Alex Raskolnikov (Columbia) presents two papers as part of the 2023 Canadian Law & Economics (CLEA) conference:
Should Only the Richest Pay More?:
This paper challenges the leading academic, political, and cultural narrative supporting greater redistribution. The narrative holds that redistribution should come at the expense of a very restricted group of the highest earners: the one percent, the super-rich, the billionaire class. I argue that many reasons offered in support of this view call for redistribution from a much broader group that includes the affluent—those with incomes in the ninetieth to ninety-ninth percentiles of the distribution. Whether one looks at the recent trends in income concentration, wealth concentration, social mobility, political representation, or the rise of populism, the affluent are as great—and sometimes greater—contributors to these problems as those in the top one percent. Remarkably, contemporary legal scholarship has ignored the affluent almost completely, greatly limiting the magnitude of possible economic transfers as well the forms that these transfers may take. This paper reveals the analytical weakness of the prevailing narrow view. Higher taxes on the affluent should fully enter distributional debates.
Poor ESG (with Zohar Goshen (Columbia) & Assaf Hamdani (Tel Aviv; Google Scholar)):
The rise of inequality and global warming are the two ultimate challenges of our time. After decades of congressional failure to combat global warming, the private sector has stepped in and adopted a set of environmental, social, and governance (ESG) policies as a market-based solution to a public policy failure. Corporate executives are free from the influence of lobbyists fighting to impede climate change efforts. They face different pressures: activists and institutional investors pushing for ESG policies. Corporate executives are now expected to undertake the necessary measures to save our planet. Where Congress failed, ESG will succeed.
This article argues that turning from government policymaking to private sector ESG solutions will hurt the poor and exacerbate inequality. Curbing global warming is fraught with difficult distributional challenges that corporate ESG measures will neither solve nor circumvent. Interventions to combat climate change are nearly always regressive, with the costs of such policies impacting those with the least, the most. ESG will inevitably replicate the regressive effects of various legislative interventions on which all ESG carbon-reduction strategies are based. But, in contrast with congressional action, ESG solutions will not raise any revenue that could be used to offset ESG regressivity. ESG solutions are attractive in large part because they seem to avoid the contentious politics of redistribution, clearing the way for private sector agents to effect policies that stall in Congress. But as the backlash against ESG vividly demonstrates, opponents will seize every opportunity to remind voters—particularly middle- and low-income voters—of the job losses and increased energy costs that will follow ESG policies aimed at curbing carbon emissions.
The most feasible response to these concerns would be legislation that offsets the regressive impact of ESG. That is, while ESG would protect the planet, Congress would protect the poor. However, as this article will demonstrate, Congress will be unable to address the regressive implications of the varied and opaque ESG policies adopted by thousands of corporations. And furthermore, Congress does not have strong incentives to do so.
We conclude that ESG is a poor solution to global warming because the poor will pay the price. We argue that institutional investors should channel their ESG resources toward ensuring their portfolio companies’ lobbying efforts are aligned with their pledges to protect the environment.