The Opaque Side of Summers
“All animals are equal, but some animals are more equal than others.” — Animal Farm by George Orwell
Picture this: you host a party at your house with your friends, their friends and the friends of their friends. All around it turns into a rager and everyone has a lovely evening. The next morning you wake up with a pounding headache and a filthy floor to clean up. Automatically your response is to gather up all the empty cans, red Solo cups and bottles laying around and toss them into a bag for disposal. You toss the bag out the garbage chute and carry on with your day. What happens down there in that wasteland? It’s irrelevant to you because there are other people who deal with and discard those bags; it is no longer your problem. Your house is clean.
What if I told you that how you see the garbage chute and it’s questionable process is how a predominant majority of first-world leaders see the third-world, particularly those countries in Latin America and Africa?
For further context, on December 12, 1991, a memo regarding trade liberalization policies was written by Lant Pritchett and signed by Lawrence H. Summers, then Vice-President of Development Economics and Chief Economist of the World Bank. The Summers memo, as it later became infamously renowned, included an allegedly satirical section that suggested dumping toxic waste in third-world countries for global economic benefit. Below is an excerpt of the seven-page memorandum:
“… shouldn’t the World Bank be encouraging MORE migration of the dirty industries to the least developed countries (LDCs)? 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 thought 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 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 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.”
In case you skimmed through the italics, let me summarize it for you. The memo basically stated that since there are less regulations, technology and lower living conditions in least developed countries, it would be beneficial for the economy if toxic waste was deposited in the third-world given that people likely wouldn’t be as concerned in matters of health, air quality and industrial atmosphere (due to lack of access to information, resources and education?) He also explicitly said that Africa was not polluted enough (yes, I am highlighting that again) in comparison to big cities like Los Angeles and Mexico City. Furthermore he mentioned that the factors that do cause pollution in the third-world such as public transportation and the energy industry were not as favorable to the world ́s economy given that they are non-tradable goods and services.
The memo was leaked by Roberto Smeraldi, a member of “Friends of the Earth,” an international network of environmentalists, and published to Jornal do Brasil (a Brazilian daily newspaper, ehem third world) on February 2, 1992. After much controversy and scandal, Pritchett who worked directly under Summers at the time, publicly expressed that he had written the memo and Summers had signed it without thoroughly reviewing it. He also went on to say that the excerpt was intended to be sarcastic and that it was taken out of context. The Brazilian Secretary of the Environment at the time, Jose Lutzenburger responded to Summers with the following words:
“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.”
Summers later expressed at his nomination hearing to become Secretary of the Treasury of the United States that the memo “sought to clarify the strict economic logic… not make any kind of policy recommendation.” He reiterated that he had inadequately reviewed the memo prior to signing it and eventually became the U.S. Treasury Secretary under the Clinton administration. Lutzenburger was fired from his post in Brazil.
It is concerning that top officials of international organizations have a mindset that is discriminatory towards underdeveloped nations and consequently, their citizens. The mercantile hegemonic structure that first-world nations like the United States, China and the United Kingdom dominate has not shifted much in the past decades and although the Summers memo might be close to thirty years old, the practices and mentality in regards to third-world countries remains.
According to a press release from the World Bank published on October 2nd, 2019, the total external debt of low and middle-income countries rose 5.3% from the previous year in 2018, totaling $7.8 trillion. Inequality remains a predominant issue today in economic, political and social aspects worldwide. Putting my third-world citizen bias aside and looking at this issue objectively, the intention behind the memorandum boldly shines through and continues to be relevant today.
To begin solving the vast array of global issues that predominate our society, these need to be observed, analyzed and targeted from the root. Enough band-aids to distract the general public. Creating a perduring change in general requires a change of individual mentality which later leads to a shift in group mentality. These types of changes occur gradually and are usually evident after a few generations. As long as there are people willing to point out out-loud what is wrong and do something about it, there is hope to grasp onto.
Activists like Smeraldi, who happened to come across and publish the Summers memo is a prime example. How many more memos like that have gotten by inconspicuously? We might not know but we can follow those footsteps in order to continue preventing injustice. Call people out when something negatively targets a specific group of people, speak your mind cohesively with respect and assertiveness, and put your grain of sand towards building a fair and inclusive society. Last but not least, remember to double check what you sign and clean up your mess before looking into someone else’s house. The consequences, depending on your global positioning apparently, could be catastrophic and perdure through generations to come.
