Shut ‘er Down!

Back when I worked in a factory as a welder, that phrase was music to my ears. At the very least, an extended smoke break was in the offing while the foreman argued with the inspector. But here I offer it as a suggestion for what to do with the World Bank. I know it is unlikely; large bureaucracies do not easily go away. The Bank for International Settlements was set up to handle war reparations and still lives on and the IMF has survived the collapse of the system it was set up to monitor (Bretton Woods).

There are several reasons for considering shutting down the WB. Its history of policy advice has not always been the greatest, and its IADB arm that makes market rate loans is not really needed in this era of global financing. And, when it comes to dispensing aid, its a monopolistic bureaucracy that seems at times more concerned with quantity than quality (David Ellerman has a nice piece on the WB that discusses its quasi monopoly status under the heading Structural Problem #1).  I believe there are viable alternative modes of disbursing aid. Consider for example organizations like Global Giving which collects vetted projects on its website. There donors can search for and contribute to specific projects. Decentralized, streamlined and "ownership" of the project seems clearly delineated.

So lets "shut ‘er down" and move on. But if we can’t not replace Wolfowitz (son of Wolfenson), lets at least do the right thing and replace him with this proud son of Oklahoma.

Comments

Wait! If the WB closes, the market will flood with economists seeking $100k+ tax-free jobs. Wages drop for all of us! No -- the WB should hire MORE economists to study and explain how to make the WB a more effective organization for hiring economists - whoops - I mean helping the poor! /irony

Kevin, I think you mean IBRD (International Bank for Reconstruction and Development), not IADB (Inter-American Development Bank). Whether or not the IADB should exist to give market-rate loans to latin american countries is a even more debatable, but probably not the multilateral development bank that you intended.

As for the IBRD, I agree that if the private sector can appropriately fill the market than this is reason for the World Bank to get out of the business. Instead, the World Bank should focus on public good provision and especially global public goods, as Nancy Bridsall has suggested. If the social benefits to an investment far outweigh the private benefits, then there is a case for the World Bank to still lend money at market rates, given that the provate sector would under-provide lending.

Kevin, replace World Bank with "economists" in your second paragraph. It still makes sense but I bet you'd be less inclined to get rid of the economist profession. I'm not interested in that either, but I don't think that these arguments work well.

Niall: thanks for helping out an apparently dyslexic rookie blogger. IADB is indeed the Latin American regional development bank and IBRD is the guy I was after. At least they have 75% letters in common!

Erik S.: as David W notes above, closing the world bank would be a DISASTER for economists job opportunities and salaries.

Mike Munger: and the Borowitz report gleefully pointed out the real mystery of the whole scandal was how Wolfie ever got himself a girfriend to begin with
( http://borowitzreport.com/archive_rpt.asp?rec=6727&srch= )

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