President Elect Obama has begun the process of selecting his staff and cabinet members. Rahm Emmanuel, the basis for the character of Josh Lyman on the West Wing, has accepted a position as chief of staff. Robert Gibbs, who recently (and deliciously) ripped Sean Hannity apart over Obama’s supposed “Ayers problem,” is going to be the press secretary. These seem to me like awesome selections — from the little I have learned about each of these men — but other names being floated around are less terrific. Lawrence Summers, supposedly at the top of the short list for SecTreas, is a fairly problematic figure, in my view.
As Max Blumenthal at the The Huffington Post reports, Summers is famous around the world for writing a memo — while president of the World Bank — suggesting that the bank should encourage polluting industries to migrate to “LDCs” [Least Developed Countries], claiming that “the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that,” as he put it, though he later claimed to be joking. Jose Lutzenberger, while Brazil’s secretary of the environment, replied to Summers in a letter by suggesting that “[y]our 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.” For his candor, Lutzenberger was canned, and for his brilliant logical reasoning, Summers was awarded the position of secretary of the treasury under Clinton and given the presidency of Harvard.
The issue with the Summers memo is not merely his assumption that LDCs ought to have been (and ought to be) lining up to absorb our toxic waste — the waste that we want to produce — but more crucially the system of international relations within which our friendly “encouragement” happens. I mean, societies often have to choose between polluting more and growing an economy and polluting less and growing less quickly, and if you want to develop fast economically, there is a price in air pollution. Because pollution often affects the whole community — i.e., I breath in the toxic pollution you produce, my cancer is cause partly by the chemical plant down the river — I believe that pollution and growth need to be balanced through democratic deliberation. But in the context of World Bank activities, “encouragement” usually meant — and means — conditional assistance, in concert with the IMF — e.g., “reduce your anti-toxic waste regulations or else we don’t help you with your debt and/or inflation problems.” Of course, now that the US financial system is suffering the consequences of excessive liberalism and deregulation, Summers has reverted to the reflexive interventionism of mainstream economists — when it comes to our economic crises — and (rightly) supported the $700 billion bailout package.
Since there are so many other more palatable names on the docket for SecTreas, and Summers is such a controversial figure (and not only because of this memo), I think we should level pressure against his selection.
Update
Dylan Matthews, at pushback, contests Blumenthal’s account of the Summers memo controversy. It seems that Summers took responsibility for a memo that someone else wrote, but which he signed, in the context of internal debate about the effects of free-market policies and pollution. The memo was then leaked with official-looking letterhead to The Economist. I don’t know how convincing of a defense this is, given that the memo only gave offense in the context of the Bank’s actual, arguably coercive policies, policies quite consistent with the anti-regulatory character of the memo. But anyway, I thought I’d link to the defense, get some debate going, if only with myself. And as I said, there’s lots to criticize Summers on beyond the memo, whatever the final version of the story turns out to be.