Contrary to Dr. McKeever's statement, economists have extensively studied
external costs (or in economist jargon "externalities"). The standard
recommendation is for the producer to be taxed to bear the negative social costs
he or she creates, which will then induce the producer to reduce those
"unintended consequences" (like pollution).
As far as the negative effect of growth on the poor, there is no evidence that
the poor are left behind systematically by economic growth (see references on
web site below). However, the poor do not share as much in overall growth when
there is a high level of inequality. Oddly enough, they have also appeared in
the past to share less in growth when there is a World Bank or IMF program in
place.
William Easterly
MC3-337
World Bank
1818 H Street
Washington DC 20433
Phone 202 473 8965
Fax 202 522 3518
Web-site: http://www.worldbank.org/research/growth
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