Real Clear Politics
by Edward Conard
May 06, 2016
This week, Time Magazine released its list of the top 100 Most Influential People and placed Leonardo DiCaprio on the cover of its magazine for the personal example he sets on climate change. How Ironic!
DiCaprio is a one-man carbon-polluting machine. According to the leaked Sony documents for example, DiCaprio took six private roundtrip flights from Los Angeles to New York over a 6-week period and, a private jet to the 2014 World Economic Forum in Davos Switzerland. Pictures of him vacationing on big yachts show that his polluting ways extend far beyond his charitable work. What hypocrisy! He enjoys the very luxuries that he admonishes others not to indulge.
By wrapping himself in carbon offsets, the editors of Time Magazine and Secretary of State John Kerry, who authored the tribute, claim he is setting a fine example for others to follow. But is he? Hardly.
Had he flown commercial and bought offsets anyway, the world would have less carbon in its atmosphere. Better yet, flying commercial would have reduced the need for offsets so that money could have been used to help the world in other ways—to reduce poverty, for example. In either case, the world would be better off—with either less pollution or less poverty.
So who really paid for DiCaprio’s grossly polluting ways? The rest of the world of course, not DiCaprio. Economist Scott Sumner, summarizes the truth succinctly. He argues:
“You cannot put the burden of a tax on someone unless you cut into his or her consumption. If the Obama tax increases did not cause Gates and Buffett to tighten their belts, then they paid precisely 0% of that tax increase. Someone else paid, even if they wrote the check. If they invested less due to the tax, then workers might have received lower wages. If they gave less to charity then very poor Africans paid the tax. I have no idea who paid, but I’m pretty sure it wasn’t Gates and Buffett.”
A person’s consumption is their true cost to the rest of society, not their income, nor their unspent wealth.
Does the tax DiCaprio imposes on himself for polluting the world reduce his polluting consumption? Hardly! In fact, it encourages more of it.
DiCaprio is little more than a prominent example of what psychologists call “moral licensing,” the tendency of people to reward themselves after they do a good deed. DiCaprio, and others like him, buy carbon offsets to sooth their guilt—guilt they never needed to incur in the first place. They think that if they buy carbon offsets instead of helping the world in other ways, it gives them the license to spew carbon as they please. And boy, do people like DiCaprio spew it. His hypocrisy and Time Magazine’s endorsement of it are beyond the pale.
Unfortunately, we see the power of moral licensing at work throughout the economy. Few people truly sacrifice to help others. They don’t reduce their consumption to make risky investments that employ others; risk their lifestyle to find and commercialize innovation that improves living standards but is likely to fail; or even to serve the poor through charitable work until it hurts. Like the person who admonishes a healthy driver not to park in a parking spot reserved for the disabled, they sooth their guilt by voting to spend someone else’s income helping others. They think they have done a good deed when they have really done nothing at all.
Their hollow need to help others without personal sacrifice drives them, without end, to redistribute income and find more people in need of help. Their needy include an increasing share of poor Americans who are some of the richest people in the world. It also includes immigrants who have disrupted their lives to earn more money by moving to America; people in the future who will be richer than people are today if the fears of global warming come true; and a near-infinite supply of poor people throughout the rest of the world.
They don’t see that if higher payoffs for success had motivated increased risk-taking that produces innovation and increases standards of living, or if redistributed income had been invested to create higher-paying jobs or simply donated to charity—then the true cost of income redistribution is borne, not by the 1%, but by workers and consumers. We see exactly that in the wealthiest European economies, France and Germany for example, where median incomes are lower, growth is slow, and their contributions to innovation are paltry compared to the United States. Politicians who run on the promise of income redistribution take full advantage of the electorate’s failure to understand these tradeoffs.
Has a person who has done little more than shift the cost of their moral responsibilities onto their neighbors really done anything moral at all? It’s hard to believe the editors of Time Magazine and John Kerry don’t recognize Leonardo DiCaprio for the carbon polluter he is. Perhaps, in an election year, they are intentionally promoting the misguided economics that exploits moral licensing for political gain.
Ed Conard is an American Enterprise Institute visiting scholar, former Bain Capital partner, and New York Times bestselling author of Unintended Consequences and the forthcoming The Upside of Inequality: How Good Intentions Undermine The Middle Class.