World Bank’s Former Lead Economist Asks “How Is The World Ruled?”
ZeroHedge · by Mon, 02/19/2018 – 02:00
It is Saturday evening and snowing in New York. I have nowhere to go, I do have things to do (my book!) but my memories take over.
Like for example, the simple question of how is the world ruled. I think that lots of misunderstanding among people in the world comes from inability to visualize how organizations and countries are managed: people either overestimate their singularity of purpose and scheming, or try to convince themselves that there is a full freedom of action and that things are decided on merit. Neither is true. The truth is complex, elusive and lies somewhere (somewhere!) in the middle: it is what Nirad Chaudhury called in a broader context of human history “Libertas in imperio”.
I can describe it, I am afraid, best using the examples that I know well, from my life and long association with the World Bank.
Proposition 1. The world is ruled by a cabal.
Around 1989 when Yugoslavia was in its death-throes (which were not obvious to the naïve types like myself) when on vacation there I wrote an article for an economics and politics weekly in Belgrade that argued that the best privatization strategy, under the last (sensible and brilliant) Yugoslav PM, Ante Markovic, should be such that vouchers be distributed to all citizens of the country and citizens be allowed to buy shares in enterprises in whatever part of the country they wished.
It was an utterly quixotic proposals because the national nomenklaturas were precisely then working on the break-up of the country and the last thing they wanted was to cooperate with each other which they would have to do if their citizens owned shares in companies in the other republics. So, the proposal was dead on arrival.
But one afternoon, in the weekly’s nice boarding room, I explained the proposal in detail to one of weekly’s main writers on social issues. The writer was a Serbian fascist (I am using the term not in a derogatory but strictly political sense) enamored with Italian fascism. (German was I think a bit too heavy for his taste.) He was a painter, who studied and lived in Italy, was proud of his relationship with MSI leadership, admirer of Mussolini. He also looked the part: could have been on any of the bas-reliefs that adorn Euro city near Rome: tall, well-built, square-jawed, straight posture, walking always straight with head held high. A real bell’uomo. In Rome in 1934, he would have been Mussolini’s favorite barbarian painter.
But he was, when at home, a Serbian nationalist. So after carefully listening to me and basically nodding his head during most of the conversation, a couple of days later he came with a stinging two-page attack on my proposal titled “The World Bank sends its CIA spy to sell Serbian enterprises to foreigners”.
Now, was he mad? Not at all. He was, I am convinced, a smart guy, but he saw the world and organizations in it as an immense plot within which everything was strictly hierarchical: ordinary people had no ideas or will of their own. So if I was then in Belgrade arguing X, it must have been not only cleared by my superiors, but ordered by them. And by superiors’ superiors and so forth all the way to the US Secretary of the Treasury, and perhaps Wall Street and perhaps the Jews.
The truth was that I was even risking reprimand from the World Bank because I had no business doing anything with Yugoslavia, publishing articles or creating trouble while on vacation.
But what was the reverse of this view?
Proposition 2. The world is ruled on merit.
This is the view that many people hold about their own involvements and that of institutions they work for. (Academia is a bit different, so I will leave it out). But this view of moral and intellectual rectitude is widely shared in think-tanks (and I worked in one in Washington), international organizations and probably many others (like Oxfam, Medecins sans frontiėres, Open Society etc.).
But is it true? Here I could ply the readers with numerous examples, but I will choose the one that, like the Belgrade story, sticks in my mind.
I was in the Research Department, and thus fairly independent from World Bank’s hierarchy, but it was desirable that I spend a given number of weeks annually working on concrete “operational” issues. It happened that the offer thatI got involved a study of how heating and transportation subsidies in a Central Asian country affected its income distribution. It was easy to do and I promptly came back with the conclusion that they were pro-poor and should be kept.
But this was not the policy of the World Bank. The year was 1994 or 1995 and everybody believed in Fukuyama and Larry Summers. So the decision or rather the diffuse feeling (because you do not need a formal decision on matters like these to know what the “correct” answer is) was made before the report was even started that the subsidies should be eliminated. The leader of the group, not the most brilliant person, was smart enough to know what the desired conclusion was and that his/her career would be helped if the empirical analysis supported it.
So when it did not, he/she totally ignored it, and after several endless meetings where I was supposed to be somehow convinced that the data must surely be wrong, that part of the report was either not included or totally ignored. (I cannot remember what happened.) Because I was not brave or stubborn enough, I gave up a (hopeless) struggle after a couple of attempts and went back to my numbers and equations.
I was outside that particular hierarchy; so I was relatively free. But I then thought: let’s suppose that I was hierarchically under the project leader and that I was courageous enough to stick to my guns. What would have happened? My arguments would have been ignored; I would not have been demoted or fired. But in my next annual review, I would have been given the lowest possible grade, salary increase would be nil, my promotion prospect would be zero, and the explanation would never address the substantive issue: it would be that I was not collegial, failed to work in a team spirit etc. It could be even that I would have been asked to attend “team building” seminars like the Soviet dissidents were sent to psychiatric asylums.
The problem would never even be mentioned to have consisted in a disagreement on substance. Rather it would have been treated as some maladjustment problem on my part; perhaps I was harassed when young or had a difficult childhood. Because, of course, the institution is not closed to different viewpoints and welcomes diverse opinions and “vibrant” or “robust” (these are the preferred terms) dialogue.
This is how the weeding out of undesirable views would have proceeded.
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So who was right: the Mussolini’s admirer or the Washington consensus believer? Or nobody. Your call.
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