Climate change, covid and global inequality — Branko Milanovic

High global inequality, otherwise a scourge, can here be used to our advantage. We know that the top decile of world population (call them “the rich”) receives about 45-47% of global income. We also know that the elasticity of carbon emissions with respect to income is about 1 which is a fancy way of saying that as real income goes up by 10%, we generate 10% more emissions. This then implies that the top global decile is responsible for 45-47% of all emissions. That percentage can be calculated with even more precision because we have detailed consumption data (by a number of categories, running into hundreds) and we can assign to each consumption category its precise carbon footprint. It is not unlikely that we could find that the carbon emissions of the top decile are even above one-half of total emissions.

The question thus gets simplified. Suppose that we draw a list of goods and services such that are (a) carbon intensive and (b) consumed predominantly by the rich. We could then in a concerted international action try to curb consumption of such goods and services while leaving entirely free other decisions: no limits to growth, no degrowth in either poor or rich countries.

The entire onus of the adjustment falls on the rich. Who are the rich, viz. the global top decile? About 450 million people from Western countries, or the entire upper half of Western countries’ income distributions; some 30-35 million people from both Eastern Europe and Latin America, that is respectively about 10% and 5% their total populations; about 160 million people from Asia or 5% of its population; and a very small number of people from Africa.

Curbing consumption can be done either through rationing or draconian taxation. Both are feasible technically although their political acceptability may not be the same.