I want to highlight an item from Joshua’s News Brief on Thursday:
What’s even funnier than nostalgic Russians rampaging one of their former colonies for daring to be decolonized? The UN General Assembly electing Zimbabwe to head the agency on sustainable development. Robert Mugabe, remember, murdered or deported the white people in his country, created a famine, and for the last year or so has seen quadruple-digit inflation. There is, of course, some resistance from Western countries, but the UN is a joke. A bad joke. No one should be surprised it treats development the same way it treats human rights and refugees.
What else can one say?
How about the World bank? I think Wolfowitz is getting a bad rap, and what really happened is being misrepresented. I also find Wolfowitz, whatever else one might say about him, above the median when it comes to ethics in government. I also see no evidence that he has been a poor World Bank President, despite it being claimed over and over in many quarters.
However, he should go, and the bank should go as well. I am pleased to find out George Will agrees with me:
The kerfuffle over whether Paul Wolfowitz, the World Bank’s president, behaved badly regarding the contract for his companion to facilitate her departure from the bank involves no large issue. The bank’s existence does. The bank’s rationale, never strong, has evaporated.
Born in 1944, at the apogee of confidence in governments and international governmental organizations, the bank’s mission is “to fight poverty with passion and professionalism.” The great prerequisite for curing poverty is, however, economic growth, and the world has learned, during a 63-year retreat from statism, that the prerequisite for growth is free markets allocating private capital to efficient uses.
Much of what recipient countries save by receiving the bank’s subsidized loans they pay in the costs of “technical assistance,” the euphemism for being required to adopt the social agendas of rich nations’ governments that fund the bank. Those agendas focus on intrusive government actions on behalf of fashionable causes — the empowerment of women, labor, environmentalists, indigenous peoples, etc.
The bank argues, incoherently, that its clients value the “technical assistance,” but that the clients would not adopt it unless bribed — unless it were a condition of receiving subsidized loans. So the bank subsidizes projects that the client countries do not deem worth financing with money borrowed at market interest rates. As Allan Meltzer of Carnegie Mellon University says, money is fungible: Projects with the highest social or economic return are often dangled in front of the bank to get its loans — but these projects would have been funded anyway. So, in effect, the bank’s loans support marginal projects that would not have been funded without the loans.
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Wolfowitz has said:
“We are facing … competition [from the capital markets]. I think it’s important that we effectively compete. Increasingly … if the fight against poverty is successful, more and more countries will be in this middle-income category, and if this institution is going to remain relevant to the world, it obviously needs to be relevant to the middle-income countries.”
Wolfowitz’s words are those of a man who has been in government much too long. He says private capital markets have become competitive with the bank’s functions. But when those markets are not “competitive,” that means only that they question the value added by loans the World Bank has wanted to make. That is the meaning of the capital markets’ supposed bias against developing countries. If those markets are now eager to compete with the World Bank for clients, it is time for the bank to get out of the way.
The World Bank’s problem, as Wolfowitz seems to see it, is humanity’s blessing: Middle-income countries are proliferating. This means that the bank is losing its battle to retain whatever relevance it once had. The bank’s real mission statement is the non sequitur that makes government undertakings immortal: We were created for a reason, therefore there must forever be a reason for us to exist.
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It is said that unless Wolfowitz goes, some donor governments might withhold funds. At the bank, the right thing, even done for a silly reason, would be an improvement.
I’m waiting until Equatorial Guinea – whose dictator not only has a sprawling mansion in Maryland, and was declared a “good friend” of Condoleeza Rice, but has also been accused of cannibalism – ascends the UN Human Rights Council.
It just goes to show that it doesn’t matter what party you belong to, once you get into the international relations subculture morality turns on its head. “Looked into his soul” and all that other crap.