Leaked Internal Memo
LAWRENCE SUMMERS / Chief Economist of the World Bank 12dec91
DATE: December 12, 1991
FR: Lawrence H. Summers [Vice President of Development Economics and Chief Economist of the World Bank]
'Dirty' Industries: Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]? 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 though 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 prostrate cancer is obviously going to be much higher in a country where people survive to get prostrate cancer than in a country where under 5 mortality is 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.
Who's Lawrence Summers
Lawrence H. Summers was sworn in as the 71st Secretary of the Treasury on July 2, 1999.
From August 11, 1995 to July 2, 1999, Mr. Summers served as Deputy Secretary of the Treasury under Secretary Robert E. Rubin. Working closely to support Secretary Rubin, he played a leading role in the Departments work on issues related to international economic and financial policy, tax policy, the nations financial system, domestic policy and enforcement. From April 5, 1993 to August 10, 1995, Mr. Summers served as Under Secretary of the Treasury for International Affairs. In that position, he had broad responsibility assisting then-Secretary of the Treasury Lloyd Bentsen in the formulation and execution of international economic policies.
Prior to joining the Administration, Mr. Summers served as Vice President of Development Economics and Chief Economist of the World Bank from 1991 to 1993. As Chief Economist he sat on the Banks Loan Committee, played a key role in the design of country assistance strategies and had overall responsibility for the Banks research, statistics and external training programs.
From 1983 to 1993, Mr. Summers was a professor of economics at Harvard University. In 1987, he was named the Nathaniel Ropes Professor of Political Economy. Mr. Summers served as a Domestic Policy Economist on the Presidents Council of Economic Advisers from 1982 to 1983 and served on the faculty of the Massachusetts Institute of Technology economics department from 1979 to 1982.
In 1993, Mr. Summers was awarded the John Bates Clark Medal, given every two years to the outstanding American economist under the age of 40. He was also the first social scientist to receive the National Science Foundations Alan Waterman Award for outstanding scientific achievement. He is a fellow of the Econometric Society and the American Academy of Arts and Sciences.
Mr. Summers has written extensively on economic analysis and policy. He is the author of Understanding Unemployment, the co-author of Reform in Eastern Europe and edited the series Tax Policy and the Economy. He has contributed more than 100 articles to professional economic journals and served as editor of the Quarterly Journal of Economics from 1984 to 1990.
Mr. Summers received a B.S. degree from the Massachusetts Institute of Technology in 1975 and a Ph.D. from Harvard University in 1982.
Mr. Summers was born in New Haven, Connecticut in 1954. He and his wife, Victoria Summers, a tax attorney, have twin daughters and a son.
What's Lawrence Up To?
News Scan A.M.: March 12, 2001
Davide Dukcevich, Forbes.com, 03.12.01, 9:18 AM ET
NEW YORK - Technology, wealth and Internet news:
- London-based Prudential (nyse: PUK - news - people) has agreed to purchase Houston-based American General (nyse: AGC - news - people) for $26.5 billion in stock, forming the world's sixth-largest insurance company. Prudential will own 50.5% of the combined company, which will have a market cap of $45.3 billion.
- Hershey Foods (nyse: HSY - news - people), the maker of Reese's peanut butter cups and Kit Kat wafer bars, today named Richard Lenny president and chief executive officer. Lenny, 49, who had most recently been chief of the Nabisco Biscuit and Snack division at Kraft Foods, replaces Kenneth Wolfe.
- SPX (nyse: SPW - news - people), which provides parts to vehicle makers, today agreed to acquire United Dominion Industries (nyse: UDI - news - people), a diversified manufacturer of engineered products, for $954 million in shares. SPX will also assume $876 million of United Dominion's debt.
- Outgoing General Electric (nyse: GE - news - people) Chairman and Chief Executive Jack Welch saw his salary and bonus payments rise to $16.7 million last year, a 25% increase from the previous year. Welch also exercised 1.2 million options in 2000, with a value realized of $57.1 million. The 65-year-old is expected to retire at the end of the year and be replaced by 44-year-old Jeffrey Immelt. More on Welch...
- Industrial products company BFGoodrich (nyse: GR - news - people) today said it will provide the landing gear for a new Airbus Industrie superjumbo aircraft, in a contract that could be worth $2 billion over 20 years.
- Clinton Administration Treasury Secretary Lawrence Summers is going back to school. Harvard University tapped the 46-year-old to serve as its 27th president yesterday, succeeding Neil Rudenstine. Summers received his undergraduate degree from M.I.T. and a doctorate in economics from Harvard, where he became a tenured professor.
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