In 1991, Larry Summers - now reputed to be high on Obama's appointment list - signed a memo when he was vice president and chief economist of the World Bank concerning the handling of pollution in less wealthy lands. When an excerpt of the memo was leaked, more than a few people became upset. Summers initially took responsibility for the memo but claimed it was satirical. Later, blame for writing the memo was taken by aide Lant Pritchett. Pritichett went on to lecture at the Harvard Kennedy School and Summers went on to be president of Harvard.
If the memo was in fact intended to be humorous, whoever wrote it didn't understand that humor used again the poor and defenseless is not satire but ridicule and bigotry. The fact that Summers thought it funny should disqualify him from any government position.
The excerpt:
|||| '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. ||||
While Summers and Pritchett survived the memo incident, the Brazilian secretary of the environment was not as fortunate. He was fired after writing to Summers:
"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."
Composer John Halle has memorialized this seedy memo and the Brazilian official's reply with a musical number performed by the Sequitur Ensemble, Kristin Nordeval and Dora Ohrenstein, sopranos:
FOLLOW THE MONEY
Lawrence Summers, mentioned as a possible Treasury Secretary, is a managing director at the hedge fund D.E. Shaw Group.
Robert Rubin, mentioned as a possible Treasury Secretary, has been temporary chair of Citgroup (and a current director) and co chair of Goldman Sachs. He also was a founder of the conlib economic group, the Hamilton Project.
Top Obama advisor Valerie Jarrett was a member of the board of the Chicago Stock Exachange from 2000 to 2007 and was chair from 2004-2007
Top Obama advisor John Podesta has a lobbying firm that has represented BP, Lockheed Martin, National Association of Broadcasters, Novartis Vaccines and Diagnostics, Sunoco and Wal-Mart
Bill Daley, advisor to the transition team, is mid west chairman of JP Morgan Chase.
Rahm Emanuel, whom Obama selected to be chief of staff, earned, according to Fortune magazine, $18 million between 1999 and 20002 working as a managing director for the investment banks Dresdner Kleinwort Wasserstein
Tim Geithner, a possible Treasury Secretary, is head of the NY Federal Reserve. His first boss was Henry Kissinger and he has close ties to the Wall Street players.
John Corzine, now governor of New Jewrsey and possible Treasury Secretary and CEO of Goldman Sachs before Hank Paulsen staged a coup and got rid of him
Richard Holbrooke, mentioned for Secretary of State, is vice president of Perseus, a major private equity firm. He was a member of the board of AIG until July when he resigned. He has also been vice chair of Credit Suisse First Boston, and managing director of Lehman Brothers.
Other names dropped:
John W Rogers Jr runs a mutual fund company in Chicago where Obama spent much of the day after the election.
Otto Kramer is a financier at Boston Provident.
Robert Wolfe is an investment banker and CEO of UBS Americas
Mark Gallogly is a private equity expert who funded the firm Centerbridge after working at Blackstone.
Jim Torrey is a fund manager.
Brian Mathis works for the Provident Group
Frank Brosens runs Taconic Capital Advisors
Josh Gotbaum formerly with Lazard Freres
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