January 26, 2012

Larry Summers nomination for president of the World Bank and how "Africa is vastly under-polluted."


I read this awhile ago on David Rylance's Facebook page and I can't quite shake it off. One of the most disturbing things I've read in a while. The memo is from 1991 but I missed it at the time:

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 adds 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.


[Just read on Wikipedia that Pritchett claims the memo was meant to be sarcastic. I read it over a few times and sometimes I believe the intention was sarcasm while other times I don't. It does read a bit like A Modest Proposal, but there is a big different between A Modest Proposal written by Swift and A Modest Proposal written by the very people constructing and enforcing economic policies that lead to atrocity. Whether or not the sarcasm angle is true, or simply post-leak spin, for me it somehow makes the memo even worse. That the World Bank has a culture of sarcastically suggesting we dump toxic waste in less developed countries, I suppose as a kind of joke, when in fact such practices are some of the harshest, cruelest economic realities of our current world. Heartbreaking.]


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