I am curious. Please give some examples of nasty adjustment loans the WB has been involved in. I am seriously curious. It may be that the Metzler Commission is right about this aspect: make the WB go back to its original function.
I don't think the WB can be held responsible for the fact that global income distribution has become more unequal. Most of its efforts have been directed at raising incomes in poorer countries. These may not have been as successful as most would like, but unless one can show that they actually worsened the situations of those countries, I don't think the WB can be held responsible for the more general outcome. I do think the IMF can be held so responsible, at least to some extent.
BTW, the best study on global income inequality was put out by a WB staffer, as you know, Branko Milanovic (we should probably keep our voices down so that he does not get fired...!!!).
I agree that Daly resigned out of frustration. As for Stiglitz, he did resign, but I gather it was under pressure that ultimately came from Summers. But, I gather you know more about this matter than I do. Barkley Rosser -----Original Message----- From: Doug Henwood <dhenwood at panix.com> To: lbo-talk at lists.panix.com <lbo-talk at lists.panix.com> Date: Wednesday, May 24, 2000 4:47 PM Subject: Re: WB and IMF
>J. Barkley Rosser, Jr wrote:
>
>> Just got your latest lbo. Found the lead article to
>>rather confusingly move from discussions of the World
>>Bank (WB) to the International Monetary Fund (IMF) and
>>back, although I realize that you understand the difference
>>between the two.
>
>Hmm, I could swear I defined their original roles and said that the
>differences between the two had blurred considerably since the 1980s
>debt crisis, with the WB getting into conditionality and structural
>adjustment loans, and the IMF lending longer term and talking about
>poverty reduction.
>
>> Nevertheless, annoying as it might be, I do see considerable
>>differences between them. Basically the IMF is the bad cop, which,
>>as in the title of the Harry Cleaver paper you cite, should be shut
>>down.
>
>And the WB is a good cop. Which makes it a cop nonetheless, and in
>some ways more sinister, since it often pretends to be better than
>what it is.
>
>> The criticisms of the WB are much more
>>amorphous and vague, such as that lenders are protected or
>>that grants should be made rather than loans, or that regional
>>rather than national infrastructure should be emphasized. If
>>one goes to the past, prior to the 1980s, one does find a
>>tendency to support ecologically damaging large-scale projects.
>>It can be argued that there is still a tendency to do this, although
>>there has clearly been some effort to move away from this as well.
>>Larry Summers did send out his nasty memo about pollution while
>>at the WB, but I note that Herman Daly was an employee of the
>>WB at the same time, part of the effort to redirect towards a more
>>environmentally conscious approach.
>
>And Daly felt utterly defeated and resigned.
>
>> Of course, there is ultimately a big difference between the
>>two, although the WB certainly is ideologically pro-market
>>capitalist and all that. The WB's mission is to eliminate poverty.
>
>And how has it done? I suppose you could say that absolute poverty,
>in the most extreme sense, is lower now than 50 years ago, but
>relative poverty - the gap between rich and poor - has never been
>wider at any time in human history.
>
>>The IMF's is to stabilize macroeconomies and bail out countries
>>in debt crises. One can say the WB is bad because world poverty
>>has not been conquered, but this strikes me as a pretty weak
>>argument.
>
>They are deeply involved in policy loans, i.e. bad cop stuff.
>According to the 1999 Annual Report, "adjustment lending" accounted
>for about half of all lending.
>
>> This may not matter, but I suspect that you are aware of the
>>very different atmosphere and attitude among the staffers at the
>>two institutions.
>> In a sense the recent role of Stiglitz, in the position
>>of Chief Economist of the WB, criticizing the IMF (until he was
>>removed under pressure), is a tip of the iceberg. Stiglitz had (and
>>has) lots of support within the WB, very little at the IMF. Based on
>>people that I know (admittedly a small, possibly biased, sample),
>>staffers at the WB are frequently genuinely committed to reducing
>>poverty, increasing income equality, etc. etc.
>
>Perhaps you read the insider's account of Stiglitz' resignation in
>LBO #93. Yes there were some who were sorry to see him go, but many
>were happy, including Lant Pritchett, the actual author of Summers'
>memo. If things were as groovy inside the WB as you seem to say, why
>did Stiglitz leave?
>
>> Perhaps they are
>>buffoons or tools or whatever. OTOH, Stiglitz's crack that staffers
>>at the IMF are arrogant you-know-what who are third raters from
>>first rate schools really hits the mark. My observation is that for
>>many of those folks, power has gone to their heads. They may
>>be 28 year old recent grads out of MIT, but they walk into a Third
>>World country in a debt crisis and they have finance ministers
>>and anybody else with any power falling all over them. The upshot
>>is a closed-shop mentality replete with insufferable arrogance.
>>Stiglitz really called it right.
>
>Which is why he had to go.
>
>I don't deny there are many fine people in the WB with the best of
>intentions. But the institutional constraints they operate under
>limit what they can do, and if they step too far out of line, as
>Stiglitz did, Summers will quash them.
>
>By the way, you might have heard that perhaps the last straw for poor
>Stiggy was this passage from his recent New Republic article: "...
>the IMF staff, which frequently consists of third-rank students from
>first-rate universities. (Trust me: I've taught at Oxford University,
>MIT, Stanford University, Yale University, and Princeton University,
>and the IMF almost never succeeded in recruiting any of the best
>students.)"
>
>Doug
>