Behind the mudfight over Paul Wolfowitz at the World Bank lurks the real question: Why do we still have a World Bank? We shouldn’t. A relic of the collectivist utopian fallacies of the mid-20th century, the World Bank has long been in the business of funneling billions in cheap loans, often accompanied by bad advice, to governments with especially stellar talents for wasting and filching money. Too often, World Bank projects have the effect of subsidizing and supporting despotic regimes that are the real cause of poverty.
The laws of supply and demand suggest that when you lower the price of an activity, you will probably get more of it — and the World Bank, however noble its aims, is fundamentally in the business of picking up the tab for damage done by bad policy, and thus encouraging more of the same. In theory, the Bank offsets this problem by harnessing some of its loans to tutorials in World Bank-approved behavior. But this is an operation underwritten by a grand committee of governments, and implemented by Bank bureaucrats whose tax-free salaries insulate them from the effects of their own preachings. Would you want a World Bank bureaucrat running your life?
That does not excuse the attack on Wolfowitz, which has nothing to do with poverty, and everything to do with politics. This is not a quarrel over the best way to help hungry children; it is a scramble by the Old Boys of the Bank to protect their mighty jampot of World Bank taxpayer-funded clout and patronage. George Will has a good column today on why the World Bank even more than it needs cleaning up needs shutting down.