Tuesday, November 11, 2008

Lawrence Summers?

Since I am too young to have followed politics closely in the 1990s, all I knew about Lawrence Summers was the 2005 controversy over his comments on women which made him resign from his job as Harvard's president. I still think he has been unfairly criticized for his comments on why certain jobs are disproportionately occupied by men. I think his arguments are sound hypotheses, I've defended them several times and I managed to convince everyone I talked to that they made sense; but I'll readily admit that they're easy to misinterpret (and making them probably showed poor judgment given his political aspirations).

But I have a hard time defending this:
The aside was leaked to the press and stated that, developed countries ought to export more pollution to developing countries because these countries would incur the lowest cost from the pollution in terms of lost wages of people made ill or killed by the pollution due to the fact that wages are so low in developing countries. The aside went on to state 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.
There's a time when an economist should realize when what might be economically optimal doesn't make sense from a moral perspective. He failed that test.

He was chief economist of the World Bank from 1991-1993. Given the disastrous results of his policies in the region, and his support of the disastrous World Bank policies of the 1990s, I have a hard time taking this man seriously. Maybe he learned from his mistakes and maybe he is the best economist for the job now, I do not know since this isn't my field. I do like his opinion that increasing wage discrepancy is a problem, but I am troubled by his "successes" and his judgment.

Here's a view on the result of his policies in Eastern Europe and Russia:
He turned to America’s great rival, the former Soviet Union, to try out his economic experiments. In 1990, Lithuania, a restive Soviet republic seeking independence, hired Summers to advise on that country’s economic transformation. Poor Lithuania had no idea what it got itself into. This was Summers’s first opportunity to tackle a country in economic crisis and put his wunderkind theories into practice. The results were literally suicidal: in 1990, when Summers first arrived, Lithuania’s suicide rate was 26.1 per 100,000 and falling. Just five years after Summers got his hands on Lithuania’s economy, life became so unbearable under the economic transition that the suicide rate nearly doubled to 45.6 per 100,000, worse than any other ex-Soviet republic in transition. In fact, it was the highest suicide rate in the world, suggesting something particularly harsh and brutal about the economic transition in that country as opposed to the others, where suffering and pain were common. Things got so bad that in 1992, after just two years of Summers-nomics, the traumatized Lithuanians voted the communist party back into power, the first East European nation to do so–even though just a year earlier Lithuanians actually died on the streets fighting communism.

Fresh off his success in Lithuania, Summers moved to the World Bank, where he was named the chief economist in 1991, the year he issued his famous let’s-pollute-Africa memo. It was also the year that Summers, and his Harvard protégé Andrei Schleifer (who worked with Summers on the Lithuania economic transformation), began their catastrophic “rescue” of Russia’s crisis-ridden economy. It’s a complicated story involving corruption, cronyism and economic devastation. But by the end of the 1990s, Russia’s GDP had collapsed by more than 60 percent, its population was suffering the worst death-to-birth ratio of any industrialized nation in the twentieth century, and the financial markets that Summers and Schleifer helped create had collapsed in what was then the world’s biggest debt default ever. The result was the rise of Vladmir Putin and a national aversion to free markets and anything associated with Western liberalism. -Mark Ames

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