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Carbon Taxes and Retributive Justice: Is it Fair to Charge the Wealthy a Higher Price?

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C

ARBON

T

AXES AND

R

ETRIBUTIVE

J

USTICE

:

I

S IT

F

AIR TO

C

HARGE THE

W

EALTHY A

H

IGHER

P

RICE

?

Oskari Sivula

Department of Philosophy Faculty of Humanities University of Amsterdam

This thesis is submitted for the degree of Master of Arts (Philosophy) July 2018

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BSTRACT

Global warming will create serious harm through rising sea levels, extreme weather events and other negative effects. To prevent this harm, economists propose to impose a tax on carbon emissions, equal for each unit of emissions. The consequence of such a flat rate is that the wealthy will notice less of this fee than the poor. Retributive justice, however, requires people to experience the same punishment irrespective of wealth. In this thesis, it is therefore argued that from the perspective of retributive justice there are good reasons to impose an income-dependent carbon tax. In this thesis, different justifications for punishment are discussed – retributive, consequentialist and hybrid. From these justifications, the retributive and the hybrid justifications endorse a fine model that is income-dependent, since income-dependent fines are able to impose an equal “hard treatment” on all offenders. Simultaneously, they create an equal deterrence for everyone. Similar advantages can be attributed to carbon taxation that is income-dependent. In this thesis, it is argued that moral blame can be assigned to greenhouse gas emitting activities that are done negligently, recklessly or without “strenuous effort” to do the activity in question more environmentally friendly. However, we do not have the means to identify which activities are done in this blameworthy manner. Thus, fining emissions is not considered ideal. Still, many emission-generating activities are expected to fall under this category. Hence, we have a strong reason to direct all to emission-related behavioural changes. In addition, it is argued that an income-dependent carbon tax has a more appropriate message compared to traditional ways of emission pricing. By shifting the focus more strongly on behavioural changes the income-dependent tax holds within a stronger message, signalling moral disapproval towards polluting. Finally, it is also discussed how an income-dependent carbon tax can be given shape in practice.

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CKNOWLEDGEMENTS

Thank you to Marc Davidson for supervising this thesis and providing outstanding assistance and guidance throughout this research work. I would also like to express my very great appreciation to Gijs von Donselaar for being the second reader. My thanks are also extended to Kayla Friedman and Malcolm Morgan for producing the Microsoft Word thesis template used to produce this document.

Special thank you should be given to my friends Jakob, Dáša, Niklas and Asher, for being a great help during my time in Amsterdam. Not to forget all of my other friends who have given me support and love; I am grateful for each and every one of you.

Finally, I wish to express my greatest thank you to my family for their support, care and feedback throughout my studies.

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ONTENTS

INTRODUCTION...1

1 ECONOMICS AND EFFICIENT CLIMATE MITIGATION...4

1.1COST OF MITIGATION ...4

1.2ATTACHING A PRICE TO NEGATIVE EXTERNALITIES...7

1.3CONCLUSION ...9

2 PUNISHMENT AND FINES ... 11

2.1DEFINING PUNISHMENT ... 11 2.2JUSTIFYING PUNISHMENT... 13 2.3FINES ... 16 2.3.1 Day-fine ... 17 2.3.2 Fixed fine ... 19 2.3.3 Maximum fine ... 20

2.3.4 Fine equalling harm ... 21

2.4UTILITY MAXIMISING QUESTIONED IN THE CONTEXT OF FINES ... 22

2.5IN FURTHER DEFENCE OF DAY-FINES ... 25

2.5.1 Imposing a fine in temporal terms ... 25

2.5.2 Treating fines as fees ... 25

2.5.3 Responding to possible criticism ... 26

2.6CONCLUSION ... 27

3 ON FINING GREENHOUSE GAS EMISSIONS ... 29

3.1ACCUMULATIVE HARM ... 29

3.1.1 Imputational obscurity ... 31

3.1.2 Costs related to fining emissions ... 34

3.2CONCLUSION ... 38

4 IN DEFENCE OF AN INCOME-DEPENDENT CARBON TAX ... 40

4.1SHARED SACRIFICE ... 41

4.1.1 Quantitative sacrifice ... 41

4.1.2 Qualitative sacrifice ... 42

4.2SIGNALLING MORAL DISAPPROVAL ... 44

4.3CONCLUSION ... 45

5 INCOME-DEPENDENT CARBON TAX IN PRACTICE ... 47

5.1PAULA CASAL’S DEFENCE FOR PROGRESSIVE ENVIRONMENTAL TAXATION ... 47

5.2PROGRESSIVE CONSUMPTION TAX ... 48

5.3EXPLICITLY INCOME-DEPENDENT CARBON TAX ... 49

CONCLUSIONS ... 51

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I

NTRODUCTION

Climate change is predicted to cause enormous harm in the future (see IPCC 2014, 13– 16). The excepted consequences of uncontrolled global warming are catastrophic. Climate change linked phenomena such as rising sea levels, extreme weather events, droughts, floods, heat waves, undermined food security, water scarcity and air pollution will pose grave threats to humans and ecosystems. During the past centuries economic and population growth has been the key driver for the vast human-caused greenhouse gas (GHG) emissions. The increased emissions of carbon dioxide, methane and nitrous oxide have led to atmospheric concentrations of GHGs unseen in the past 800 000 years. (IPCC 2014, 4.) Year by year we are starting to better understand what the effects of these concentrations are to our climate and future. This understanding, which brings along alarming information, also confronts us with challenging and thorny ethical issues. Economists have suggested different instruments to decrease the GHG emission flows. The economic instruments currently used to directly impose an external price on GHG emissions are carbon taxes and emission trading schemes. Both of these instruments usually impose a flat rate. The basic economic theory states that the optimal carbon tax is achieved by adjusting the rate of the tax to correspond to the harm created by the taxed activity (Metcalf & Weisbach 2009, 511). The consequence of the flat rate advocated by the economists is that the taxation will hit the poor harder than it will hit the rich. This is because, by percentage, the low-income people will use more of their wealth on the carbon taxes than the high-income people will (Grainger & Kolstad 2010, 372–373). This outcome is often considered unfair.

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As an alternative or supplementary approach for the conventional pricing methods, this thesis considers an income-dependent carbon tax as a fair mitigation policy. The core argument given in this paper for such a tax system is based on retributive justice. According to retributive justice, for the same wrongdoing, everyone should experience the same punishment. Because of this, it is argued that from the perspective of retributive justice there are good reasons to impose carbon taxes that are dependent on income. The argument given in this thesis is different from the greater ability to pay argument (see for example Shue 1999, Page 2008 and Caney 2010). The greater ability to pay principle is a widely accepted principle of equity, stating that: “[a]mong a number of parties, all of whom are bound to contribute to some common endeavour, the parties who have the most resources normally should contribute the most to the endeavour” (Shue 1999, 537). The argument of this thesis differs in a sense that it refers to retributive justice, claiming that punishment (in the case of fines) and burdens (in the case of carbon taxation) should be equally felt and shared.

In the centre of any sound mitigation policy, there will be economic instruments used to price GHG emissions. Already there are thousands of policy interventions aiming to reduce emissions (Meckling & Hepburn 2013, 468). Despite this, the academic debate about an income-dependent carbon tax is lacking. The main reason for this is assumedly because there are practical complexities and challenges related to the idea of an income-dependent carbon tax. Nevertheless, because of the importance of this topic, there should not be any stone left unturned. This thesis aims to encourage a wider curiosity when it comes to our policy options to tackle the climate disaster.

The setup of this thesis is as follows. First, a short introduction to the economics of climate change is presented. The theory of externalities and the economic theory for an optimal carbon tax is explained. After that, punishment, its moral justifications and the income-dependent fine system, also known as day-fines, are investigated. This is done because an insightful comparison between day-fines and an income-dependent carbon tax can be made. If retributive justice and considerations about fairness are taken into consideration, similar moral justifications for the day-fine system can be given in the name of an income-dependent carbon tax. Chapter three is dedicated to discussing whether there are reasons to fine emissions. It will be shown that emitting is not harmless, but rather something that is morally problematic in many cases. In chapter four the lessons learned from chapter two and three are tied together and it is shown that we have moral reasons to advocate a mitigation policy that imposes a carbon tax that is

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income-dependent. Finally, in chapter five, it is discussed how an income-dependent carbon tax might look like in practice. This thesis is primarily focused on the normative arguments leaving various options of practical implementation open.

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1

E

CONOMICS AND EFFICIENT

CLIMATE MITIGATION

According to basic economic theory, markets are efficient when they are competitive and absent of externalities. However, GHG emissions, an inalienable part of most economic activity, are negative externalities, creating something that has been referred to as “the biggest market failure the world has ever seen” (Stern 2010, 39). Over the last decades, economists have proposed various instruments to control these externalities. The main objective of economics is efficiency and the optimization of total welfare. Therefore, economics aims to find the most efficient way to reduce the impacts of global warming. This chapter explains the basics of economic theory and gives a rough indication of the value of an optimal carbon tax.

1.1 Cost of mitigation

The goal for policies should be long-term stabilization of the carbon dioxide equivalent (CO2e) concentrations in the atmosphere. The question of where to stabilize is difficult to

determine. Finding a satisfying solution requires a careful look at climate science, the economics of climate change and international relations. In addition to this, thorough deliberation about the relevant ethical issues is needed.

There has been an ongoing international effort to address global warming. The latest agreement adopted under the Framework Convention on Climate Change is the Paris agreement in 2015. Stipulated in the agreement is a goal to hold “the increase in the global average temperature to well below 2 °C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 °C above pre-industrial levels” (UNFCCC 2015, article 2 1a). The stabilization goal of 2 °C is a result of decades of climate negotiations and discussions. Governments have agreed that limiting global warming below 2 °C is an appropriate goal to prevent dangerous climate change in compromise with sustainable economic growth and food production. (Rogelj et al. 2016, 631.) This is an admirable but also a demanding goal. Already about two-thirds of the available emissions have been emitted to the atmosphere if the warming is wanted to keep under 2 °C. In addition to

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this, there has not been and there is no sign of a decrease in global emission flows. (Ibid., 631.) This all implies that urgent decline in emissions is needed if the goal of stabilizing the warming below 2 °C is aspired.

The mitigation goal can be expressed in degrees like it was in the Paris agreement, or by referring to GHG flows (how much we emit yearly) or by concentrations (how much GHGs there is in the atmosphere at a given moment) (Stern 2010 40–41). In referring to concentrations, economist Nicholas Stern has argued that our goal should be to stabilize

below 550 parts per million (ppm) CO2e1 (Stern 2010, 42–45). For comparison, in 2011,

according to International Panel on Climate Change’s (IPCC) fifth assessment report, the

CO2e concentrations were estimated to be 430 ppm2 (IPCC 2014, 20). Stern has estimated

that the annual growth in CO2e concentration is something around 2,5 ppm and that the

growth rate seems to be accelerating (Stern 2010, 43). Now seven years later, the amount of GHGs in the atmosphere is much higher just like Stern excepted (see NOAA 2018). With this accelerating growth, the world is on a dangerous path. Failing to take strong and quick enough action or even failing to take action at all will very likely lead to catastrophic environmental consequences (the growth of GHG concentrations can be seen in figure 1).

1 This goal is weaker than the one expressed in the Paris agreement. With concentrations of 550 ppm CO2e

in the atmosphere, the increase in global average temperature will very likely exceed over 2 °C (Stern 2010, 43).

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Figure 1: Global average concentrations of the major GHGs: carbon dioxide, methane, nitrous oxide, CFC-12 and CFC-11 (NOAA 2018).

Already with the goal – 550 ppm CO2e in the atmosphere – that Stern has set, the predicted

changes in temperature are something between 1,5 °C – 5.3 °C (Stern 2010, 43). Someone might argue for even more stringent stabilization goals, as there is great uncertainty as to how the world would look like after climate is 5 °C warmer compared to the preindustrial times. Moreover, according to IPCC global sea level will continue to rise way beyond 2100. The amount of sea level rising depends on our future emissions. It is predicted that it only needs a temperature rise of something between 1°C and 4 °C for the sea level to rise 7 meters. (IPCC 2014, 16). Why then relatively little has been achieved in the past years? Part of the answer is fairly simple: combating climate change is not going to be free of charge.

According to Stern, stabilizing the atmosphere’s GHG concentrations under 550 ppm

CO2e would cost 1% of world’s GDP per year for the next 50 to 100 years starting now3

(Stern 2010, 45). This might sound like a lot, but still, Stern claims, it would be much less

3 There is uncertainty with this estimate. The price might be higher due to bad policy or failing to take

action soon enough. On the contrary, the price might be lower in a case of unexpected and significant technological progress. (Stern 2010, 48.)

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costly than hastily trying to address the climate change when and if the science turns out to be correct (Ibid., 45 & 47). Information points to caution and as Stern says: “[i]f (as is unlikely) the risks of high concentrations turn out to be low and we have taken action, we would still have purchased a cleaner, more biodiverse, and more attractive world, at modest cost” (Ibid., 45).

There is a clear trade-off between current people and the future people. The money paid now to mitigate will create benefits in the future that many current people are not there to see actualise. This is the reversed side of the fact that current emissions – yielding benefits to us – will cause huge damages in the future. This emphasizes the intergenerational nature of the problem and how clearly it is a question of intergenerational justice. In the end, it comes down to ethics. Economics, by itself, cannot say what we should do. Instead, economics can suggest tools to achieve our goals: if we want to reduce GHG emissions, economics can provide us with ways that might do this.

1.2 Attaching a price to negative externalities

From an economic perspective, it seems like there would be a simple solution to climate change. GHG emissions are negative externalities. Externalities, also known as third-party effects, affect other individuals or groups who are outside the sphere of the activity that is creating it (Harris & Roach 2013, 35). These effects can either be negative or positive, but in the case of GHG emissions, the effects are mainly negative. The problem with GHG emissions is that the individuals engaging in emission-generating activity and benefitting from it are not paying the full costs of this activity and are therefore polluting excessively. Thus, an obvious solution to this problem is to impose a price on the activity that creates externalities and to make all costs of climate warming activity explicit. A price can be attached to GHG emission in many ways. It can be done explicitly with a carbon tax or with tradable emission rights (market-based solutions), and implicitly by using regulations and standards that involve extra costs but are embedded with a promise that emissions will decrease (Stern 2010, 62). Bearing in mind that the main objective of economics is efficiency and the optimization of total welfare if reducing the impacts of global warming is accepted as a general goal, economist aim to find the most cost-efficient way to do this by the use of cost-effectiveness analysis. Regarding climate change mitigation, economists tend to favour market-based policies, as market-oriented policies are considered to be most effective (Harris & Roach 2013, 456.) This thesis is

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focused on the market-based policies and especially on carbon taxation. Both carbon tax and emission trading can be implemented in various ways.

Arthur Pigou (1920) notably suggested the taxation of externalities. Using economic terms, the idea of a “Pigouvian tax” is to make all costs of an activity – both private and external – affect the decision-making of producers and consumers. By doing this the externality is “internalized”, leading to a socially optimal level of activity. According to the theory, the socially optimal level of activity is achieved when social marginal benefit meets social marginal cost (See figure 2) (Harris & Roach 2013, 39.) Having this said, this classical economic theory considers a flat rate equalling to the harm created by the externality, as an optimal carbon tax (Metcalf & Weisbach 2009, 511).

Figure 2: Pigouvian tax, where P2 = social optimal price and Q2 = social optimal quantity, whereas P1 and Q1 indicate the market outcome.

According to this Pigouvian perspective, we should only engage in an activity as long as all benefits are greater than all of the costs to the society. With climate change, the case is the following: carbon-emitting activities are relatively too cheap because individuals are only concerned with the private costs and not with all of the costs this activity creates for the society. Considering this theory, if an external price that equals the cost of the externality is imposed for a polluting activity, then people would engage in this activity on a level that is socially efficient, which refers to a situation where all social benefits are

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maximized. The tax creates an incentive for a more environmentally friendly behaviour. It makes people act in a way that takes the true social cost of an action into consideration. (See Harris & Roach 2013, 39–40.)

The carbon tax can be designed “upstream”, meaning that the tax is levied on the extraction of the resource of pollution (for example tax on coal), “downstream”, meaning that the tax is levied on the point of emissions (for example tax on consuming vehicles) or somewhere in between. The price of the tax is often imposed as a flat rate but increasing or decreasing rate is also possible. (Meckling & Hepburn 2013, 469.) A flat rate is the standard economic approach when considering a carbon tax as we just learned. Nonetheless, this approach is challenged in this thesis, by arguing for an increasing rate on a carbon tax depending on one’s wealth.

The idea of tradable emission permits, on the other hand, is that there is determined a decreasing cap of the total amount of GHGs that is allowed to be emitted. This amount of allowed GHG emissions is divided into emitting permits. These permits are then allocated (by some logic) to different parties (which can be countries, firms or individuals). Finally, these parties are allowed and encouraged to trade the emission permits depending on their need, thus creating a market for pollution permits. This kind of a scheme is usually called cap-and-trade scheme. (Page 2011, 262.) Emission trading schemes can also be implemented in multiple different ways. The system can be “downstream”, “upstream” or something in between just like a carbon tax (Meckling & Hepburn 2013, 469). There is certain symmetry between these two ways of pricing GHGs. In theory – under idealized conditions – trading and taxes would have the same implications. Higher tax translates to a more stringent cap and vice versa. (Ibid., 470.) In reality, we do not live under these conditions. Therefore, taxes and trading systems might act differently and produce different outcomes. Both tax and trading schemes have their distinct benefits and downsides, and it is an on-going debate among economists, policymakers and philosophers, as to which one is the preferred one. At the moment it appears that emission trading has taken the upper hand as the dominant economic instrument for pricing and controlling GHGs (ibid., 468).

1.3 Conclusion

As a conclusion, we can say that there are substantial costs related to the aim to stabilize the GHG concentrations in the atmosphere to a safe level. Yet, the economic cost-benefit analysis suggests strong and quick mitigation measures, at least according to Stern.

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Second, economic theory advocates market-based mechanisms to reduce emissions. A carbon tax is such a mechanism and according to the basic theory, optimal rate of a carbon tax “[…] should equal the social marginal damages from producing an additional unit of emissions […]” (Metcalf & Weisbach 2009, 511). This flat rate way of designing a carbon tax is challenged in the following chapters by appealing to considerations about retributive justice and fairness.

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2 P

UNISHMENT AND FINES

In the previous chapter, we discussed the economic approach for efficient climate change mitigation. In addition to economic instruments, public behaviour can also be controlled by the threat of punishment. Monetary sanction is an alternative method of imposing a price on activities that are wished to be controlled. Thus, this chapter starts by examining punishment and its moral justifications to investigate fines. This chapter proceeds as follows. First, the notion of punishment is defined. Following it, different moral justifications for punishment are presented. After this, it is shown what the different justifications mean for the primary goal of criminal justice when imposing a fine. While discussing fines in section 2.3, four different models for monetary sanctions are presented. These different models of fines are investigated to find an answer to the question which fine system stands strongest under the scrutiny of the general justifications of punishment. In doing this, an argument is given in favour of income-dependent fines.

2.1 Defining punishment

Punishment4 is normally conceived as something unpleasant. It is an undesirable and hard

treatment of a person for his or her prior failing to obey the rules. Ways in which states punish their law-breaking citizens include sanctions such as imprisonment, fines and sometimes even death. H. L. A Hart has given a broadly accepted definition of a

punishment5. He defines the standard case of punishment with five conditions:

4 Punishment can be understood in two ways. The restricted definition considers punishment only as a

formal legal punishment imposed by states on criminals. The broader understanding would include informal ways of punishing a person. (Dolinko 2011, 403–404.) It would hold cases such as parents punishing their children, teachers punishing students and other forms of informal punishment such as: not speaking, restricting the use of some goods, treating with coldness, excluding, detention, making someone do more work and so on, as punishment. This paper is only considered with the restricted understanding of punishment. Hence, in this paper, when referring to punishment, it should always be understood as legal punishment.

5 In formalizing the definition Hart borrows from the work of Kurt Baier (See Baier 1955), Anthony Flew

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1. It must involve pain or other consequences normally considered unpleasant. 2. It must be for an offence against legal rules.

3. It must be of an actual or supposed offender for his offence.

4. It must be intentionally administered by human beings other than the offender. 5. It must be imposed and administered by an authority constituted by a legal system against which the offence is committed. (Hart 1968, 4–5.)

This gives us a fairly good picture of what a central case of punishment consists of. Even so, Joel Feinberg has questioned Hart’s definition. According to him, it lacks an expressive ingredient, which is an essential feature of punishment. Therefore, following Feinberg example a sixth condition can be added:

6. It must express “[…] attitudes of resentment and indignation, and […] judgments of disapproval and reprobation, on the part either of the punishing authority himself or of those ‘in whose name’ the punishment is inflicted” (Feinberg 1970, 98).

These six conditions do not necessarily conclude to the most precise definition of a punishment that there is. Counterexamples can be made against the definition above. Dolinko has noted that, for example, impeachment and removal of a high ranking official, such as president, seems to satisfy all of the six conditions. Nevertheless, this should not necessarily be considered as an instance of punishment. This is because the removal of a government official is authorized on the basis of protecting the public and not on the basis of inflicting hard treatment on the offending official (Dolinko 2011, 405). Despite this, these conditions are sufficient for the purposes of this text.

A fine clearly fulfils all of these conditions. Especially important is the sixth condition emphasized by Feinberg. A fine is a price to be paid just like a fee. What makes it then a punishment? The difference between these two is the already mentioned expressive power embedded in a fine. Fine expresses moral disapproval. It has a moral stigma attached to it. Generally speaking, fines are imposed on an activity that is considered wrong. Consider for example a parking fee. Because of this fee, there is a price to be paid for the parking. Parking fine also imposes a price (normally a higher price than a mere fee would be) for parking, but that is not all. It also registers moral disapproval: parking on that spot was wrong. The things for which fines are imposed are something wrong, harmful, dangerous or otherwise objectionable. This takes us to a more fundamental

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question: Why are some actions forbidden by the law in the first place? To this seemingly simple question, Hart answers: “To announce to society that these actions are not to be done and to secure that fewer of them are done” (Hart 1968, 6). What is important here is the symbolic significance of a punishment. Punishment such as a fine expresses reprobation of a wrongdoing. A simple fee does not condemn an action for which the price is imposed in a way that a fine does (Sandel 2012, 65; see also Hart 1968, 7).

2.2 Justifying punishment

The first condition in Hart’s definition of punishment states that punishment: “must involve pain or other consequences normally considered unpleasant”. Because of this “hard treatment” of a person, the problem of moral justification of punishment arises. Punishments are in gross conflict with our basic rights (Dolinko 2011, 403). Restricting someone’s freedom or taking someone’s property would normally be considered wrong. Why in the case of punishment such a custom is morally acceptable?

Roughly speaking there are two competing categories of justifications for punishment:

consequentialist theories and retributive theories. Consequentialists locate the

justification of punishment in the good consequences of the institution of punishment. They agree that punishment is an evil, but it is morally legitimate because of its good consequences. These good consequences can be achieved in many different ways. At least five mechanisms can be named. Firstly, it is said that punishment creates deterrence for others not to act in the way as the offender did (this phenomenon is normally referred to as general deterrence). Punishment also creates a so-called special deterrence, by deterring the ones already punished, not to commit a crime again. Thirdly, punishment can rehabilitate the wrongdoers by changing their values and hence making them unwilling to commit crimes anymore. Fourthly, punishment not only creates deterrence but also prevents hardened criminals from committing new crimes when they are imprisoned or sentenced to house arrest. Finally, punishment validates and reinforces the norms in society. (Dolinko 2011, 405–406.)

Quite a few different accounts have been labelled under retributive theories. Accordingly, retributive theories are a group of heterogeneous attempts to justify punishment. John Cottingham has even questioned whether the term “retributive” serves a useful purpose

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anymore as it has become so diversely used in philosophy6 (Cottingham 1979, 238). This

poses a challenge for this chapter’s attempt to analyse how the different justifications of punishment affect the moral justification of different fine systems. For the sake of clarity, it is tried to look at retributive theories as something unitary with a shared core of justification.

What these theories share in common is a central metaphor: retribution (Ibid., 245). The theories do not consider punishment as something evil but instead as a good and appropriate response to criminal behaviour (Dolinko 2011, 412). For retributive theories, the rationale behind the question why punishment is a good response to criminal behaviour varies from theory to theory. To dispel uncertainty around retributive theories, let us name a few retributive reasonings for punishment. Either: punishment is seen as a repayment, punishment is considered as something that the criminal deserves, we ought to punish because it is fair and finally punishment annuls the crime (See Cottingham 1979). The retributive theories mix aspects of retributive justice, motivated by justice and considerations about desert. Also, corrective justice plays a role; past crimes need to be annulled and a debt needs to be paid back to the society or to the victim of the crime. What is shared with retributivist theories is the backwards-looking tendency that is absent in consequentialist theories that place the justification of punishment solely on positive societal or personal consequences. It has to be noted that treating retributive theories as a unified approach does not do justice to them. But as the field of justifications for punishment is so diverse and complex, I currently lack the space to go through every competing retributive theory that exists.

In addition to consequentialist and retributive theories, there are theories that do not really fall into either one of these categories. For example, Herbert Morris (see Morris 1981) and Jean Hampton (see Hampton 1984) have argued for a theory where punishment is understood as communication and moral education (Dolinko 2011, 417–419). On a somewhat similar basis, R. A. Duff (see Duff 1986) has argued for a theory of punishment as a type of communication through which the offender should understand to repent his crimes. Punishment, this theory claims, is in a way a type of “secular penance.” (Dolinko 2011, 419–420.)

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It is worth noting that there are also other hybrid theories that try to combine features of both consequentialism and retributivism. For instance, H. L. A. Hart (see Hart 1968, 8 – 27) has suggested making a distinction between the question about the general justification of punishment and the distribution of the punishment. By distribution, Hart is concerned with two aspects of punishment: who may be punished (liability) and how much we should punish (amount). Making this distinction allows us to believe that the institution of punishment is justified by its consequences and the distribution of punishment is justified by desert, therefore mixing elements from both consequentialism and retributivism. (Dolinko 2011, 422.)

Another interesting mixed theory is offered by Phillip Montague (see Montague 1995). According to him, punishment can be understood as “societal self-defence” and that the justification of self-defence and punishment share a common structure. Both are justified with same principles of distributive justice. Self-defence is justified by its consequences (defending from harm), but only if the harm caused, to prevent harm on yourself, is inflicted on the aggressor, hence introducing an element of desert to the justification. (Dolinko 2011, 424–425.)

Finally, Mitchell Berman (See Berman 2008) has argued that we can separate two cases of punishment. He calls them “core” and “peripheral” cases. “Core” cases are ideal cases where the offender is punished for his or her crimes. “Peripheral” cases, on the contrary, are cases where someone is punished without the person being a lawbreaker – either the person was not responsible for the crime or there was no crime in the beginning. From this, it follows, according to Berman, that the “core” cases are justified on a retributive basis and “peripheral” cases are justified on consequentialist grounds. (Dolinko 2011, 428.) The search for a definitive theory of punishment still goes on. Only a handful of theories were (briefly) addressed above and all of them face more or less problems (for more on the problems see for example Dolinko 2011).

What can be drawn from this section is that the field of justification of punishment is diverse. Nevertheless, three main categories of justification were identified (consequentialist, retributive and hybrid) and examined. Depending on what we take to be the core justification of punishment, also the central aim of punishment changes. In the following section, fines are investigated, and it is examined how different justifications of punishment suggest different ways of designing a fine system.

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2.3 Fines

Fines are generally considered as an important form of sanction. Their benefits over other means of sanctions are well known. To point out few: Fines have a very low enforcement cost compared to imprisonment. Also, fines generate wealth for the state treasury. (Kantorowicz-Reznichenko 2015, 482.) In addition to this, “fines have no criminogenic effect as prisons do” (Kantorowicz-Reznichenko 2018, 1). The challenge for legislators then is how to design the fine system. For instance, questions such as: what offences can be sanctioned by fine, how large a fine for a certain type of offence should be and what other factors should affect to the amount of fine, needs to be answered.

From what was discussed in the previous section it seems that the primary aim of criminal justice depends on whether the general justification is consequentialist, retributive or hybrid. If we take consequentialist theory in the case of imposing a fine then the aim of criminal justice would be to bring about good consequences, namely to maximize utility. This would mean that punishment is imposed to reach a situation where the net social benefit is maximized. Through fines, the consequentialist approach aims to find an optimal level of activity at which people engage in an activity only when private benefits exceed the social costs.

Retributive theories, on the contrary, seem to frame the main goal of criminal justice to impose a “hard treatment”, relative to the level of offence, on all lawbreakers. This follows from the basic idea of retributive theories that the offender deserves to be punished. This means that a fine should feel like a punishment for all and that the amount of a fine should be in proportion with the wrongdoing in question.

It is hard to say what a hybrid goal of criminal justice could be as there are many theories that can be considered hybrids. Despite this, a third goal can be added to our investigations. A somewhat hybrid aim for fines could be the aim to create most deterrence with the least cost7. For example, Hart’s hybrid theory (which makes the

distinction between the general justification of punishment and the distribution of punishment) can be seen to support the aim to create the most deterrence; the general goal is justified by its good consequences, namely having fewer crimes with the least cost.

7 This can also be characterized as an economic cost-effective approach to fines. Economics either aims to

maximize welfare or then economics can be used to achieve a given goal effectively. If creating deterrence is taken as a goal, economic cost-effective analysis can suggest ways to achieve this goal effectively.

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That means having a high level of deterrence. However, the question of distribution is justified by desert, which explains why the hybrid aim does not take all social costs into consideration. Those who have committed a crime need to be punished since they deserve it. Furthermore, the threat of punishment (making sure that lawbreakers will be punished), in theory, translates to deterrence. Therefore, the aim to create most deterrence can be seen as a hybrid aim of fines. It mixes elements of both consequentialist and retributive theories.

It is worth emphasising that not all crimes are supposed to be affected by fines. In some cases, for example with crimes like murder, rape and the like, imprisonment may be the appropriate response. Therefore, in the context of following discussions, crime is considered as something, which is suitable to be punished by a fine. Another thing that needs to be noticed is that the shame related to receiving a fine might in itself create deterrence or inflict “hard treatment” on someone. Even so, the shame factor is left out of the following discussions to simplify the investigations. Next, a closer look is paid at four different ways of designing a fine system: day-fines, fixed fines, maximum fine and fine equalling harm. These systems are valued in light of the three aims of fines to see which system performs the best.

2.3.1 Day-fine

Many European countries such as Finland, Sweden, Denmark, Germany, Austria, France and Switzerland along with others have a financial sanction system that determines fines based on income (Kantorowicz-Reznichenko 2015, 486). Fines in these systems are often called day-fines. The day-fine system is a two-stepped procedure. First, the severity of the crime in the eyes of the court determines the number of day-fines to be paid. Second, the income of the offender determines the unit of the fine. This means that for more severe crimes the number of day-fines to be paid is higher and the unit of a day fine is set by the financial situation of the offender. (Ibid., 482.)

To clarify, let us use a numerical example from a Finnish fine system to make the concept of day-fines clearer. Assuming that a person’s income is 1 500 euros, after taxes and other payments the person would receive a net payment of 1 000 euros. From this, a so-called basic need reduction (255 euros) is subtracted which then makes 745 euros. The unit of a

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day fine in this specific case would be 745 euros divided by 608, making it 12 euros if the

person does not have underage children9. Now if the person has committed a crime for

which he or she is sanctioned 20 day-fines, the whole amount of the fine in the person’s case would be 12 euros times 20 day-fines concluding to 240 euros. (oikeus.fi 2017.) The day-fine takes into consideration the offender’s capacity to pay therefore enabling sanctioning through fines for many offences without using imprisonment as a punishment. (Kantorowicz-Reznichenko 2015, 483). The day-fine system compromises between constantly under-deterring wealthy lawbreakers by using low fines or having to put poor offenders to prison who are not able to pay a high fine10, which would be a

precondition for creating deterrence for all people. The day-fine system also creates a great general deterrence without harming marginal deterrence. (Ibid., 483). The term “general deterrence” in this context refers to deterring all people from committing all kinds of offences. The point of marginal deterrence, on the other hand, is to create deterrence for offenders to limit their criminal behaviour. This rests on the basic idea of criminal justice that more severe offences should be punished more severely and that series of offences, likewise, should be punished more severely than a single offence. This idea was already expressed by Jeremy Bentham (See Bentham 1823, 178–181). In the case of a high fine (to assure deterrence for rich offenders too) poor offenders have to be imprisoned if they cannot pay the fine. But if we do not want to fill our prisons with people that could have been fined instead of imprisoned, high fines for poor offenders impede the marginal deterrence (Kantorowicz-Reznichenko 2015, 491). As an example, a poor lawbreaker committing a fraud might decide to commit a more severe fraud if the punishment for both crimes consists of a fine that amounts to the lawbreaker’s whole wealth.11 (Ibid., 489).

8 For this seemingly arbitrary number of 60, I have not found any explanation.

9 For every minor three euros is subtracted from the person’s unit of a day fine (oikeus.fi 2017).

10 Christopher Hampson has expressed his worry about taking this path. According to him, in America mass

incarceration, due to people’s failure to pay monetary obligations to the state, has created a new era of “debtors’ prison” (See Hampson 2017).

11 A stronger marginal deterrence can be maintained with the threat of imprisonment, but we have reasons

not to overcrowd our prisons as, like earlier said, the costs of imprisonment are high, and prisons have negative effects on their inmates. For the sake of the argument, let us say that we want to choose the imprisonment strategy. Even so, marginal deterrence might be weakened. It might follow that for some

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Given the consequentialist aim to maximize utility, the day-fine system does not seem convincing. It aims to create an equal degree of deterrence for all, but this does not necessarily maximize utility. For instance, in some cases, a law that deters a billionaire from using an illegitimate parking spot might not be efficient, if this billionaire could make a huge profit by using this parking spot (for example due to him or her saving time). From a retributivist perspective, the day-fine system is appealing. It can be argued that the amount of “hard treatment” should be the same for similar offences as that is what the offender deserves, and punishment is the appropriate response to a wrongdoing. Most retributive theories see punishment and the suffering related to it as a good response to criminal behaviour. The unpleasant treatment related to punishment, according to retributive theories, is because one deserves it, or it repays a debt to the society or to the victim, or because lack of punishment means that the offender gained an unfair advantage on the detriment of the other law obeying citizens who are playing fairly and so on. From this, it seems that retributive theories would advocate for a fine system that imposes a relatively same suffering for similar crimes. This is exactly what day-fines do. One might then ask why the same price is not enough? Why is the relative burden relevant? This is because, as noted above, “hard treatment” is a necessary condition for punishment. If a fine is low, it might not really be characterized as something that really “stings” some offenders and this “stingingness” is an essential part of retributive justifications. Or then if the fine is high enough to actually be unpleasant enough for a rich offender it might then be disproportionately “hard treatment” for the low-income offenders.

The day-fine seems also appealing from the hybrid perspective. The hybrid aim is to create most deterrence with least cost and day-fine achieves this; day-fines are able to create great general deterrence without using imprisonment and without impeding marginal deterrence.

2.3.2 Fixed fine

A fixed fine is the most commonly used monetary penalty in the Western society (Kantorowicz-Reznichenko 2015, 491). With fixed fines, the amount of a fine is usually

people committing a crime leads to a fine they cannot pay, and they are therefore sent to prison. In these circumstances, the lawbreaker might have reasoned beforehand that he or she could just as well commit a more serious crime for which the punishment is imprisonment if he or she would any case end up into prison.

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only determined by the gravity of the offence. Simply put, this would mean that for an offence, let us say, driving 20 kilometres per hour over the allowed limit, the fine is a fixed sum (for instance 200 euros); when caught, everyone is charged the same amount for speeding over the allowed limit. This system has some intuitive appeal to it, but it faces severe disadvantages. First, this fine system cannot be used as the only sanction for all offenders. Poor offenders who are not able to pay the fine have to be imprisoned. More importantly, when setting a price for the fine either the rate of the fine is set too high, leading to the necessity to use imprisonment sanction or the loss of marginal deterrence for low-income offenders, or then the rate of the fine is set too low which on the contrary leads to constant under-deterrence for affluent people. (Kantorowicz-Reznichenko 2015, 491.)

From the perspective of all three aims, a fixed fine system does not seem ideal. From a consequentialist point of view, a fixed fine fails because it does not necessarily maximise utility. Whereas, from the retributive point of view, a fixed fine fails because it fails to impose an equal “hard treatment” on all. The aim to create most deterrence with the least cost fails too with fixed fines because as just discussed either the fine is set too low, failing to create deterrence for the wealthy people or then the fine is set too high, leading either to the loss of marginal deterrence or then to the need to use imprisonment as an additional sanction.

2.3.3 Maximum fine

According to one economic model, it would be optimal to impose a fine equalling to the offender’s entire wealth, with a low probability of getting caught12 (Polinsky & Shavell

1979, 880; Polinsky & Shavell 1991, 618; Kantorowicz-Reznichenko 2015, 487). The idea behind this argument is that fining offenders is costless but apprehending them is costly. This said, if the fine is not at its maximum, enforcement costs can be lowered. Decreasing the probability of getting caught while raising the fine can yield optimal results without affecting the deterrence. The problem with a fine that equals the offender’s wealth is that it does not achieve marginal deterrence (Kantorowicz-Reznichenko 2015, 488–489). The problem of marginal deterrence was already discussed above. The same problem that applies to fixed fines also applies to a fine equalling lawbreaker’s entire wealth, but even more gravely. Polinsky and Shavell have also noted that this economic

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model does not work if people are considered to be risk-averse (which is a very convincing assumption when facing a fine that equals the whole wealth of the offender) (see Polinsky & Shavell 1979), or if the wealth of the offenders varies (which again is a very convincing assumption) (see Polinsky & Shavell 1991). Putting away the economic models, a fine amounting to the offender’s entire wealth does not align with reality. This kind of a fine is hardly ever imposed on people (Polinsky & Shavell 1991, 618).

This model does not match with the consequentialist aim as it deters people from breaching the law even in cases where the private benefits are greater than the harm created by the offence. By doing this utility is not maximized. The case does not look any brighter from the retributive perspective. A fine equalling offender’s entire wealth imposes in some cases disproportionately harsh punishment relative to the crime in question. In theory, the hybrid aim is achieved with a maximum fine. It creates great deterrence with very little costs. Two things can be said against this conclusion. First, even though the maximum fine creates great general deterrence it fails to create marginal deterrence. Second, the idea of a fine equalling offender’s entire wealth seems in many cases unjust. It simply feels disproportionate to impose a maximum fine for some petty crimes. For these reasons, the maximum fine does not seem ideal.

2.3.4 Fine equalling harm

In the same way as the trade-off between the probability of detection and the severity of the fine can endorse a maximum fine with a low probability of getting caught, if catching the offenders would be costless then it would be optimal to impose a fine that equals the harm (the external cost of the activity) with a maximum probability (one) of getting caught. “This is simply the traditional Pigouvian tax solution. Individuals would then engage in the activity only if their private benefits exceed the external cost.” (Polinsky & Shavell 1979, 880.) In reality, the probability of detection is never one. Because of this, it has been suggested that an optimal fine would equal the harm caused, inflated by the probability of detection, plus the enforcement costs of fining an individual (Polinsky & Shavell 1992, 133). For example, for an offence, which harm equals 5 000 €, the probability of detection is 50 % and the cost of fining this individual is 1 000 €, the optimal fine would be 5 000 € divided by 0,5, plus 1 000 €, adding up to 11 000 €. From the different ways of designing a fine system, this model of fines goes best along with the consequentialist aim. It seems to yield the most optimal results from the fine models discussed above. From the retributive perspective, this model is appealing in the

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sense that the level of punishment is aligned with the harm created, meaning often with the severity of the offence. But in imposing a “hard treatment”, this model does not succeed. If the harm is low then the fine is also low, and it can lack the essential feature of punishment that is the unpleasant “hard treatment”. Also, it imposes relatively unequal “hard treatment” on different people in the same way as a fixed fine would. This said, a fine equalling harm is not ideal from the retributive standpoint. From the perspective of deterrence created there are some flaws. This type of a fine might not create deterrence for wealthy people if the harm is low. In the case of low harm offences, the rich might still choose to break the law. Contrary to this, if the harm is high, this type of fine cannot be used for poor people as they might not be able to pay for it or it might even fail to create marginal deterrence for them. (Kantorowicz-Reznichenko 2015, 490–491.) This is why a fine equalling to harm does not align best with the hybrid aim either.

From the discussion above we can conclude that day-fines perform best under the lens of retributive aim and the hybrid aim to create most deterrence in the least costly manner. On the contrary, the consequentialist aim to maximize utility speaks in favour of a fine equalling to harm. This contradiction invites us to ask what aim is preferable in the context of criminal law and fines. In the following section, a few moral concerns related to the utility maximising strategy are raised. By doing this it is shown that we indeed have moral reasons to support a day-fine system in the context of criminal law.

2.4 Utility maximising questioned in the context of fines

A broad moral worry can be raised against the consequentialist aim in the context of fines. The consequentialist goal can be seen as enabling for the rich people something that seems like “purchasing” a right to commit a crime. It is not a problem if affluent people have, for instance, more books, jewellery or houses than poor people. The same case does not apply if rich people have more of the “ability” to commit a crime than others. Some things should not be up for sale. Michael Sandel has argued in this way in his book: What

Money Can’t Buy: The Moral Limits of Market (2012). According to him, there are two

reasons why we should worry about our society moving to a point where everything is up for sale. The reasons are inequality and corruption. Starting with inequality: there is something deeply unfair if the law does not apply to the rich in the same way as it applies to the poor. For someone who is not concerned with equality, this argument might be hard to sell and one might note that flat rates actually treats all equally (same price for the same offence). In a way this is true but fining an affluent person with a low fine simply fails to

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punish or deter. Consider a billionaire receiving a 50 € fine for speeding. This fine does not create the wanted reaction from the rich lawbreaker. It allows the person not to care about the rules in the same way others have to and failing to punish rich offenders, in a way, allows them to purchase a right to commit a crime. The second point about corruption, made by Sandel, also applies to the issue at hand. What Sandel wants to claim is that putting a price on something might corrupt the thing itself. (see Sandel 2012 110– 113.) In the case of fines, it is arguable that failing to punish or to deter some criminals corrupts the legal system. Ability to commit a crime should not be turned into a commodity, to something that can be bought if one can afford it.

Now, why is it important to prevent all from committing crimes? Consider for example a rich person who speeds (because, for instance, the person is running late for a job interview) and the possible fine that the person faces for this offence is 500 €. Consider further that the person values being on time for the interview way over the price of the fine (This might be because getting the job yields a significant increase in the person’s income and therefore in the person’s wealth in the long run). In this case, the possible private benefits exceed the possible external cost. Still, there is something morally problematic about speeding in this situation; it seems wrong to put other people in danger based on your private benefit. It is important here to note that the quantitative value attributed to something differs largely with the valuer’s wealth. Willingness to pay for something is partly a function of the ability to pay and therefore it is a poor indicator of true value13 (Eriksson & Goodin 2007, 126). This said, even though one might be willing

to pay more than 500 € for the ability to speed, this does not mean that it would necessarily be morally acceptable.

Let us consider another grosser example. In this example, a rich person x wants to inflict pain on a person y for whatever reason. Therefore, x assaults y. Let us say that the damage created by this assault is 1 000 euros. Furthermore, imposing a fine on x is 500 euros and probability of getting caught is again 0,5. In this case, the optimal fine would be 2 500 euros according to the theory where fine equals harm. Further, assume that x would have been willing to pay 2 600 euros for the opportunity to inflict pain on y. In this case, it was

13 Even though in economic theory everything can be seen as preferences which differ quantitatively

(because some are inflated by a greater willingness to pay), this quantitative approach tells very little about the nature of the preferences. Some preferences are needs, and some are only wants. Some preferences are necessary for a decent human life when others are not. (See Shue 2010, 211.)

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clearly the optimal solution for x to assault y as x’s private benefits exceeded the possible costs x would have to face. There is something deeply problematic about this kind of reasoning. By choosing this clearly troubling case it is pointed out that finding an “optimal solution” in which an individual engages in a harm-causing activity (when their private benefit is greater than the external costs) might work in cases where the harm created is in some sense morally “harmless”, but in more severe cases such as the one at hand and in other cases of right violations this kind of reasoning does not seem appropriate. In the case above a person is causing harm to another individual and not just some abstract social harm. Still, it stirs up some intuitions about the problems of these kinds of consequentialist sum games. Even if someone is willing to pay 2 600 euros for the ability to assault someone, this does not mean that the true value of the ability to assault someone is translatable to 2 600 euros. “[W]illingness to pay often tracks true value only very imperfectly […]” because as discussed earlier, willingness to pay is always backed up with the ability to pay and for some that is greater than for others (Ibid., 126). Some harms and some benefits cannot be traded; they share no common measure. In a sense, they can be incommensurable. This said, in some cases, it is morally problematic to put private benefit, whether it is in monetary terms or in terms of some abstract utility, over the social cost.

This relates to the theory of “efficiency breach”, supported, for example, by Richard Posner. According to him, in a context of contractual law a breach of contract should in some cases be permitted and even encouraged if a party of the contract profits more from the breach than the other party loses due to the breach (Posner 1986, 107). In a case like this, the perpetrator can simply reimburse the damaged party for its damages, leaving both parties better off; it is a maximisation of resources. The moral or legal credibility of this theory is not commented here. Instead, the aim is to show that finding an optimal level of activity might work in some cases related to legal contracts, but the same reasoning fails greatly in cases of criminal law from a moral point of view, for the reasons discussed above. Therefore, it is suggested here that criminal law should prevent unwanted behaviour and not try to reach an “optimal” level of activity.

What has been argued for is that the aim to maximize utility is morally problematic in the case of criminal justice and fines. In the light of this, the retributive aim or the hybrid aim seems as a more morally appropriate goal when designing a fine system. Besides, it was concluded that the retributive aim and the hybrid aim support the day-fine system as the

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superior way to impose a monetary sanction. In the next section, a further discussion of the moral reasons to support day-fines is given.

2.5 In further defence of day-fines

In this section, a further defence for the day-fine system is presented. Two moral arguments are given to support day-fines. Following this, I respond to possible criticism that might be raised against the day-fine system.

2.5.1 Imposing a fine in temporal terms

When we think about punishment often the first thing that comes to mind are prisons. The punishment of imprisonment hurts the poor as well as it hurts the rich. From this, it seems that, if we want to use financial sanctions a further argument would be needed to explain, why in the case of fines it would be morally acceptable that the severity and the deterrence of the penalty differ depending on the wealth of the offender. With imprisonment the punishment is expressed in relation to time: one is sent to prison for three years or eight

months. Regarding day-fines, similarly the metric is temporal, and it deprives lawbreaker

from the time spend “working off” the fines. Lina Eriksson and Robert E. Goodin claim that “[d]ay-fines where […] created to solve pressing problems of fairness in the legal system”, in their article: “The Measuring Rod of Time: The Example of Swedish Day-fines” (2007). According to Eriksson and Goodin, it was important to think about welfare and punishment in a temporal manner rather than in terms of money (Eriksson & Goodin 2007, 132). Even the name – day-fines – gives out the temporal element of the sanction. As Eriksson and Goodin state: “If we do not want to make people spend time in jail, we must `take their time´ in some other way” (Ibid., 128). Day-fines deprive the offender of the “pleasures of life” which the person could have enjoyed with the money that is now used to pay off the fine (Ibid., 132). If the fine is, for instance, 100 €, for a low-income person this might translate to a full eight-hour day of work, when for a high-income individual it might only take one hour of labour to gain back the deprived money. Day-fines are able to tackle this kind of unfairness because time – our scarce resource – is also a very egalitarian resource. We all have only 24 hours in a day. This gives a strong case in favour of day-fines as a fair monetary sanction.

2.5.2 Treating fines as fees

Another argument in favour of income-dependent fines is that the distinction between fines and fees can be blurry. This blurriness can be opposed on the basis that, if

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punishment should be a punishment for everyone, then also fines (punishment) should be a punishment for everyone too. Sandel has stressed this point: imagine a person who is the head of a construction site. Near to his construction site, there are no parking spots available. Besides this, the person is too lazy or finds it too inconvenient to park far away from the construction site, so he parks on a parking lot reserved for the physically disabled. The contractor might, in this situation, think of the possible parking fine only as an expensive parking lot fee and a cost of business. This kind of attitude fails to grasp the moral significance of the parking lot reserved for physically disabled people. (Sandel 2012, 65.) In the same way, it is troubling if someone considers speeding tickets only as a fee to drive fast, just like it was already discussed with the rich speeder example. Fines are imposed for a reason for an activity that is harmful, dangerous or objectionable. If fines are treated as fees, the function of a fine, as a thing that signals moral disapproval, creates deterrence for unwanted activity and imposes the appropriate “hard treatment” on the wrongdoer, fails. The way to ensure that fines really are treated as fines is to set them high enough relative to the offender’s financial situation.

2.5.3 Responding to possible criticism

Despite everything mentioned above not everyone is convinced of income-dependent fines. In Finland and Denmark, there is no ceiling set for how high the day-fines can be (Kantorowicz-Reznichenko 2015, 486). As a corollary, the fines can be astonishingly high in absolute terms for violations that some might consider not being so severe wrongdoings. For example, in 2015 a millionaire in Finland got fined 54 024 € for speeding 103 km/h in an area with a speeding limit of 80 km/h (Daley 2015).

Someone might argue that this kind of a system punishes the rich in the society unfairly. Huge fines might seem disproportionate, but at least in theory day-fine system stings everyone the same in respect to their financial situation. Consider for instance two persons

x and y. The person x has a monthly income of 3 000 euros and the person y is wealthier

with a monthly income of 100 000 euros. They both receive a fine for the same offence that sums up to, let us say, 10% of the monthly income. For person x the fine is 300 euros and for the person y, it is 10 000 euros. Understandably 10 000 euros is a tremendous amount of money compared to 300 euros, but then again so is an income of 100 000 euros per month compared to 3 000 euros per month.

Additionally, it has been argued that a day-fine system can prevent people from committing minor offences in a situation where breaking the law provides high utility or

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the breach is otherwise justifiable (Kantorowicz-Reznichenko 2015, 496). For example, a wealthy person might drive over the speed limit to take an injured person quickly to the hospital under a fixed fine system, but not in a case where the fine is tied to the income. There are two obvious ways to answer this objection. First, jurisdictions often have some power to consider special cases and adjust the verdicts in the light of special circumstances (Ibid., 497). Hence, the court could lower the high fine of a wealthy offender who was speeding while trying to save the life of an injured person. Second, as Kantorowicz-Reznichenko says:

[the day-fine] is a proportional fine that imposes an equal relative burden on all offenders. Therefore, the violator may still decide if it is efficient for him to breach certain rules. On the other hand, low fixed-fines simply create incentives for the rich not to comply with the law since the “purchase” of violations might be perceived as a utility-maximizing strategy. Consequently, those fines would lead to under-deterrence of the wealthy population. (Ibid., 497.)

2.6 Conclusion

After looking at punishment and its moral justifications three aims for fines were identified. The retributive justification claims that punishment is the appropriate response to criminal behaviour. Therefore, it was argued that the retributive aim of fines is to impose an equal punishment on all wrongdoers. The consequentialist justification states that punishment is justifiable because of its good consequences. Hence, it was concluded that the consequentialist aim of fines is to maximize utility. The hybrid justification is a mixture of retributive and consequentialist justifications. It was argued that a goal to create most deterrence with the least cost can be considered as a hybrid aim for fines. From these aims, the retributive aim and the hybrid aim supported the income-dependent fine system (day-fines). The consequentialist approach, on the contrary, supported a system where the fine equals harm. Nonetheless, it was argued that the utility-maximizing aim can be contested in the context of fines. The utility-maximizing aim was contested on the basis that it allows the wealthy to “purchase” a right to commit a crime. This was claimed to be unfair and it was argued to corrupt the legal system. Furthermore, it was claimed that some harms should not be traded or compensated with money even though one is willing to pay. This is due to the fact that, often willingness to pay tracks true value very poorly because it is always backed up with the ability to pay, which then again largely varies among people. Altogether, it can be concluded that if retributive aspects

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are considered as an important part of the justification of punishment, day-fines appear to be the most appropriate way of imposing monetary sanctions. This is because day-fines are able to impose equal “hard treatment” for all offenders. Simultaneously, day-fines create an equal deterrence for everyone.

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3 O

N FINING GREENHOUSE

GAS EMISSIONS

In the previous chapter, it was concluded that there are strong moral arguments for income-dependent fines in the case of the breaking of legal rules. In this chapter, it is investigated whether it makes sense to fine individual GHG emissions. The setup of this chapter is as follows. First, two problems related to fining GHG emissions are discussed. The problems being: (1) it is hard to determine onto whom to impose the climate change related harm and (2) fining GHG emissions is too harmful. Second, the two problems are investigated to see whether they actually impose such a challenge to the idea of fining GHG emissions. After discussing these problems, it is concluded that there are cases where we would have moral reasons to fine emissions but due to epistemic problems fining all emissions is not ideal in practice. Despite this finding, because in theory emissions could be fined and blame can be asserted to emissions, it is argued that similar arguments that favour income-dependent fines also support carbon taxation that is dependent on income.

3.1 Accumulative harm

Already monetary sanctions are imposed on large polluters. For example, in 2017 it was announced that Exxon Mobil will pay 2,5 million dollars as part of a settlement. Exxon Mobil was accused of violating the Clean Air Act. The violation was due to gas flaring which was not properly monitored and operated. The flaring happened in Exxon Mobile’s petrochemical facilities and because of it excessive amounts of harmful pollution was released into the air. In addition to the fine and as a part of the settlement, Exxon Mobil agreed to spend 300 million dollars to install better technology, which reduces harmful emissions in the future. (Friedman 2017.) From this, we can see that large polluters are indeed facing sanctions for their wrongdoings. But how about fining smaller polluters? Joel Feinberg says in his article “Environmental Pollution & the Threshold of Harm” (1984) the following:

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