If 'tis the season to welcome change...
President Elect Obama should say NO to Summers
Dear President Elect Obama:
If this is the season for change you should say NO to Lawrence Summers. Please remember that Mr. Summers, when chief economist for the World Bank, was the author of the following memo in which he places US-centric concerns over the welfare of others.
This myopic world view, which embraces the selfish attitude of "its not my problem," is a rejection of your stated aim at sharing responsibilities. While Mr. Summers is surely an intelligent and capable economist, his willingness to propose morally reprehensible solutions for the sake of economic expediency preclude him from being qualified to lead this country in a new direction.
The Memo
DATE: December 12, 1991TO:
Distribution FR: Lawrence H. Summers
Subject: GEP 'Dirty' Industries:
Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]? I can think of three reasons:
1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.
2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I've always though that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.
3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. The concern over an agent that causes a one in a million change in the odds of prostrate cancer is obviously going to be much higher in a country where people survive to get prostrate cancer than in a country where under 5 mortality is is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable.
The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.
Tiara Tip: http://www.whirledbank.org/ourwords/summers.html
Dear President Elect Obama:
If this is the season for change you should say NO to Lawrence Summers. Please remember that Mr. Summers, when chief economist for the World Bank, was the author of the following memo in which he places US-centric concerns over the welfare of others.
This myopic world view, which embraces the selfish attitude of "its not my problem," is a rejection of your stated aim at sharing responsibilities. While Mr. Summers is surely an intelligent and capable economist, his willingness to propose morally reprehensible solutions for the sake of economic expediency preclude him from being qualified to lead this country in a new direction.
The Memo
DATE: December 12, 1991TO:
Distribution FR: Lawrence H. Summers
Subject: GEP 'Dirty' Industries:
Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]? I can think of three reasons:
1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.
2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I've always though that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.
3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. The concern over an agent that causes a one in a million change in the odds of prostrate cancer is obviously going to be much higher in a country where people survive to get prostrate cancer than in a country where under 5 mortality is is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable.
The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.
Tiara Tip: http://www.whirledbank.org/ourwords/summers.html
posted by Queenies Daughter at 7:52 PM
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