This paper critically examines the ethical dimensions of industrial pollution and waste outsourcing to developing nations, with particular focus on the 1992 World Bank argument — associated with Lawrence Summers — that the cost of health-impairing pollution should be equated with forgone earnings in low-income countries. The paper argues that this logic is morally untenable, economically misleading, and a form of modern imperialism. Drawing on perspectives from Cowen, Irons, and African critics of the Summers position, the author contends that developed nations have an ethical obligation to uphold environmental and health standards regardless of where they operate, and warns that exploiting weaker regulatory environments in the developing world will ultimately harm wealthy nations as well.
The cost of health-impairing pollution is definitively much higher than the forgone earnings of those who are disabled or die as a result of this pollution in developing countries. An overenthusiastic member of the World Bank first advanced this problematic proposition in 1992, arguing that the cost of health-impairing pollution is equivalent to forgone earnings. Since then, those who understand that business ethics must be followed regardless of where a person is and what their intentions are have vehemently challenged it. This paper subscribes to their views and maintains that this theory was advanced by those who believe it is cheaper to poison third world countries since those countries lack meaningful environmental laws. It is easier to impose such ideas on them because their economic needs and dependency make it difficult to refuse.
The argument presented by this World Bank position may carry some superficial logic in first world countries where per capita income is significantly higher than in developing nations. However, there is no significant difference in the cost of treating the symptoms of health-impairing pollution across national borders. Consider the example of India, where per capita income is less than $2,000, compared to close to $14,000 in the United States. One look at this vast income gap makes clear why the cost of pollution damage cannot possibly be considered equal to forgone earnings in India. The underlying assumption collapses when measured against real economic disparities.
It is true that third world countries do not have the same environmental laws as Western nations, and neither can they currently afford such stringent regulations. They need to make rapid economic progress, and some relaxation of regulatory requirements may be necessary. However, this does not automatically make it ethical for the United States or other developed countries to treat the developing world as a wastebasket for industrial pollution. An Indian life is just as important as an American life, and health is affected in similar ways by an unhealthy environment. For this reason, we must take into account the health impacts on people in these countries and not overlook the extra burden we would impose by shifting polluting production to those regions.
Cowen and Irons, in their article in the Wall Street Journal, explained why they viewed outsourcing favorably:
"Many Indians and other recipients of outsourcing investment are desperately poor by U.S. standards. It is both proper and in our long-term national interest to help India develop into a free and prosperous economy. Indians do not count for less simply because they stand outside of U.S. national borders."
"Poor countries should not have the same environmental and labor standards that the U.S. does; they simply cannot afford them and do not have the requisite legal structures to enforce them. The best way to improve their standards is to help them grow rich, so outsourcing is part of the solution in this regard."
This view has merit, but it must not be used to justify turning the developing world into a dumping ground in the name of progress. Once these nations become aware of how their environments have been misused, and eventually marshal enough resources to implement stricter environmental laws, it will be the West that suffers the consequences. Not only will these countries stop accepting outsourced projects, but they will have accumulated enough capital and knowledge to utilize their own workforces for their own benefit. This would result in intensified global competition — one in which developed nations could find themselves at a disadvantage, having lost both productive expertise and access to low-cost labor markets.
It is our duty as more developed and knowledgeable nations to help developing countries overcome health and pollution problems rather than exacerbating them. Using weaker nations' environments as convenient disposal sites is a form of environmental imperialism — an attempt to justify the unethical exploitation of other people's resources and living conditions. This imperialism was further entrenched by the theories of Summers, who originated the forgone earnings argument. Countering his position, one African writer posed a pointed question:
"Toxic dumping framed as neo-colonial economic oppression"
"Exploitation of developing nations risks long-term blowback"
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