Central banks and climate justice: the case for green quantitative easing

Ferret Mas, Josep

Central banks and climate justice: the case for green quantitative easing

Citation

Ferret J. Central banks and climate justice: the case for green quantitative easing. In: Pellegrino G, Di Paola M, editors. Handbook of the philosophy of climate change. Cham: Springer Nature Switzerland AG; 2023. p. 1247-68. DOI: 10.1007/978-3-031-07002-0_126

Abstract

Philosophers distinguish between at least two kinds of intergenerational climate justice principles. There are principles that tell us to mitigate climate change, and principles that tell us how to share mitigation costs fairly. Some authors argue (a) that central banks can, and should, serve intergenerational climate justice by implementing policies that cut emissions and thereby reduce the climate burden on future generations. Others also argue (b) that some of these policies justly shift some of the financial costs of mitigation onto future generations. First, I will present the case for Green Quantitative Easing as a policy that serves both kinds of principles of intergenerational climate justice. Secondly, I will review the normative issues raised by the move of “making our grandchildren pay.” Different economists have presented a range of policy options that a green central bank can implement to meet these principles. The first part of the chapter will offer these policy options, starting with milder proposals and ending with the more radical but realistic ones that are intergenerational in scope, and which should be seen as instances of borrowing from the future. Moreover, some claim that Green Quantitative Easing is superior to alternative strategies, such as a global carbon tax or a World Climate Bank, given the power of central banks to create money and buy bonds that can be kept in their balance sheet. Furthermore, in order to justify the moral acceptability of these policies, I will examine normative arguments for making our grandchildren pay. I will proceed by distinguishing between concessive and enthusiastic arguments in favor of borrowing from the future. Concessive arguments involve a normative claim: that making our grandchildren pay is unjust, and an empirical claim: that borrowing from the future is a more feasible way to take climate action now and avoid further harm to future generations. In contrast, enthusiastic defenses of borrowing from the future, as a guiding principle to share the burden of climate change mitigation and adaptation across generations, claim that it provides a better state of affairs or a more just world. I will start by analyzing the best-known concessive argument proposed by Broome and Foley, and their defense of efficiency without sacrifice, as well as various criticisms of that principle. Finally, I will critically examine an important objection raised by Gardiner: that making our grandchildren pay is a case of intergenerational extortion or moral corruption.