Posted by: Doug Henwood | January 18, 2012

Larry Summers, future World Bank president?, on how Africa is vastly underpolluted

So Obama’s going to nominate Larry Summers to be president of the World Bank. Recall this passage from 1991 memo, actually written by Lant Pritchett but signed by Summers when he was the Bank’s chief economist, on how “Africa is vastly under-polluted.” The last paragraph is important, and should not be overlooked in fighting these mofos.

3. “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 measurement 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 thought that underpopulated 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 [sic] cancer is obviously going to be much higher in a country where people survive to got prostrate cancer than in a country where under 5 mortality is 200 per thousand. Also, much of the concern over industrial atmospheric 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.

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Responses

  1. ‘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.’

    Well that just about sums it up, doesn’t it?

  2. Please see my essay “Where the Crises Intersect: Lawrence Summers, Al Gore, and U.S. Environmental & Economic Policy” at

    http://www.mitchelcohen.com/?p=1803#more-1803

    From the introduction:

    Law­rence Summers is Capitalism’s chief economist. He was, as we shall see, a major influence on Bill Clinton and Al Gore, whose approach to economics and the environment is continued by Obama. While Gore powerfully illustrated the planetary devastation underway via Global Climate Change in his 2006 film “An Inconvenient Truth,” it was Summers who provided Gore’s nonsensical consumer-driven approach about “what to do” to halt and repair the global ecological crisis. Here is where the ecological and the economic intersect.

    To get us out of the crises, President Obama has turned to the same coter­ie of economic advisers who got us into them. They have brought the U.S. (and world) economy and ecology to the brink of collapse. Writer Ron Suskind, in his new book “Confidence Men,” confirms that there was never any question of Obama doing things differently. Describing the then-president-elect’s choice of economic advisers, Suskind notes,

    “Obama, after all, had selected for his top domestic officials two men [Lawrence Summers and Timothy Geithner] whose actions [in the Clinton Administration] had contributed to the very financial disaster they were hired to solve.”

    John R. MacArthur, the editor of Harper’s, also references Suskind’s book: “These anti-reform appointments did not go unnoticed by party regulars, even though they were ignored by Obama groupies. ‘I don’t understand how you could do this,’ Suskind quotes Sen. Byron Dorgan (D.- N.D.) saying to Obama. ‘You’ve picked the wrong people!’

    “The ‘wrong people’,” MacArthur notes,

    “included Rahm Emanuel, now mayor of Chicago, and his replacement as White House chief of staff, William Daley. Both of these advisers were four-star generals within the Chicago Democratic machine who cut their teeth in Washington during the campaign to pass that job-killer North American Free Trade Act and who later worked for investment banks. But Obama’s hypocrisy in Osawatomie, Kansas, set a new standard in deception. Among other things, his speech blamed ‘regulators who were supposed to warn us about the dangers of all this [the unfettered sales of bundled mortgages], but looked the other way or didn’t have the authority to look at all. It was wrong. It combined the breathtaking greed of a few with irresponsibility all across the system.’

    “What’s truly breathtaking,” MacArthur bristles, “is the president’s gall, his stunning contempt for political history and contemporary reality. Besides neglecting to mention Democratic complicity in the debacle of 2008, he failed to point out that derivatives trading [still] remains largely unregulated while the Securities and Exchange Commission awaits ‘public comment on a detailed implementation plan’ for future regulation. In other words, until the banking and brokerage lobbies have had their say with John Boehner, Max Baucus, and Secretary of the Treasury Tim Geithner. Meanwhile, the administration steadfastly opposes a res­toration of the Glass-Steagall Act, the New Deal law that reduced outlandish speculation by separating commercial and investment banks. In 1999, it was Summers and Geithner, led by Bill Clinton’s Treasury Secretary Robert Rubin (much admired by Obama), who persuaded Congress to repeal this crucial impediment to Wall Street recklessness.”

  3. [...] turned around and used more or less effectively against every Bank proposal for liberalization. (SOURCE: Doug Henwood) Money & Power   Ecology, Environment, Greed, Larry Summers, [...]

  4. [...] blogger Doug Henwood cites a memo issuing from Summers’s office back in 1991, when he was the Bank’s Chief [...]

  5. [...] blogger Doug Henwood cites a memo issuing from Summers’s office back in 1991, when he was the Bank’s Chief Economist. The [...]


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