Genre = Economics
The focus of Julia M. Puaschunder’s book, Global Responsible Intergenerational Leadership, is the conflict between the present and the future. Those alive now, are taking away resources of the future, degrading the environment, and leaving the future with more debt. The future will not be able to sue the past (the current present) for the mess that the past left, creating an intergenerational problem. The problem is expressed in the understanding the future will have lower living standards than the present. Puaschunder makes the case that incentives can be changed to provide for a better future. That the future and present can create intergenerational policies that ensure at least the same standard of living for all the generations that do and will inherit this planet.
History shows that major events changed the trajectory of future events. Although events are not inevitable, the past does sets up opportunities for the future; but the future is not obligated to follow in the footsteps of the past. It is the responsibility of the past to help provide opportunities for the future, as Puashunder indicates that many cultures have a social structure that incentivizes the community to consider their impact on the future. Transferring knowledge is the ne plus ultra of how the present helps the future, the issue is that to utilize the knowledge requires more than just the procession of the knowledge. Inequality plays a role in exacerbating who has access to the uses of knowledge. With inequality, ability and skill are trivialized. Should ancestral outcomes eclipse merit based results, future knowledge and productivity will become more difficult to maintain.
With the current deeply globalized and dependent on international policy world, who can best aid the future? Puashunder claims that those are the corporations. Corporations that currently reduce future opportunities with a disproportioned energy consumption, are actually in the best position to help protect future opportunities. Corporations have a social status in every society. Positive social status allows for customer to trust their products, while negative social status makes any corporate endeavor difficult to reach. That social status, that reputation carries over for the long term, meaning corporations have the most to lose by taking away from the future. Utilizing prospect theory, were the sensitivity of a loss is far greater in value terms than the same absolute gain, Puashunder shows that corporation have an incentive to provide intergenerational support. Corporate decision makers usually last longer in their position than most government officials, which implies that corporations can maintain intergenerational policies more consistently and have a much more reputational risk than governments.
Another reason why corporations have to be in the lead of intergenerational implementation, is due their consumption. Much of the energy in production is used in corporate consumption. This creates a tax initiative. The corporations which emit more waste, should pay to clean it up; or rather, the corporations should be taxed based on their waste production. This would disincentives waste, and promote sustainable production. Based on Puashunder’s research of how governments tax waste, taxing waste means that governments can clean up corporate messes. With the tax, corporations can spend more time utilizing their creative capacity rather than the waste management. Moving waste management to governments via a tax on waste (energy consumption), has multiple benefits.
Corporations may take a leading role in Puaschunder’s book, but governments also have a role to play. The two major roles that governments have are to establish intergenerational policies and provide a determining factor in tax compliance. In regards to the decisions involved in picking policies, Puashunder uses behavior economics to show that having alternatives directly comparable provides for a direct opportunity cost understanding which aids in the selection of the better policy. Policies are meant to impact a future, the intertemporal decision bias favoring the current impact can be overcome by the direct comparison.
As taxes are important, Puaschunder does not leave out a story of tax systems. Some tax systems create a social environment were people want to evade taxes, while others systems have communities seeing a tax as an imperative to be a good citizen. Tax compliance is needed to bring about the policies needed, and Puaschunder shows how governments can facilitate greater tax compliance. Perception of how the government treats its citizens is a determinant of tax compliance. There is more tax compliance when citizens are treated with respect and the tax collected are allocated to the public good. By supporting the people, people will adhere to the social contract with government.
The need for intergenerational policies to provide intertemporal equality is the focus, and the players are well described. But, two parts are missing from this story, the reason for the debt and the adjusting of the status quo. Many policies that help the future are described. To create those policies benefiting the future, many current policies also tax the future with debt and an actual tax. As the future benefits from the policies, the future should pay for it, is the usual policy standard. This is not discussed in the book. The future is now laden with debts that are difficult to repay, which is a part of this book, but there is a need to separate out the various reasons for the debt.
There are many corporations now that have changed policies to reflect more the intergenerational sustainable goals, but it does not seem enough to alter the others’ behavior. The loss of social status carries a huge penalty for any future corporation, as Puaschunder expressed using prospect theory, the problem is the status quo. To change the norm, to make shaming enough, might take a very long time. As more corporations change their policies, it does shame the other corporations who do not provide the competitive service which includes the sustainable goals, but this itself does not seem enough. Puaschunder explains that a tax can aid in the decision to provide better corporate strategies, but its implementation remains difficult. Altering the status quo to reflect shaming of bad policies and the honoring of the good policies is a challenge for all parties.
With empirical studies utilizing statistics and behavior economics, this book provides a holistic view of intergenerational decisions. The future generations are currently on a trajectory of having lower living standards due to the policies of the present. To create a better future, we need intergenerational equity. This book is a guide for policy makers, corporate strategist, and those who those policies impact.
Pages to read: 375
1st Edition: 1972
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