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.

On risk

After a wonderful discussion about food in class last night, Lydia and Samantha stayed after class to keep me company while I ate (the students brought in wonderful food for a potluck). After Samantha left, Lydia and I talked for an hour about, of course, the environment and government, she being in the School of Public Policy. She used a term that was insightful, and one that we don't necessarily think about in our daily lives, and one that I have not used at all in the last year - risk.

We take risks all day, every day. Many of us don't realise that some actions are risky, but that doesn't stop us from doing them. Some of us decide to get into cars, and drive ourselves around. We put our complete faith in other people, hoping that they won't drive, from the other oncoming lane, into your lane, at fifty miles per hour. As a cyclist, you are even more vulnerable, and several people I know have been hit by cars. When we decide to heat food up in the microwave in plastic containers, we accept, whether we want to or not, the risks of plastics and plasticisers leeching into our food. When we decide to pass through a full-body scanner at the airport, there are risks to developing some complication, no matter how small those risks may be. In fact, the standards that are set by the government, be they for car crash safety, whether or not a plastic is microwavable, or for X-ray imaging, are set by evaluating the risks for all of these actions. There is nothing that is not risky with these sorts of standards. Someone, somewhere, will experience side effects of medication - we run that risk. Risk is inherent and calculated into whether or not an oil exploration company will decide to drill into an exploratory oil well - I am absolutely sure those at BP, Halliburton and Transocean had some conversation about the risk. Whether they decided to do something about it or not, that is a different story.

But in our daily lives, how much do we think about the risks of our actions ruining the environment? There almost seems to be a tacit acceptance of those risks in favour of "progress" (1, 2, 3) and "development" (1, 2). Any acceptance of how we have behaved so far only legitimises the acceptance of these risks. On the other hand, what do we risk if we change our behaviour? What do we risk if we did choose to live under the paradigm of sufficiency, rather than efficiency (1, 2, 3) and neoliberal economic growth? We risk the staggering and unquantifiable - we risk living with and within the limits and capacity of Earth rather than forcefully and violently against those boundaries. We risk being better to other people and animals. We risk not filling up landfills to their created capacity. We risk preservation and conservation. Are we willing to take that risk?

On my declining faith in government

I was at the EPA National Vehicle Emissions Testing Facility the other day when it was announced that there would be a new "public-private" partnership between the EPA and Chrysler to develop hydraulic hybrid technology for light duty vehicles such as minivans. The EPA Administrator, Lisa Jackson, was there along with Chrysler Chairman Sergio Marchionne introducing a "new model relationship" between the government and corporations - one in which the government and industry will work hand-in-hand. I was particularly surprised at how many times Jackson called residents of the US "consumers." The newly elected Lieutenant Governor, Brian Calley, was there as well, speaking about how his "family of five consumers" would benefit greatly with this new product. I got the feeling, along with my friends who agreed, that the tone of the government, represented through Jackson and the EPA, was markedly subservient to Chrysler and "other corporate partners." That seemed to rub us the wrong way, given that the EPA is a regulatory agency, whose job it is not to compromise and work with industry, but to set "acceptable" (yes, a loaded word that I will talk about in another post) standards within which industry can operate. Jackson also said the following: "Hydraulic hybrid vehicles represent the cutting edge of fuel-efficiency technology and are one of many approaches we’re taking to save money for drivers, clean up the air we breathe and cut the greenhouse gases that jeopardize our health and prosperity. The EPA and Chrysler are working together to explore the possibilities for making this technology affordable and accessible to drivers everywhere. This partnership is further proof that we can preserve our climate, protect our health and strengthen our economy all at the same time.” (emphasis added by me)

President Obama, in his weekly radio address to the nation, today declared that the United States can "outcompete any other nation on Earth," in what The New York Times called a "pro-growth, pro-trade message that is likely to be at the heart of the State of the Union speech he gives to the Congress on Tuesday." Obama went on the say (with emphases added by me), "We’re living in a new and challenging time, in which technology has made competition easier and fiercer than ever before. Countries around the world are upping their game and giving their workers and companies every advantage possible. But that shouldn’t discourage us, because I know we can win that competition. I know we can outcompete any other nation on earth. We just have to make sure we’re doing everything we can to unlock the productivity of American workers, unleash the ingenuity of American businesses and harness the dynamism of America’s economy." He went on to say, about his trip to Schenectady's GE steam-turbine plant, “This plant is manufacturing steam turbines and generators for a big project in India that resulted from a deal we announced around that trip — a project that’s helping support more than 1,200 manufacturing jobs and more than 400 engineering jobs in Schenectady,” Mr. Obama said. “Good jobs at good wages, producing American products for the world.”

(I will stop short and not talk about new Michigan Governor Rick Snyder's announcement during his State of the State speech this past week about the new bridge between Canada and the US.) I have written at length in other posts about how the government has been as complicit in environmental harm and degradation in the past; these recent announcements do not change my viewpoint, but rather lend evidence that indeed, the government is as short-sighted as corporations are. The government views us, people, people with thoughts, emotions and feelings, as consumers. We are viewed as consumers that only do our rightful duty when we consume and produce and grow, not thoughts, emotions and ethics, but physical products whose presence almost inevitably degrades the Earth's capacity to sustain those very governments. We are at a point in time when simplicity of thought and rhetoric and broad brush strokes cannot allow us to comprehend the full impacts of our actions. More fuel-efficient cars do not mean lesser environmental impact. The economy, the way it is currently defined, cannot protect our health and climate if it grows. There may have been a time when we could have used simple equations such as "more = good." Unfortunately, ecology, the environment, people, emotions and spirit cannot be reduced to an equation.

A natural course

While I was sitting in the lobby of a La Quinta Hotel in Canton, Ohio, last week, a debate between candidates running for a Senate seat in Florida was being broadcast on CNN. Marco Rubio, one of the candidates said, "The natural (emphasis added) state of the economy is to grow. If it is not growing, there is something hindering its growth, and we need to find out what that is and fix it."

This is in stark contradiction to what Professor Princen, in a panel discussion at the Law School last year, talked about. He laid out the idea of sufficiency. He gave the example of human growth and viewing the Earth from space. He said that humans only grow (generally) to a certain size, and over time, we go from being small children to fully grown adults. Our growth stops (maybe not girth); we are fully developed, maybe mentally and physically definitely. When we look at the Earth from space, what we see is not an overflowing, unbound teeming of life, but the finiteness of the space in which all life as we know exists - the thin layer of atmosphere, the brown of the land and the blue of oceans. Yet for some reason we think that within the finiteness of our Earth, we can grow, materially and monetarily, unboundedly.

A comment from my post On definitions and development said,

"Your comment on the meaning we put in the word "development" made me think of human development, as in a baby developing into a child, teenager, and then adult. That kind of development is following a line of growth that is already put into place, natural, and essential for that human to be able to explore and manifest all of his or her individual gifts, traits, and qualities. If only we thought of the world this way - development is not to get all we can out of it, but rather to cultivate it along the lines of what it is naturally made to be - and in so doing experience all the wonders it can produce - just as, I assume, a parent experiences when seeing a child enjoy and excel in one of his or her natural talents."

Is there a natural course of our existence, with all that we have invested in "humanity?"