A response to Larry Summers from The Economist

Below is the response of The Economist magazine to Larry Summers's memo to his colleagues at the World Bank, which I posted yesterday. I will write my thoughts in response to both Larry Summers's memo and The Economist's response to the memo in my next post.

If Mr. Summers is wrong, why is he wrong? Many greens would say his premise is false. They appear to believe that the only acceptable amount of pollution is zero--or which looks more sensible, but almost as daft--that all pollution above some arbitrarily low threshold must be stopped. This cannot be right. Controlling pollution is expensive (and many third world countries can ill afford the expense), and the benefits (especially when levels of pollution are already low) may be small. Greens and eco-sceptics may disagree about these costs and benefits, and thus about where the proper balance should lie. But the notion that such a balance should in principle be struck--and that, as a result, the "right" level of pollution is greater than zero and varies according to circumstances--ought to be uncontroversial. Without that idea, intelligent discussion of environmental policy is impossible.

But then Mr. Summers makes a further, crucial assumption. He supposes that the value of a life, or of years of life-expectancy, can be measured by an objective observer in terms of incomes per head--in other words, that an Englishman's life is worth more than the lives of a hundred Indians. This is naive utilitarianism reduced to an absurdity. It is so outlandish that even a distinguished economist should see that it provides no basis for World Bank policy.

Suppose then, that the Bank of and the other multilateral institutions regard the life of an African peasant as equal in value to the life of a broker on Wall Street--as they self-evidently should. What remains of Mr. Summer's arguments? The answer still is: more than most environmentalists care to admit.

The greatest cause of misery in the third world is poverty. This must guide the priorities of poor-country governments and aid donors alike. If clean growth means slower growth, as it sometimes will, its human cost will be lives blighted by a poverty that would otherwise have been mitigated. That is why it would be wrong for the World Bank or anybody else to insist upon rich-country standards of environmental protection in developing countries. Often, policies that favour growth (such as setting world-market prices for energy and other resources) will lead to a cleaner environment, too; such policies should be vigourously promoted. But when a trade-off between cleaner air and less poverty has to be faced, most poor countries will rightly want to tolerate more pollution than rich countries do in return for more growth.

So the migration of industries, including "dirty" industries, to the third world is indeed desirable. Not because life there is cheap; if anything, for the opposite reason. Those who insist on "clean growth everywhere" must either deny that there is ever a trade-off between growth and pollution control--or else argue that imposing rich-country standards for clean air worldwide matters more than helping millions of people in the third world to escape their poverty.

Environmental policy is immensely complicated. The debate over Mr. Summers's memo is ignoring many issues altogether: global, as opposed to local, pollution; the links between trade policy and the environment; the opportunities to promote growth and a cleaner environment at the same time; and so on. In working through all this, economic method--the weighing of costs and benefits--is indispensable. Mr Summers's morally careless arguments, intended seriously or otherwise, must not be allowed to discredit it.

What "development" means for sustainability

I have written about the family of notions surrounding "development" on several occasions. Previous posts have talked about how the word is used as an adjective, e.g., "developing" countries, how tracts of land should be "developed," natural courses of "development," and how sustainability has come to mean sustainable "development" (here, here). I want to elaborate today on the arrogance of the word "development" when used in the context of describing countries, communities and just groups of people, and what this means for sustainability.

As you probably know, the meanings and connotations of words have a way of changing over time. The term "Third World," was initially used to describe countries that were neither leaning towards capitalism (and NATO) or communism (and the Soviet Union). Nowadays, many people in the West use that phrase to describe a country that is (according to Western standards) "undeveloped" or "developing." Furthermore, these "Third World" countries have economies that are "developing," according to Western-defined Organisation for Economic Cooperation and Development (OECD) standards.

There are several issues that come to mind because of these words and their connotations. First, it implies that Western standards are those that should be met. Since the standards on which countries want to be judged are these standards, it means that countries would prefer to graduate from being "developing" to being "developed." What does this mean for sustainability? What it means is that since the standards to be met are economic standards first and foremost, countries may lower their environmental standards so as to attract investments from "developed" countries. This most likely leads to the rapid and unthoughtful industrialisation of these "developing" countries. What it also means is that if there is any hope for a sustainable future, that necessarily comes from being "developed," i.e., if you are not developed, there are no standards on which a country can be judged to be "sustainable." This seems to me a different approach under which to view "sustainable development."

What the word "developing" connotes today is backwardness, and the sense is that there isn't much in these countries, and the people living in these countries are less fortunate than those that are in the "developed" world. But what this word masks, however, are the problems that come with being "developed," particularly under a capitalistic, competitive mindset. In my mind, there are very clear threads of reasoning that trace social issues such as the fracturing of families and declining neighbourliness and increased mental illness back to the very foundations upon which the country claims itself to be "developed." If you were to go to most any of these "developing" countries, I am sure you would find integrity in family life, and a greater spiritual and material contentment of the people. What does this mean for sustainability? It means that maybe these definitions aren't as clear cut as we think they are. Of course, while many "developing countries" are very polluted, many of them are not, and do not have to deal with toxic chemicals in their water; the serious environmental problems that we face here in the US, because of say, fracking (here, here), are just completely non-existent in these places. More importantly, what it means is that we shouldn't propagate the connotations of these words by using them in the manner that we currently do. It also means that maybe we shouldn't be using these words nonchalantly, and that we should be mindful of the full implications of using such words.