A veil of morality

In the last two posts, I did no writing whatsoever. Instead, I typed up a memo that Larry Summers had passed around to other World Bank colleagues about how polluting "poor" countries is in the interest of these countries, as pollution can be welfare maximising. In response, The Economist, calls Summers's arguments "morally callous," yet, in the end, agree with Summers's suggestion.

I find this very sad for several reasons. It is unfortunate that this is what we have been taught--that the environment, the biophysical world that supports our very breaths and lives, can and ought to be polluted, at least to a certain extent, for human "welfare." (This of course comes from the human-environment dichotomy.) But, as we've seen in the US and Western Europe, it takes massive amounts of pollution and burning rivers and acid rain for even slightly effective laws to be put in place that reduce pollution, at least in the areas where the laws are enacted.

As we know, however, if our demands for the things that cause pollution don't die down, the pollution just migrates elsewhere under neoliberalism. Under this economic framework (the economy that the United States and powerful organisations such as the World Trade Organisation and the World Bank and most of the world subscribes to), the economic calculations that are the taken into account in these "environmental" laws result in the migration of polluting industry; such results are "logical," as Matthew and Andrew and Ethan have discussed with me. Summers wishes that pollution such as air pollution was indeed fully tradeable, just like "commodities" and material "resources." In neoliberal thinking, in a thinking that tends to maximise profit of money under a monetary economic framework, it is to the advantage of people to be able to trade as much as they can in the name of economic efficiency. Consequently, pristine environment and the value of human lives do not go hand in hand. Rather, the environment must be degraded to bring any value into the world, and, once we are rich enough, we will magically buy back what we've lost.

But what bothers me more, though, is The Economist's response. Indeed, it is patronising and debasing to anyone who truly cares about the Earth we live on. They go so far as to justify pollution, because the control of it is expensive. The response is industry's dream, and endorses wholeheartedly the legal and cultural framework we've created for ourselves. And if given all of laws in the US have only stopped three chemicals from being used, ever, of the many thousands, what chance would there be for the countries we dump these chemicals on to understand what they are trading away for their supposed "welfare"? In the end, from a neoliberal standpoint, it is the rich who stand to benefit, and the poor that stand much to lose--their clean air and water, their environment. Pollution is dangerous, especially because it is demonstrably unregulated, even in the so-called "rich countries," as The Economist calls them. (Think of the Toxic Substances Control Act, the Safe Water Drinking Act, and the toxins present in our bodies, which I wrote about here.)

The Economist's arguments are elitist, condescending, and patronising. When the magazine states that "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," they fail to recognise that it is the policies of imperialism and colonialism of the very nations that The Economist calls "rich" that have led to poverty and conflict in the global south.

What The Economist is arguing for is effectively a continuation of policies that have led to climate change and pollution and unsustainability, under a veil of moral superiority. The magazine says that we ought to be more humane and ethical, while at the same time promoting a way of thinking that systematically throws out ethical considerations. To Larry Summers's credit, at least he is unabashed and open about what he thinks: "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."

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.

"...under-populated countries in Africa are vastly under-polluted."

I want to focus the next few posts on neoliberal economics--how skewed, despicable, and inhumane it is, how major media outlets and major political figures subscribe to it, and what steps need to be taken to bring it crashing down. Today, I will share with you a an old leaked memo, written by Lawrence Summers (ex-Harvard president, ex-chief economist at the World Bank, ex-Secretary of the Treasury, and, so sadly, a man that President Obama appointed to direct his National Economic Council), to his colleagues at the World Bank.

Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the Lesser Developed Countries (LDCs)? 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 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 is 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.