Bible Studies
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Wednesday, 23 February 2005

Economic logic often has no heart, since it is concerned with money, things, and situations rather than people. Read on to learn of an egregious example of such logic and its effect upon poor people and nations.


By Jim Jordal

Woe to those who call evil good, and good evil; who substitute darkness for light and light for darkness; who substitute bitter for sweet, and sweet for bitter! Woe to those who are wise in their own eyes, and clever in their own sight! Woe to those who are heroes in drinking wine, and valiant men in mixing strong drink; who justify the wicked for a bribe, and take away the rights of the ones who are in the right!

Isaiah 5:20-23 (NASB)

I’ve just come across the most scathing indictment of heartless economic analysis I’ve ever seen. It comes from a book entitled Mortgaging the Earth: The World Bank, Environmental Impoverishment, and the Crisis of Development, by Bruce Rich, Beacon Press, Boston, 1994. The section entitled "Perfectly Logical But Totally Insane" (p. 246-249), refers to a label placed by Brazilian ecologist Jose Lutzenberger on a crazy bit of World Bank economic logic. It concerns editorial comments by former World Bank chief economist Lawrence Summers (now embattled Harvard president) on a Bank report entitled "Global Economic Prospects," written by other bank economists in preparation for the 1992 "Earth Summit" conference in Rio de Janeiro.

The section of the infamous memo, entitled "Dirty Industries," contained this comment by Summers: "Just between you and me, shouldn’t the World Bank be encouraging more migration of the dirty industries to the LDCs [lesser developed countries]?" The leaked memo was soon faxed by the Washington office of Greenpeace to dozens of countries. Although the author denied this was a serious policy recommendation, and was instead a thought exercise aimed at creating more rigorous economic analysis by colleagues, the document created an unprecedented amount of public attention to World Bank policies and their often-disastrous impact on the global environment.

"Impeccable" economic logic supported the conclusions. First was his contention that economic costs of pollution are measured in terms of lost income resulting from premature illness and death of wage earners. Since wages are so much lower in Third World countries, it follows that lives lost there to pollution are less valuable, so economic logic would dictate that to save money and enhance economic efficiency pollution should be exported to such countries if at all possible. As he said, "the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to it."

The second bit of economic logic concerned what economists call marginal incremental costs. Each successive unit of pollution dumped in already heavily polluted industrialized nations costs increasingly more. Thus, every extra unit of pollution dumped in the developed world costs much more than it would if dumped in the relatively pristine Third World. He added the comment that "I’ve always thought that underpopulated countries in Africa are vastly under-polluted…" One could draw from his comments that shipping polluted air from Los Angeles to some poor African country would create an economic benefit for both areas.

And his third piece of economic logic is also a classic. He noted that "the demand for a clean environment for esthetic and health reasons is likely to have very high income elasticity," meaning (if I understand it correctly) that small increases in national income will cause much larger increases in demand for a clean environment. In other words, pollute the poor countries because their people don’t live as long or have as much money as we do, and are therefore in no position to demand or afford the luxury of environmental protection.

This type of tragic economic logic pervades much of what rich nations have done to poor nations under the guise of "development." During the ‘80s and ‘90s the World Bank (controlled largely by the U. S.) became noted for massive regional development projects in Third World countries. The idea was that in order to solve poverty in these nations it would be necessary for them to initiate large regional projects such as road systems to open primitive areas for development; build dams and grids for electric power; create large extractive industries to earn foreign exchange; dredge deep-water harbors to more easily move export goods; and develop other gigantic public works efforts.

Picture if you will a tranquil valley in India, populated by perhaps 30,000 indigenous people having a sustainable economy, a nurturing stable culture, with a minimum of what we might call social problems. Unfortunately, however, the World Bank has decided that a large dam will facilitate industry and thus lessen poverty in that area. So, without consulting the locals, the Indian government and the World Bank proceed with the project. Unfortunately, the dam will flood local homes, villages, and farms, so relocation of the populace will be necessary. But the river valley was rich and productive, and there is no unused comparable land upon which to settle the refugees. So they receive a pittance for their land and are turned loose into the cities. There they become wage slaves, prostitutes, drunkards, or beggars. Thus we destroy the people and their culture to save them from poverty. Perfectly logical, but totally insane!

Development may be the answer to some kinds of poverty, but not the kind of development pushed by the World Bank and other multi-national corporations. Massive, destructive development needs to be replaced by cheap, small-scale, technologically-simple, user-friendly projects such as wells, schools, clinics, wind power, country roads, bridges and other infrastructure improvements aimed as facilitating access to markets and abilities to produce goods and services needed locally.

But the World Bank fosters large-scale development of export industries in debtor nations so as to provide them with income for meeting interest payments on their massive liabilities to the Bank and other Western lending institutions. Notwithstanding the efforts of Jubilee 2000 to cancel or reduce Third World debt, much still remains. In fact, some poor nations still spend more on debt service than they do on education or public health. "Perfectly logical, but totally insane!"

Last Updated ( Friday, 18 November 2005 )