into force on November 4th. The difference this time is that the Paris Agreement is legally binding and holds each country accountable for predetermined targets, including providing financing for developing countries while they reduce their GHG emissions. Hopefully this international agreement will help tilt the economic pyramid toward a global partnership in a responding to a global problem. We collectively need to ensure this happens.
As Amartya Sen pointed out in The Idea of Justice, “When people across the world agitate for more global justice—and I emphasize here the comparative word ‘more’—they are not clamouring for some kind of ‘minimal humanitarianism’. Nor are they agitating for a ‘perfectly just’ world society, but merely for the elimination of some outrageously unjust arrangements to enhance global justice.”