Incoming economic advisor: "Let them eat pollution."

Only twenty more days until the next administration is inaugurated! This is really exciting and we should celebrate the historic importance of this coming moment, and our role as youth in making it happen. But we can’t let our guard down, and keeping our momentum up and growing our movement is just as important, if not more important than ever before. And if anybody needed a reminder, check this out.

This quote is from the incoming Director of the National Economic Council (1992), an executive-level economic advising body, named Lawrence Summers, appointed by Barack Obama. While he was the Chief Economist of the World Bank he said in an internal memo,

“Just between you and me, shouldn’t the World Bank be encouraging more migration of the dirty industries to the LDCs [Lesser Developed Countries]? I can think of three reasons:

(1) The measurement of the costs of health-impairing pollution depends on the forgone 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 under-populated countries in Africa are vastly under-polluted; their air quality is probably vastly inefficiently low [sic] 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 prostate cancer is obviously going to be much higher in a country where people survive to get prostate 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 liberalisation.”

It’s pretty unlikely that Lawrence Summers has had a radical change of heart since he was in the World Bank (let’s hope I’m wrong!). We are winning! But there are a lot of people still making policy that are deeply stuck in the old logic of dirty-energy capitalism. So let’s keeping stepping it up and putting the pressure on along our way to the clean-and-just energy future!

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