While I like Obama I’m none too fond of some of the people he has around him, especially in the economic area. Larry Summers and his pals (Rubin, Geithner, etc.) helped bring us the current crisis, although it took GWB and the Republican Congress to turn a bad situation into a catastrophe. We threw the Republicans out, and good riddance. But why let the others back in? These remarks are occasioned by a commitment I’ve made to do a “work in progress” seminar tomorrow morning. My scientific work is progressing nicely but one of the things that isn’t yet in progress is preparing for the seminar. Hence I am resorting to reposting something from four years ago that, alas, is still timely. It’s a little rant about Larry Summers:
One gaffe does not a Summers make (originally posted on February 22, 2005)
The “Larry Summers” show is still reverberating around the Main Stream Media and the blogosphere (for one of many accounts and some pertinent links, see this post at Majikthise). The wingnuts and their MSM fellow travelers are portraying him as the intellectually honest but innocent academic who got his weenie caught in the Political Correctness door (presumably Ward Churchill is not worthy of such solicitude). Poor guy. Lest you feel too sorry for him, though, consider a little bit of Larry’s prior history, courtesy of the sadly hilarious site, The Whirled Bank Group: Dedicated to a World Full of Poverty.
Here is the full text of a leaked memo from the World Bank’s Chief Economist in 1991, one Lawrence Summers:
DATE: December 12, 1991
FR: Lawrence H. Summers
‘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.
The Whirled Bank site adds this 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, on the other hand, was appointed the U.S. Treasury Secretary on July 2nd, 1999, and served through the remainder of the Clinton Admistration. Afterwards, he was named president of Harvard University.
Postscript: And now, Mr. Summers has returned as Obama’s Chief Economic Adviser.
What do they say about bad pennies?