Who Needs the World Bank?

By | 2019-01-12T22:04:36-07:00 January 11th, 2019|
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NeverTrump Republicans are buoyed by a sense of opportunity following the unexpected announcement on January 7 that World Bank president Jim Yong Kim is resigning in the middle of his second five-year term.

The World Bank and its companion institution, the International Monetary Fund, were established by the United States and our allies during the last days of World War II, in anticipation of what were believed to be essential arrangements for international public finance and monetary systems following an Allied victory.

The head of the commission that designed the World Bank system was the British economist John Maynard Keynes. A key intent of the bank was to make low-cost loans available to poor countries that could not get financing from commercial banks. The bank’s shareholders are member governments, which pay in capital and sponsor the bank’s bureaucracy and its “poverty reduction” schemes.

The United States holds the largest number of shares, but not a majority. For more than 70 years, the bank president’s job has always gone to a American appointee nominated by the U.S. president who, until now, has been able to muster enough votes from allied governments with large shareholdings.

Since 2012, when President Obama nominated the Korean-born naturalized American Jim Yong Kim to his first term, the World Bank presidency no longer has been a sure thing for U.S. nominees. Obama had to struggle to gain the needed votes to elect Kim.

Now that the plum of all globalist plum jobs is open, NeverTrumpers and other Republicans in name only have suddenly discovered within their breasts the strong heartbeat of nationalism. It is all-important, they say, to keep the job in U.S. hands.

They say that, of course, because they expect the job to go to one of their kind.

The Best and the Brightest?
The World Bank began operations in 1946, and its first president, an appointee of Harry Truman, was Eugene Meyer, the owner of the Washington Post and father of the newspaper’s longtime publisher, Katharine Meyer Graham.

One of the longest-serving World Bank presidents was Robert McNamara, who was appointed by Lyndon Johnson in 1968 and held the job until 1981. Under McNamara, who had done so much to harm the well-being of the United States and its allies as architect of the no-win war in Vietnam, the bank became the breeding ground for nearly every imaginable crackpot and pernicious left-wing economic and social policy that made the 1970s the mess that they were.

George W. Bush, believing that the United States had won decisive victories in Iraq and Afghanistan, bestowed the World Bank presidency triumphantly in 2005 upon the architect of those wars, deputy defense secretary Paul Wolfowitz. Wolfowitz resigned under a cloud after only two years at the bank because of the flagrancy with which he had given a cushy job and very high compensation to his mistress.

A Fresh Opportunity
Donald Trump began his administration giving numerous top foreign policy appointments to persons who did not support his candidacy or his campaign promises. These included establishment Republicans as well as Democrats in military uniform. Tillerson, Haley, McMaster, and Mattis—all now gone—are the best known of these.

Meanwhile, still in office at the next tier down where the real mischief gets made, are appointees who represent the antithesis of what Trump voters thought they were choosing. One is liberal RINO Henrietta Fore, who ran the U.S. Agency for International Development under free-spending George W. Bush and now, incredibly, has secured Trump’s appointment as head of UNICEF in New York. Another is ex-House Speaker Paul Ryan’s protégé and former Wisconsin congressman Mark Green, a sentimental humanitarian whom Trump—surely under the influence of Ryan and Tillerson—appointed to head USAID.

To give you a sense of just how bad things are—just how much USAID today might as well be operating under a President Carter or Clinton instead of a President Trump—look at the fatuous statement on the home page of the agency’s website.

“The purpose of foreign aid,” says USAID administrator Green, “is to end the need for its existence.”

This stunning lack of originality, is the very same horse manure spread by every USAID administrator, Democrat or Republican—while always expanding the wasteful and ideologically addled aid bureaucracy that has persisted since the 1960s.

One can only hope that now, with Tillerson, Haley, and McMaster gone, President Trump might decide to call the globalists’ bluff. He could take his case over the heads of Congress and the permanent bureaucracy and tell the American people the plain truth that most foreign aid spending, and certainly the USAID bureaucracy, no longer need to exist.

In 2007, when Wolfowitz was ousted from the World Bank presidency, a free market economist writing in National Review raised the proper existential question:

Do we really need the World Bank?

Free market capitalism is spreading like gangbusters across the globe, and with it, the proliferation of private capital markets to channel investment everywhere.

Instead of making cheap loans at below market rates to state planning governments in Africa and elsewhere, the real key to fighting poverty is putting markets—not World Bank bureaucrats—in the driver’s seat.

Both the IMF and the World Bank are unnecessary artifacts from a bygone, post-WWII reconstruction era. Instead of government-to-government lending, poor nations need pro-market reforms that will then attract private capital flows. This will subject low-income nations to the same marketplace discipline that China, India, Russia, Eastern Europe and Latin America have all been subjected to.

The thousands of World Bank bureaucrats with their tax-free salaries know very well that private market capitalism is overtaking their mission. So they want to morph the World Bank into some kind of super-sized global warming bureaucracy—something we clearly don’t need.

That economist’s advice in 2007 was ignored by George W. Bush and the RINOs who directed his foreign aid programs, but it is every bit as relevant today as it was then.

Maybe, just maybe, President Trump will heed those words of advice now. The economist who wrote them was Larry Kudlow, director of the president’s National Economic Council.

Photo Credit: Xinhua/Shen Ting via Getty Images

About the Author:

Joseph Duggan
Joseph Duggan, a former White House speechwriter for President George H. W. Bush and a former Reagan State Department appointee, is an international business and public affairs consultant. He recently moved home to his native city of St. Louis.