Does Lawrence Summers fit in Obama’s White House Team?

By Abdullahi Osman El-Tom

November 30, 2008 — Obasma’s successful bid for the US presidency was greeted by international celebrations everywhere across the globe. The international delight that accompanied Obama’s success was not confined to the western world and their compatriots in the poor countries. On election night, the refugees and IDPs of the beleaguered Darfur clung to their transistor radios and remained awake until 4am when they finally celebrated his outstanding victory speech. For years and years gone by, the USA imposed itself as an unwanted global leader. This time, thanks to Obama, the world has chosen the USA to act as its leader.

There is no doubt that Obama’s first commitment goes to his US constituency. Nonetheless, in his victory speech, Obama signalled a recognition of his international constituency and emphasised that the destiny of the entire world is indeed intertwined. President Elect Obama has certainly started off very well. But the appointment of Lawrence Summers to head his National Economic Council does not tally well with his implied commitment to an international constituency and particularly its less fortunate members, primarily the refugees and IDPs (Internally Displaced Persons) residing in the poorest countries of the world. Some years ago (1992), Summers, who was then Chief Economist of the notorious World Bank, advised or rather instructed, the movement of “dirty industries” to the Third World. Below, in its entirety, is my own critique at the time under the title “Obscene Economics”. The work was published in the Irish Reporter (1992) and as a part of a booklet issued by the Institute for African Alternatives (IFA;1994). First of all though, I must concede that people learn from their mistakes and change. I do hope that Mr Summers does just that.

“The collapse of communism led to a wave of optimism regarding the role of multilateral organisations including the WB (World Bank – International Bank for Reconstruction and Development) and the IMF(International Monetary Fund). Among others, development organisations are thought to have been freed from the negative influence of communist threat paranoia factor.

It is this factor which was presumed to have justified the neglect of the fundamentals of development in the WB/IMF dealings, and the subsequent entertainment of cosy relationship with several heads of states renowned for total lack of regard for their own people eg. Marcus of the Philippines, Siad Barre of Somalia and Mobotu of Zaire. The same factor has also led to the penalisation of many countries; eg. Egypt, Tanzania, Jamaica, Peru, Nicaragua and Vietnam. The new hope that commitment to development, and in particularly to the poor of the Third World, would then prevail in the WB/IMF policies is no more than wishful thinking. This is at least what one gets from a WB internal memo, which leaked out as late as December 1992 (The Economist, Let them eat pollution, February 8th Issue). The document was authored by no-other than Lawrence Summers, the WB’s Chief economist. The memo contained certain lines which are said to have caused some fuss in the World Bank. In his memo, “their”, or rather “our” Chief economist, says to his juniors:

“Just between me and you, shouldn’t the World Bank be encouraging more migration of dirty industries to the LCDs? I can think of three reasons:

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 liberalisation” (Economist 1992:66).

Overlooking the messy language aptly described by the World Bank as “crass” (Ibid), the memorandum affords us a stunning insight into the World Bank’s commitment to the poor in the Third World. A senior World Bank employee defended his Chief Economist by saying, “the document is no more than a memo and that the man was only thinking” (personal communication). What is shocking and thus hard to take is that Mr Summers is not only thinking, he is also encouraging others in the Bank to think along a specific line. Moreover, what is even more incriminating is that, the document sets in motion an attempt to provide a scientific justification for polluting the Third World. In effect, Summers’ call is no more than an effort to formalise a policy which many Third World observers think is already taking place. The important question is how justified is the view under consideration? Judged in economic terms, does it really make sense?

Summers’ first point states that the costs of sickness and death due to pollution can be quantified by simple computation of foregone earnings. The implication of this grand discovery is that human worth can be measured by how much one earns or loses. Accordingly millions and millions of poor people in the Third World, babies and children who are non-earners and housewives who do not produce, in the World Bank’s sense of the term, are condemned to utter worthlessness. Their worth approaches zero if not equal to it. The other side of the argument is that the First World, wealthy people and high earners – like our Chief economist – are on the top of the scale, and thus enjoy health and lives which it would make no sense to damage. The conclusion is obvious: move health and life impairing industries – which Summers treats as a necessary evil – to where human beings are worth less. In short, to the Third World. This is economics at its most obscene.

The second point raised by Mr Summers dictates that the cost of pollution increases incrementally with the increase in the level of pollution in a given locality. It is to be understood that Mr Summers found it redundant, and thus did not add, that the cost of each increment in equally polluted localities also increases in tandem with the increase in the wealth of respective populations. This is due to the fact that Summers has already established that the health and lives of poor populations are less costly than that of their comparatively wealthier counterparts. The argument eventually leads to the same conclusion arrived at in the previous paragraph. In order to justify this point, Mr Summers resorted to the absurd use of language, such as referring to LDCs as “UNDER-POLLUTED”. It is as though what is natural and/or normal – and hence desirable – for the air is to be polluted. The abnormality obtains when the air is underpolluted or overpolluted! Summers’ obsession with earnings, tradability and the marginalisation of human worth led him into a yet meaningless sentence which I am still struggling to make sense of. He describes the air quality under a lower level of pollution as vastly inefficiently low compared to the heavily polluted air of Los Angeles and Mexico City!! One would have thought that the reverse is true, since with cleaner air, people get a better deal in relation to their morbidity and mortality. But hang on again; the air efficiency for Mr Summers depends on how much earnings one, or rather a few, get out of it or forego. Of course, the costs of the casualties have to be considered, and in the Third World, people are bound to be hopelessly cheap, according to the World Bank think tank.

After dubiously underrating “non-tradable” industries (transport?) which still remain high on the World Bank agenda, Mr Summer lamented the high unit transport cost of solid waste which prevents the disposal of toxic waste in the Third Word. Another absurd piece of jargon used in Summers’ second point is his reference to “trade” in toxic waste as “world welfare-enhancing trade”. Ignoring the fact that it is not trade in the first place, the jargon glamorises the transference of toxic waste to the Third World, and thus disguises its essence. The jargon is also inspiring, as it is revealing to where Summers’ heart lies. The world for Mr Summers seems to be the west, because this kind of “trade” can’t be regarded in anyway as “welfare-enhancing” for those at the receiving end, including the victims. Mr Summers’ source of inspiration for using this term cannot be that far away. After all, his Institution is referred to as “the World Bank”, despite the fact the neither its control, nor its performance, justifies the name.

In his third point, Summers proposes that the richer the people are, the more concerned they will be about aesthetics and the health impacts of dirty industries. He make a further move into a pathetic attempt to downplay the damage of pollution, declaring that most of it is visibility, rather than health impairing. First, the seemingly less resistance to health impairing industries among poorer communities, can be attributed to power rather than to demand differentials. Yet, crusades of the poor against pollution, often violent, have become a common feature of Third World struggle. Those who are in doubt are referred to the recent history of Brazil, the Philippines and many other countries. While visibility impairing particulates may accompany health damaging pollution, it is the latter which attracts more concern both among the rich and the poor. After all, mist, fog and rain all come with visibility impairing agents that attract no complaints. On the other hand, many toxic agents like radiation have little impact on visibility and yet, resistance to it is always forthcoming.

Summers suggests that the people of the Third World are less concerned about pollution because they do not survive to contract prostate cancer, presumably due to low life expectancy. This is a conclusion based on a fraudulent reading of demographic statistics, as high infant mortality does not mean people do not survive to old age. While high infant mortality suppresses life expectancy, those who survive their early years have a chance to survive to an age which is only marginally shorter than people in the First World. Rather than thinking about high mortality and taking it as his duty to curb, Summers takes it as natural and thus proceeds from it. This is not surprising because if he had done otherwise, he would have come to an embarrassing conclusion; namely, that high mortality is a result of a specific development structure in which the World Bank is a major player.

Summers further reminds the people of the Third World that they cannot trade their clean air but can count on the mobility of pollution producing industries. In other words, they can trade their health and lives instead! Trade for the sake of trade seems to be the theme of the article. This is the same ethos that generates and justifies trade in kidneys, blood, brain tissues and other body parts, often from impoverished live victims in the Third World.

Summers’ words are indeed a sharp reminder that the World Bank is and will remain a bank committed only to its western shareholders. All else are incidental and the less the Bank does, the better for the people of the Third World.”

The author is Head of Bureau for Training and Strategic Planning of JEM. He can be reached at: [email protected]