Summers' memo

Doug Henwood dhenwood at
Thu Apr 27 08:05:45 PDT 2000

Chris Doss wrote:

>Didn't Summers claim that he had meant it as a joke? He admitted
>authorship, I think.

Summers claimed at the time he was being "ironic" and "provocative." He didn't actually write the memo, though it went out under his name; it was written by WB economist Lant Pritchett. Read all about my impromptu interview with Summers in LBO #94, going to press any day now.

Here's the relevant passage from the Dec 91 memo. The last sentence of the excerpt is a deep truth.



>3. _"Dirty" industries_ Just between you and me, shouldn't the
>World Bank be encouraging more migration of the dirty industries to
>the LDCs? 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
>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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