How do people read this speech? The spin is that Summers rejects radical change, and thinks the World Bank should pretty much stay as it is. It could well be that the spin is right, and that the specific proposals are just so much radar chaff. But if we take the proposals seriously, Summers seems to be calling for changes just as enormous as the Meltzer commission, but if anything, even less progressive. He rejects the idea of switching from loans to grants, and his solution to the fact that most of the World Bank's loans go to emerging markets rather than the superpoor is that the bank should charge more interest. But then he says that the WB should get out of all major infrastructure projects. In dollar terms, isn't that the bulk of its lending to the big four? "Instead" says the FT article on the speech "the banks should concentrate on . . . lending to boost investor confidence after financial crises." Umm, I thought that was what the IMF was going to be limited to in his plan. Is the WB supposed to be made into a safety-net provider during the same crises while the IMF provides liquidity? Because Summers makes noises elsewhere about how the WB ought to invest in health and education. But, if he means what he says, that has nothing to do with poor people, since he called for "'increased selectivity' in lending, moving away from "needs-based aid" to countries in crises" -- which once again makes it sound like the WB would be the short term safety-net provider, softening the blows (or at least the cries) of crisis management. Certainly you can't invest usefully in education or health care on a short term, rule- out-the-poor basis.
Or maybe by "investing in health care" he just means loaning money to Sachs' project to sponsor investment in treating tropical diseases and then calling it a day.
Michael
__________________________________________________________________________ Michael Pollak................New York City..............mpollak at panix.com