Coase gone wild?

Recently a University of Colorado professor has gotten himself into trouble for some insensitive remarks regarding the victims of the 9/11 attacks (here). President of Harvard University, Lawrence Summers, has also found himself in hot water of late for his remarks at a women scientist’s convention (here). This is not the first time President Summers has rocked the boat with what some would call politically incorrect remarks. As the chief economist at the World Bank Mr. Summers wrote an internal memo in 1991 that outlined three reasons why the World Bank should promote the movement of “dirty industries” (polluting industries) to less developed countries (here).

The reasons Summer’s outlines in his memo are very much grounded in the Coasian concept of relying on market allocation of pollution rights to there most efficient position. On a normative level Summer’s comments are disturbing, on the other hand if economic efficiency is our goal his proposal has a great degree of validity.

Although the adoption of Coase has been widespread within the U.S., I am not so sure that Summer's proposal has as much acceptablility by other countries around the world. Especially in countries with a large Green faction the idea of receiving alien toxic waste is unthinkable. Indeed, the transaction costs on an international level seemingly kill Summer's proposal.