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Re: Rao plus Roy

Postings not related to the writing of the Manifesto or policy chapters
are likely to be summarily rejected. Thanks for your understanding. IPI
"Prof. R. Jagadiswara Rao" wrote:

> As I have no interest to make any "vigourous and precise critical
> discussion of the working of the international institutions and their
> relationships with India and other developing countries", such a
> discussion is "sorely lacking" in my article. If that is so "vitally
>      necessary", why not Dr. Roy attempt it?

In continuation of my earlier posting on the motivation and workings of
international lending institutions, the following excerpt from a1992 interview
with Noam Chomsky provides some useful material. The complete interview is at

One of my favorite issues of the New York Times
must have been February 7, back in the business
section. There was a report called something like
"Can Capitalism Save the Ozone Layer?"  Ozone
being a metaphor for saving the environment. The
question was whether capitalism could save the
environment. That was a story by their financial
correspondent Sylvia Nasser.
The World Bank had come out with a
consensus report for the rich countries on a
position to take at the Rio conference in June on
the global environment. It was written by Lawrence
Summers, the chief liberal economist from
Harvard. The idea is that the rich countries
should take the position, led by the World Bank,
that the problem of pollution is that the poor
countries, the Third World, don't follow rational
policies.  "Rational" means market policies. Many
of them are resource and raw material producers,
energy producers, and they sometimes try to use
their own resources for their own
development. That's irrational. That means that
they're using resources for themselves, often at
below market rates, when there are more efficient
producers in the West who would use those
resources more efficiently. That's interference
with the market. Also, these Third World countries
often introduce some measures to protect their own
population from total devastation and starvation,
and that's an interference with the market. It's
an interference with rational market policies. The
effect of this Third World irrationality is to
increase production in places where it shouldn't
be taking place, to increase development in places
where it shouldn't be going on, and that causes
pollution. So if we could only convince those
Third World countries to behave rationally, that
is, to give all their resources to us and stop
protecting their own populations, that would
reduce the pollution problem.  This document was
produced with a straight face. It happened that on
the same day on the same page of the New York
Times there was a little article, unrelated, about
a World Bank memo, an internal memo, that had
leaked. It had been published by the London
Economist, a right-wing British Wall Street
Journal, but weekly. It was written by the same
Lawrence Summers. The Times had a brief, slightly
apologetic summary of it, including an interview
with Summers in which he claimed it was intended
to be sarcastic. The World Bank memo added to what
I have just said about Third World
irrationality. It said that any kind of production
is going to involve pollution. So what you have to
do is to do it as rationally as possible, meaning
with minimal cost. So suppose we have a chemical
factory producing carcinogenic gases that are
going into the environment. If we put that factory
in Los Angeles, we can calculate the number of
people who will die of cancer in the next forty
years. We can even calculate the value of their
lives in terms of income or whatever.  Suppose we
put that factory in Sao Paulo or some even poorer
area. Many fewer people will die of cancer because
they'll die anyway of something else, and besides,
their lives aren't worth as much by any rational
measure. So it makes sense to move all the
polluting industries to places where poor people
die, not where rich people die.  That's on simple
economic grounds.  Combine that with the other
document. What it says is that the Third World
should stop producing and protecting its own
population because that's irrational. We should
send our polluting industries to them because that
is rational. Summers in this memo points out that
you might have counterarguments to this based on
human rights and the right of people to a certain
quality of life. But he points out that if we
allowed those arguments to enter into our
calculations, then just about everything the World
Bank does would be undermined. That's quite
accurate. That's supposed to be a reductio ad
absurdum. Obviously we can't undermine everything
the World Bank does, so obviously we can't allow
such considerations to enter. We consider only
economic rationality, of course geared to the
interests of the World Bank.  That's what you do
with pollution. Try to convince the Third World to
stop producing and to stop protecting their own
population and to accept our pollution. It's all
perfectly explicable on rational economic
grounds. Any graduate student in economics can
prove it to you.

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