Friday, June 02, 2017

Is the SGR inter-generationally equitable?

When we speak of inter-generational equity, how do we measure where one generation begins and where another ends? I think I first heard of inter-generational equity in the context of the 1992 Rio Conference. The idea was that the current generation shouldn't endanger the next generation (or future generations) by exploiting the environment in such a way as it would endanger the lives of those that would come after the damage was done. The same moral principle applies in public finance: do not take on financial burdens today that will be borne with great difficulty by future generations [Article 201(c)].

Let us assume for argument's sake that a generation lasts twenty-five years, the loans taken by the Government of Kenya for the construction of a standard gauge railway shouldn't, ideally, burden those who will be paying taxes in twenty-five years, that is, beginning around the year 2040 (if we further assume that the loans were taken in or around 2015). Is it equitable that this generation should bear the costs of the loans even though, as is the case with most railroads, the benefits will be enjoyed by at least three generations?

I wish someone could explain it to me.

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