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TO: Environmental/social justice community FR: Jim Vallette, International Trade Information Service Dt: 13 May 1999 RE: The tragic rise of the new Treasury Secretary
Back on December 12, 1991, the chief economist for the World Bank, Lawrence Summers, wrote an internal memo that was leaked to the environmental community, and we, in turn, publicized it. This memo remains relevant.
Mr. Summers, currently the Deputy Secretary of the Treasury Dept., is Pres. Clinton's nominee to replace Mr. Wall Street, Robert Rubin, as U.S. Treasury Secretary. As the country's chief economist, Mr. Summers will be the driving force behind its global economic policy. We can thus look forward, with trepidation, to further exertion of the U.S.' free trade - at any cost to people and the environment - policies.
In 1994, by the way, virtually every other country in the world broke with Mr. Summers' Harvard-trained "economic logic" ruminations about dumping rich countries' poisons on their poorer neighbors, and agreed to ban the export of hazardous wastes from OECD to non-OECD countries under the Basel Convention. Five years later, the United States is one of the few countries that has yet to ratify the Basel Convention or the Basel Convention's Ban Amendment on the export of hazardous wastes from OECD to non-OECD countries.
THE MEMO
Here now, is the text of the relevant section of Mr. Summers' infamous memo:
"DATE: December 12, 1991 "TO: 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."
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