The Price of Everything - Eduardo Porter [2]
Leaked a few months before the 1992 United Nations Earth Summit in Rio de Janeiro, the memo confirmed to critics that the World Bank believed poor countries were dumps. The reasoning “is perfectly logical but totally insane,” wrote the late José Lutzenberger, then Brazil’s environment minister, in a letter to Summers. Furious, Vice President Al Gore torpedoed Summers’s chance to become chairman of then-president Bill Clinton’s Council of Economic Advisers. Summers apologized, explaining the memo as an attempt to offer “sardonic counterpoint” to sharpen analytical thinking about the trash trade.
Lutzenberger had a point. Wages are not the only benchmark of people’s value. The price of dealing with garbage in impoverished countries is often zero not because their citizens care nothing about pollution, but because their governments don’t enforce pollution-related laws. But Summers had a powerful point too: in poorer countries, an untainted environment is less valuable than other things that are more abundant in richer nations—schools, for instance. Many developing nations would serve their interests best by trading trash for the chance to build an extra one.
THE PRICE OF CROSSING BORDERS
Most of us think of prices in the context of shopping expeditions. In the marketplace, prices ration what we consume, guiding how we allocate resources among our many wants. They prompt us to set priorities within the limits of our budgets. Just as prices steer our purchasing patterns, they steer the decisions of the companies that make what we buy, enabling them to meet our demand with their supply. That’s how markets organize a capitalist economy.
But prices are all over the place, not only attached to things we buy in a store. At every crossroads, prices nudge us to take one course of action or another. In a way, this is obvious: every decision amounts to a choice among options to which we assign different values. But identifying these prices allows us to understand more fully our decisions. They can be measured in money, cash, or credit. But costs and benefits can also be set in love, toil, or time. Our most important currency is, in fact, opportunity. The cost of taking any action or embracing any path consists of the alternatives that were available to us at the time. The price of a five-dollar slice of pizza is all the other things we could have done with the five dollars. The price of marriage includes all the things we would have done had we remained single. One day we succumb to the allure of love and companionship. Years later we wonder what happened to the freedom we traded away at the altar. Economists call this the “opportunity cost.” By evaluating opportunity costs, we organize our lives.
Just to be born, the scavenger girl in Delhi had to overcome Indian parents’ entrenched bias against girls—which has led to widespread abortions of female fetuses. The Indian census of 2001 recorded 927 girls aged six or less per 1,000 boys. This compares to 1,026 girls per thousand boys in Brazil and 1,029 in the United States. The bias is due to a deeply unfavorable cost-benefit analysis: while boys are meant to take over the family property and care for their parents in old age, daughters must be married off, which requires an onerous dowry. To redress the balance of incentives, regional governments across India have been experimenting with antipoverty programs aimed at increasing parents’ appetite for girls. In 2008, Delhi launched a program