Skip to comments.Banking on Obsolete Statism
Posted on 05/12/2007 1:57:13 AM PDT by CutePuppy
WASHINGTON -- 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 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.
When the bank was born, a war-shattered world was haunted by memories of the collapse of global trade in the 1930s. Capital markets in the late 1940s were small and risk-averse. Today the problems the bank was created to address are long gone. The world is awash in capital available at low rates. China's central bank has $1.2 trillion in foreign reserves and more than $60 billion arrives annually in direct investment.
It is said that the Wolfowitz matter might damage the bank's reputation. But its reputation that matters concerns the waste and corruption that inevitably attend the political yet unaccountable distribution of many billions of dollars.
It is said that unless Mr. Wolfowitz goes, some donor governments might withhold funds. At the bank, the right thing, even done for a silly reason, would be an improvement.
(Excerpt) Read more at online.wsj.com ...