Hausman and McPherson discuss Larry Summers's memorandum Essay

Hausman and McPherson discuss Larry Summers's memorandum - Essay Example Even though Summers and Pritchett argued the â€Å"aside† on the memo as a sarcastic inference, the â€Å"aside† generated worldwide uproar and criticisms. In the book Philosophy of Economics, Hausman and McPherson debate the Summers Memo, lamenting the idea that health-impairing pollution could not be promoted or shifted to LDCs. This paper discusses one of Hausman and McPherson objections to summers arguments. In the essay ‘The Philosophical Foundations of Mainstream Normative Economics’, Hausman and McPherson suggest that the three paragraphs in Summers memo presented a scientific argument while the last paragraph highlighted moral objections. However, according to Hausman and McPherson, the entire â€Å"aside† was essentially a moral argument, which is significant to the relationship between market evaluation and welfare. By isolating welfare and preference satisfaction, and then leaning on the relationship positive economics establishes between preferences and market prices. Consequently, the Summers memo established a link between premises regarding costs and demands and conclusions regarding the specific outcomes that augment welfare (Hausman and McPherson 233). According to Hausman and McPherson the uproar instigated by the Memo signified objection to its conclusions. On page 232, they outline five objections discussing why the World Bank should not encourage the migration of pollution to LDCs. The first objection states that encouraging ‘dirty’ industries to shift to LDCs might cause more total pollution. Specifically, compared to LDCs, industrialized countries have better incentives, superior administrative ability, and extensive resources to implement pollution regulations. The second objection is that even though individuals in the industrialized economies and LDCs would agree to the migration of pollution to the third world in exchange for suitable compensation, the exchange may be discriminating. Notably, in such an