Paul Romer’s advice for the World Bank

First, outsource the bank’s research upon which it depends for identifying problems and proposing solutions. Diplomacy and science cannot both thrive under the same roof. One consequence of the bank’s commitment to diplomacy is its necessary embrace of the helpful ambiguity that makes it possible for multilateral institutions to allow “Chinese Taipei” compete in the Olympic Games without “Taiwan, China” having a seat in the UN. Dispassionate examination makes clear that what the bank does to maintain conformity on the diplomatic front is not compatible with scientific research.

All that matter in science are the facts. When complex political sensitivities are allowed to influence research by stifling open disagreement, it ceases to be scientific. For good reasons, the bank’s shareholders have chosen to protect its diplomatic function, at the expense of its research.

Outsourcing research would be a better, more efficient way for the bank to establish the facts needed to do its job. This would also be an investment in the universities that make the discoveries that drive human progress.

Here is the full piece.  What do you all think?


I think economics is not a science, anymore than history is a science. That's why A. Smith called it "political economy", it's politics.

Bonus trivia: some people claim Adam Smith's "invisible hand" was more directed to ethics than laisse-faire capitalism.

...and Adam Smith was proved wrong a thousand times in the last two centuries. Just because business economists like citing him it doesn't means his ideas are universally applicable. The kind of economics the World Bank should do is clearly the science-based one.

Get the U.S. out of the world bank and get the world bank out of the U.S.

Shut the entire contraption down. Easterly and others demonstrated quite well how damaging and counterproductive these institutions are. Plus, there is no possible ethical justification in stealing money from working class people in rich countries to subsidize politicians and crony parasites in poor countries.

And Third , get out of the obsession (and precedent) that only an American should head the World Bank.

'All that matter in science are the facts.'

Science actually involves going beyond facts, using facts to test our understanding. Much like saying that the only thing that matters in painting is pigments is to miss the point of the Sistine Chapel, though it is an accurate statement when viewed in isolation.

'to establish the facts needed to do its job'

Facts are not established, they exist independently - assuming one believes in science (of course, if by established one actually means tested, then fine). Otherwise, we are back to establishing the fact that the Sistine Chapel is a great work of art, without making any reference to the idea that all that matters in painting are pigments.

Science is a human activity, a fact that needs no establishing at all.

To make a banal analogy, a world bank loan to an economy is supposed to be like the lighter fluid to the charcoal, a brief help, that causes so much growth that it becomes trivial to pay back.

I propose establishing a betting market on which loans will be paid back, and if the betting market performs better than the prediction of the world bank political economists, fire the economists, and hire the successful gamblers.

Also look back at the marshal program, which was also time limited.

Lastly, if Chinese Beijing is a significant recipient of world bank loans, as claimed by Balding of Balding's World, that lends credence to Massimo's thesis above, you can't be both a third world country and an imperialist at the same time.

Yes to outsourcing, no to universities, who (at least the good ones) are almost as diplomatically constrained as the World Bank.

Good ideal, but in practice? Would the World Bank want independent auditing or critical analysis of its results? I think not.

This seems predicated on the idea that you can interfere with outsourced research less easily than in sourced. That seems flimsy to me

I'm sure you can find a public policy institute that would disagree with your perspective.

Of course, you can undoubtedly find a public policy institute that agrees with your perspective.

What is interesting is seeing how easily those public policy institutes will switch their positions, dependent on the donation/contract stream.

Of course out sourced research is easier to control - but it is so much easier to deny with a straight face that such influencing is happening.

Given the oft claimed ample, if not over abundance, of capital in today’s world, is there any legitimate role for the bank at all?

If the loans made by the world bank systematically can’t attract this capital, is the world bank actually a bank at all?

Romer's argument is that adding a layer of bureaucracy will improve the effectiveness of the Bank?? ROTFL. Who pays for this "outsourced" research? Who decides who to pay? I think it highly unlikely that the decision makers will be LESS abusive of their power in dealing with contractors. Seems like another set of hurdles in which corruption will flourish. The use of the term "research" is a bit inaccurate; isn't it more like diagnoses and opportunity identification? WTF does "science" have to do with this? Is he suggesting the Bank frequently ignores the Laws of the Physical Universe? Confusing "science" with what the Bank does , it seems to me, is part of the reason the Bank is as dysfunctional and ineffective as it is. (sure "evidence based...blah, blah.)

If "complex political sensitivities are allowed to influence research by stifling open disagreement", most universities have the same problem.

So you outsource to people you know will return to you what diplomacy requires. And if they don't, they don't get another grant.

With money comes power.
With power comes influence.
This people very desire.
Science: base the actions on just the cold hard facts.
Hope is the thing with feathers. -Emily Dickinson

WB and IMF seem to attract good researchers, and their research output seems more realistic than lots of high-profile uni stuff. Lamentably, it also seems more sensible than the institutions' investment decisions

Outsourcing the research would also outsource the diplomatic pressure, corrupting the research of the institution to which it was outsourced, with the added negative of plausible deniability. It would allow the claim that the influenced research had been produced by a neutral and independent entity.

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