Tax the rich — and save the planet | Esther Duflo

0:07You're listening to TED Talks Daily, where we bring you new ideas to spark your curiosity every day. I'm your host, Elise Hume. By now it's clear we need bold strategies to pay for and stop the damages of climate change. In this talk, economist Esther Duflo asks a blunt question. Why don't we just tax the world's richest people in order to pay for climate damages? She explains why a publicly funded redistribution system financed by taxes on billionaires and large multinational companies could really work and says this grand bargain is more within reach than we might expect.

0:47So most of the time when we think about climate change, we conjure these images of wildfires and storms and floods. But the reality is that temperature alone kills, and in particular right here in Africa. We don't see it in the capital of France or the US, because it's mostly happening in poor countries, which are already hot, and where citizens don't have the protection of air conditioning or office jobs. By the best estimates, by the end of this century in 2100, an extra 6 million people will die just because of increased temperature. and all of these deaths will take place in low - or middle-income countries.

1:40Every ton of carbon that we emit from the US, from India, from China stays in the atmosphere for a very, very, very long time, contributes to the warming of the earth and therefore kills people. Now let's try, for the sake of concreteness, to put a dollar value on this life's cut short. Now I can see what you're thinking, the economy is calm, you know, we cannot really price a life. The reality is we are doing it all the time. As individuals, we are thinking about, you know, the probability of dying in a bicycle accident and the cost of a helmet, and we kind of weigh one against the other. And our governments also do it.

2:24For example, when thinking about the cost of investment that can protect the lives of people on highway, for example. Mexico, which is about the world's average income, uses a value of a statistical life of about two million dollars. So using this number of two million dollars for a value of a statistical life as a benchmark, we calculated the dollar value of the life lost because of emission. And the costs are staggering. Every year, the greenhouse gas emission of the OECD inflicts a cost of$1.7 trillion, with a T, on low - and middle-income countries. And the costs are the largest in the countries that are the poorest.

3:16Take Niger, a country where the GDP is just shy of$650 a year. The yearly damages from the OECD emission in Niger are$9 ,000. Meanwhile, from COP to COP, rich countries are nicken and diming the poor countries for the climate money, for mitigation, for adaptation. We are supposed to be on the roadmap from Baku to Belem, from 300 billion to 1.3 trillion, but it is likely to be a road to nowhere if we continue with buzzwords and with hairy schemes. The money is difficult to raise. It's even harder to spend. Climate negotiators from India, from Africa are so tired to negotiate with dozens of outfits to access money that should legitimately be theirs.

4:10So there has to be a better way, and I'm here to tell you one better way. So first of all, how about we stop beating around the bush and try to raise 1.7 trillion dollars for our moral debt to the poor countries?

4:31Can we do that? Yes, we can. But let's face it. There is no money to be made, saving the life of an old woman in Pakistan. And this is too much money for philanthropy. So the money has to come from publicly funded international redistribution. Now, you're looking at me and saying she probably was under the rock the last few months. This is every country in the North starting from the US, but not ending there. It's cutting international commitment, not adding to them. So how can I go and say, well, how about 1.7 trillion of new money? So we have to take the money where it is, which is in the bank account of the richest people in the planet and the largest multinational corporations.

5:28Now, before you think I'm a dangerous alien, I'm not talking about, I'm not talking about expropriation. The reality is that the richest people on the planet do not pay their fair share in taxes.

5:47Warren Buffett, who is no communist, quipped that he paid less taxes than his assistants. And it's true, but it's not just in the US. Worldwide, rich people have all sorts of perfectly legal maneuver to avoid paying the same taxes as everybody else. A tax on the wealth of the 3 ,000 richest people in the world of about 3 % a year would raise$400 billion. A slight increase in the minimum tax on multinational corporations from 15 % to 21 % would raise$300 billion. I'm not dreaming, because the tax on international corporations, it exists already. 20 years ago, it would have seemed crazy to think that we could have an agreement worldwide to have such a tax.

6:39And yet, in 2021, 120 countries signed a treaty, and it's already implemented by 40 countries. And what is nice about it is that it does not require every single country to participate. if the US, for example, doesn't participate. The way the rules are made, France and Germany, for example, can tax the US companies on their sales in France or Germany to make sure that overall they pay 15 % on their profits. We could do just the same for the billionaires. France and Germany could send them a tax bill, say to Jeff Bezos. In the unlikely event that Jeff Bezos doesn't pay his taxes, they could start levying money on Amazon's tax in France.

7:26So this is feasible. This is already in the conversation. Brazil put it on the map during their presidency of the G20. It made it to the final declaration with support from many countries, including France, for example, and Spain, and with support from some of the Brazilian richest billionaires. Thank you, Nica Setubal. Now, it has also a lot of support. 70 % of Americans and 80 % of Europeans are in support of attacks on the wealthiest people to help the poorest people cope with climate change. But some people are a little worried that what would we do with the money if we manage to raise it.

8:09The climate activists are worried about international institutions hogging it. and the rich countries are worried about developing countries' government using it for their own purpose. So here is a simple solution. Send it straight to people.

8:28We know how to do it. The infrastructure is already there. Chief of all here in Africa, where almost everyone has a mobile money account already. There are more than 100 randomized controlled trials of cash transfer programs that show that people use the money well. And moreover, the money not only is used well, but it also helps resilience. For example, in Zambia, when people received about$12 a month in support income, not only did it increase their consumption on average, but it removed the ups and downs that they get with drought and flood usually. Here in Kenya, people used a universal basic income that they had to finance first a better roof over their head and second solar panels to power a fan, a pump, or a cell phone, thus increasing resilience and increasing productivity.

9:25For some countries which are very poor, there is enough damage money to fund a UBI for everyone such that nobody has to live under the poverty line. For a richer, middle-income country, there is enough to find a sort of insurance where no one needs to work when it's 35 degrees outside. Finding ways to reliably collect money to pay for our moral debt to the world's poorest citizen would do a lot to repair the trust between the West and the rest. And it is badly needed because the reality is that the future of climate mitigation is in the countries that are today poor. Even if the OECD, even if the US, Europe managed to reduce their emission, unlike the countries of Africa, India, etc., don't get into a crazy trajectory, the climate fight will be lost.

10:21So the future is here. And it can only be done if there is trust. So what we need is really a new grand bargain about climate mitigation and adaptation. What we need is a situation where every poor country is entitled to the damages that our continued emission imposes on them. And in exchange of this money for their citizens, they commit to forceful climate action, including potentially carbon pricing mechanism. It's urgent. It's feasible. It's just. So all of you here, especially any billionaire either in Rome or watching me, please stand up and demand a billionaire tax for climate justice. Asante, thank you.

11:19That was Esther Duflo at the TED Countdown Summit in Nairobi, Kenya in 2025. If you're curious about TED's curation, find out more at TED.com slash curation guidelines. And that's it for today. TED Talks Daily is part of the TED Audio Collective. This talk was fact-checked by the TED Research Team and produced and edited by our team, Martha Estefanos, Oliver Friedman, Brian Green, Lucy Little, and Tonsika Sungmarnivong. This episode was mixed by Lucy Little. Additional support from Emma Taubner and Daniela Ballarezzo. I'm Elise Hu. I'll be back tomorrow with a fresh idea for your feed. Thanks for listening.

12:02Thank you.