FacebookTwitterGoogle+RedditEmail

The Summers of Our Discontent

by ROBERT WEISSMAN

“Just between you and me, shouldn’t the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?”

Do those sound like the words of a man who should be running the world’s leading economic development institution?

They don’t, but the man who put his name on the memo in which those words appeared — Lawrence Summers — does in fact appear to be the Obama administration’s leading candidate to head the World Bank.

For the sake of hundreds of millions of people for whose lives and life chances are shaped in some significant part by World Bank policy, please urge President Obama not to nominate Larry Summers to be World Bank president. Sign the petition at ForgetLarry.org.

The World Bank is supposed to be the development bank for the world’s poor. It has a very poor record of fulfilling its mission — precisely because it has pushed the kind of deregulatory policies that Summers has advocated.

By indefensible tradition, the United States is given the power to name the Bank’s president, and it has always named an American — even though the Bank is governed by a board that represents the world’s nations, and the Bank’s mission is to serve poor countries. In 2005, the Bush administration named neoconservative Paul Wolfowitz to run the Bank. That ended in disaster, when Wolfowitz was forced to resign amidst a personal scandal. It’s hard to imagine the Obama administration is on the verge of making a similarly outrageous pick to head the Bank, but that seems to be the case.

What’s the matter with Larry?

Consider his public service career.

As chief economist at the World Bank, Summers authored (or at least put his name on) a 1991 internal memorandum that argued for the transfer of waste and dirty industries from industrialized to developing countries. “Just between you and me, shouldn’t the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?” wrote Summers. “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. … I’ve always thought that underpopulated countries in Africa are vastly under polluted; their air quality is vastly inefficiently low [sic] compared to Los Angeles or Mexico City.” Summers later said the memo was meant to be ironic, or a thought experiment.

What Summers never explained was how he disagreed with the memo’s “impeccable,” if ironic, logic. Indeed, that kind of logic has guided World Bank policy for decades, as it has pushed deregulation, privatization and corporate globalization, with horrific results.  The Bank needs as its leader someone who categorically rejects this way of thinking.

As Deputy Secretary and then Secretary of the Clinton administration Treasury Department, Summers helped lead the deregulatory charge that enabled the financial crash of 2008 and the Great Recession. Among his notable achievements was stifling the efforts of Brooksley Born, then head of the Commodity Futures Trading Commission, to investigate and regulate the trade in financial derivatives. The trade in unregulated financial derivatives amplified the financial crisis far beyond the unavoidable troubles connected to the popping of the housing bubble. AIG made aggressive bets on credit default swaps that went bad with the housing bust, and led to a taxpayer-financed rescue of more than $130 billion. AIG was able to put itself at such risk because its CDS business was effectively subject to no governmental regulation or even oversight — a direct result of the efforts of Summers and his confederates in the Clinton administration.

In recent decades, blind financial deregulation has contributed to a long series of financial crises with absolutely catastrophic results in developing countries. The World Bank does not need a financial deregulator as its leader.

As Harvard University president, Summers set records for offending vast portions of the faculty. He also provoked a firestorm with comments suggesting that innate differences helped explain why relatively few women have top scientific positions.

Effectively running the World Bank requires managing a vast bureaucracy and dealing sensitively with diverse global constituencies. The job requires finesse, about the last word anyone would use to describe Summers. The job also requires someone able to function as an advocate for women’s empowerment, given the gendered inequality and power imbalances in the global economy.

The history is not yet written on Summers’ role in the Obama administration.  What is clear is that the Obama economic team both failed to deliver a large enough stimulus plan to address the economic and jobs crisis it inherited, and that the administration made a political decision to coddle rather than confront the Big Banks and Wall Street interests responsible for the mess. Not exactly the kind of performance that recommends being given the top job of dispensing economic advice to developing countries.

The World Bank has its own colossal failures to answer for. For 40 years, it has promoted a brand of market fundamentalism that has served rich corporate interests but impoverished hundreds of millions in the developing world. Bank-imposed privatization and downsizing of the public sector has left poor countries unable to educate their young, treat the sick or build up their economies. The Bank’s penchant for megadevelopment projects has devastated ecosystems around the world, destroyed the livelihoods of millions of indigenous people and small-scale farmers and set developing countries on a dirty and unsustainable energy pathways.

Yet for all its failures, there are many very good and committed people at the World Bank, and the institution exerts a dominant role in policymaking in poor countries. Who runs the World Bank makes a lot of difference.

The people of the developing world deserve a lot better than Larry Summers.

Unfortunately, those people have no power to determine who will run the Bank. People in the United States do. Tell President Obama not to nominate Larry Summers to head the World Bank: ForgetLarry.org.

Robert Weissman is president of Public Citizen, www.citizen.org

(c) Robert Weissman

More articles by:

ROBERT WEISSMAN is president of Public Citizen.

Weekend Edition
February 23, 2018
Friday - Sunday
Richard D. Wolff
Capitalism as Obstacle to Equality and Democracy: the US Story
Paul Street
Where’s the Beef Stroganoff? Eight Sacrilegious Reflections on Russiagate
Jeffrey St. Clair
They Came, They Saw, They Tweeted
Andrew Levine
Their Meddlers and Ours
Charles Pierson
Nuclear Nonproliferation, American Style
Joseph Essertier
Why Japan’s Ultranationalists Hate the Olympic Truce
W. T. Whitney
US and Allies Look to Military Intervention in Venezuela
John Laforge
Maybe All Threats of Mass Destruction are “Mentally Deranged”
Matthew Stevenson
Why Vietnam Still Matters: an American Reckoning
David Rosen
For Some Reason, Being White Still Matters
Robert Fantina
Nikki Haley: the U.S. Embarrassment at the United Nations
Joyce Nelson
Why Mueller’s Indictments Are Hugely Important
Joshua Frank
Pearl Jam, Will You Help Stop Sen. Tester From Destroying Montana’s Public Lands?
Dana E. Abizaid
The Attack on Historical Perspective
Conn Hallinan
Immigration and the Italian Elections
George Ochenski
The Great Danger of Anthropocentricity
Pete Dolack
China Can’t Save Capitalism from Environmental Destruction
Joseph Natoli
Broken Lives
Manuel García, Jr.
Why Did Russia Vote For Trump?
Geoff Dutton
One Regime to Rule Them All
Torkil Lauesen – Gabriel Kuhn
Radical Theory and Academia: a Thorny Relationship
Wilfred Burchett
Vietnam Will Win: The Work of Persuasion
Thomas Klikauer
Umberto Eco and Germany’s New Fascism
George Burchett
La Folie Des Grandeurs
Howard Lisnoff
Minister of War
Eileen Appelbaum
Why Trump’s Plan Won’t Solve the Problems of America’s Crumbling Infrastructure
Ramzy Baroud
More Than a Fight over Couscous: Why the Palestinian Narrative Must Be Embraced
Jill Richardson
Mass Shootings Shouldn’t Be the Only Time We Talk About Mental Illness
Jessicah Pierre
Racism is Killing African American Mothers
Steve Horn
Wyoming Now Third State to Propose ALEC Bill Cracking Down on Pipeline Protests
David Griscom
When ‘Fake News’ is Good For Business
Barton Kunstler
Brainwashed Nation
Griffin Bird
I’m an Eagle Scout and I Don’t Want Pipelines in My Wilderness
Edward Curtin
The Coming Wars to End All Wars
Missy Comley Beattie
Message To New Activists
Jonah Raskin
Literary Hubbub in Sonoma: Novel about Mrs. Jack London Roils the Faithful
Binoy Kampmark
Frontiersman of the Internet: John Perry Barlow
Chelli Stanley
The Mirrors of Palestine
James McEnteer
How Brexit Won World War Two
Ralph Nader
Absorbing the Irresistible Consumer Reports Magazine
Cesar Chelala
A Word I Shouldn’t Use
Louis Proyect
Marx at the Movies
Osha Neumann
A White Guy Watches “The Black Panther”
Stephen Cooper
Rebel Talk with Nattali Rize: the Interview
David Yearsley
Market Music
FacebookTwitterGoogle+RedditEmail