Memo de L. Summers- 1991

Señoras y señores:

 

Un saludo. Hoy, ante la compañía grata de magníficos
conversadores, tuve la oportunidad de recordar un nefasto escrito de un
economista, que nos recordó la necesidad de pensar la teoría económica
conjuntamente con la filosofía moral. Adjunto a ustedes el memorándum del sr.
Summers en 1991 y a partir del cual se invita a la reflexión de la academia al
respecto.

 

Cordialmente,

 

Andrés Felipe Sierra. 

Enviado el 2008/9/23

 

The Lawrence Summers World Bank Memo

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

Many
of you are familiar with this sad tale, but you might want to forward this
message to others who are not.

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."

Postscript

After
the memo became public in February 1992, Brazil’s then-Secretary of the
Environment Jose Lutzenburger wrote back to Summers: "Your reasoning is
perfectly logical but totally insane… Your thoughts [provide] a concrete
example of the unbelievable alienation, reductionist thinking, social
ruthlessness and the arrogant ignorance of many conventional ‘economists’
concerning the nature of the world we live in… If the World Bank keeps you as
vice president it will lose all credibility. To me it would confirm what I
often said… the best thing that could happen would be for the Bank to
disappear."

Sadly,
Mr. Lutzenburger was fired shortly after writing this letter. Mr. Summers
remained in the World Bank before joining the Clinton administration and
continuing his incredible rise toward the Cabinet. Meanwhile, world trade has
burgeoned with imbalanced cargoes: banned pesticides, leaded gasoline, CFCs,
asbestos, and other products restricted in the North are sold to the South;
tropical timber, oil, coal, and other natural resources flow from South to
North with little or no benefit to the host communities; and while regulations
tighten around dirty coal and dangerous nuclear power plants in the North, they
are proliferating in Asia, Africa, Eastern Europe and Latin America, where they
are owned and operated by Northern corporations.

This
trade has been facilitated through tens of billions of dollars of financing by
the World Bank, the U.S. Overseas Private Investment Corporation, and the U.S.
Export-Import Bank, government institutions in which Mr. Summers has wielded
his economic logic. His 1991 memo can be considered a working thesis behind
this decade’s dominant global economic policies.

All
the best,
Jim Vallette

Jim
Vallette
International Trade Information Service
P.O. Box 658
Southwest Harbor, ME 04679 USA
e-mail: itis@igc.org and itisme@downeast.net

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