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25-class notes

25-class notes - TODAY class 25 Mon Nov 9 Let them eat...

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1 TODAY – class 25 – Mon Nov 9 Let them eat pollution (from last class) Causes of International Trade: Comparative and competitive advantage – Brander (8, pp 159-166) Wed – Remembrance day holiday NEXT CLASS Friday Nov 13 NEXT CLASS – Friday Nov 13 Finish comparative and competitive advantage – Brander (8, pp 159-166) Economist: Let them Eat Pollution Memo by Larry Summers: was President of World Bank at the President of World Bank at the time (currently main economic advisor to President Obama) The World Bank should encourage the migration of dirty industries to the LDC’s.
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2 The cost of pollution is lower in a low-wage country 1) The economic cost of health-impairing ll ti d d f i pollution depends on foregone earnings. a given amount of health impairing pollution should be done in the country with the lowest costs, i.e. the country with the lowest wages. “the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable” Utilitarian justification Dirty industries should be moved to the LDC's if the gains to people in the developed countries the gains to people in the developed countries would more than offset any losses to people in the LDC's. Summers - a lower wage reduces the marginal opportunity cost of sickness and death. suggests that the marginal social cost of a given – suggests that the marginal social cost of a given amount of pollution is lower in an LDC than a developed country Criticisms?
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3 Rich countries place more value on a clean environment 2)
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