Behind the billionaire climate tax

One economist explains why taxing the rich and paying the poor actually has a chance of becoming a reality.

A man drinks from a bottle of water as temperatures hit 38°C (100°F) on Saturday in New Delhi, India. Climate models show that by 2100, India will suffer disproportionately from extreme heat. Source: Raj K Raj/Hindustan Times via Getty Images

The climate crisis is extremely unaffordable. That’s the conclusion of a new study published in Nature last week, which found that global warming will cost $38 trillion every year by 2050. For comparison, the entire global economy is about $100 trillion per year.  

But one economist has a novel idea about how to pay for at least part of the bill. At a meeting of the world’s wealthiest countries and banks last week, Esther Duflo proposed that the richest people should compensate poor people for the climate damages they disproportionately caused. That money would be raised through a climate tax on billionaires and large corporations.

Duflo is the youngest person and second woman to win the Nobel Prize in Economics. She is currently the president of the Paris School of Economics, and the co-founder and co-director of MIT’s Abdul Latif Jameel Poverty Action Lab. Duflo’s work on poverty pioneered using field experiments to test how well economic policies work in real life.

I spoke with Duflo about why she proposed these specific climate taxes; how the richest nations in the world reacted to them; and why she thinks they might actually have a shot of becoming a reality.