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Wolfowitz at the World Bank
In an excellent piece, Sebastian Mallaby writes:
...the biggest misconception about the bank is that it needs the goading force of Wolfowitz to fight graft in poor countries. Even before Wolfowitz arrived in 2005, the bank was trying to plug leaks in government budgets, reform civil services and back new anti-fraud units: From 2000 to 2004 the bank's lending to improve public-sector governance grew 11 percent annually. Wolfowitz's goal was to take these anti-corruption efforts to the next level. The instinct was noble; the implementation horrible.
As an outsider it is hard to judge many aspects of Wolfowitz's tenure. I take his continuing unwillingness to resign to be the biggest argument against his managerial abilities. He has lost the public relations battle and can no longer be effective. Why should he want the job any more? The obvious hypothesis is that he is emotionally committed to a losing battle, and is not placing much weight on the long-term interests of the institution he is running.
Addendum: Chris Masse points me to this good article on the crisis facing the World Bank. I would add that the real "corruption" problem is that the Bank's board expects lucrative "development" contracts to be given to national firms of France, Germany, U.S., etc. In the final analysis the Bank has a strong incentive to push through loans, whether it should or not. Recipient nations have learned how to game this system very well. I believe this more or less legal form of corruption is well understood by Wolfowitz and his ultimate goal was to challenge the institution at its core.
Posted by Tyler Cowen on May 15, 2007 at 12:53 AM in Current Affairs | Permalink
Comments
Another obvious interpretation is that the entrenched bureaucracy of the bank is pushing him out for political reasons, based on bogus charges. He is fighting back due to a sense of justice or in the best case due to a sense of responsibility.
This is similar (but of course no where near as scandalous) as the Summers-Harvard controversy. Fine, Summers lost the “confidence” of the organisation. But if the “organisation” has it’s own agenda it is not automatically given that the best thing is that president always gives in as soon as his enemies find an excuse to “lose confidence”.
An equally important question is if we should accept their grievousness as fair. If the WSJ is right that they ethic committee *themselves* suggested that the women should get a raise to compensate disturbance to her career than the charges are not just. In that case perhaps the American and Europeans taxpayers should “lose confidence”, and fire the board of the bank?
Posted by: Tino at May 15, 2007 1:22:23 AM
Tino,
Uh, excuse me, but where do you get your so-called information? Fox Noise?
In the case of Summmers, what did him in was lying to the faculty about his
dealings with Andrei Shleifer, not his statements about women, although the
latter certainly did weaken him.
As for Wolfowitz, since it appears that you have not been following, he has
lied to this committee, unless you think that giving four different accounts
of events does not involve lying. Just bad memory perhaps?
I guess you are one of those who support his presence in his position for political
reasons, although those cannot be his crusade against corruption, which is completely
undercut by his continued presence in his position, and given the paucity of actual
corruption at the WB, aside from his own actions and those of his assistants he
brought with him into the bank, not based on any great crusade to clean up the
bank itself either.
I suppose, you think that cutting off funds to Uzbekistan after it threw out
the US military while not doing so to Pakistan, even though the latter is much more
corrupt than the former by pretty much all measures, is a good argument for his
staying around? Very impressive.
Oh, I know. Are you one of those who thinks he should stay because of the high
accuracy of his predictions about what would happen in Iraq after we invaded?
Yes, that is obviously a very important argument for keeping him in his position,
certainly better than having him back at the DOD.
Posted by: Barkley Rosser at May 15, 2007 1:53:57 AM
I hate to see MR go to the dogs like this... :-)
Barkley would you agree Tito's first two paragraphs represent a plausible alternative hypothesis as to why Wolfowitz hasn't stepped down?
Posted by: Will at May 15, 2007 2:10:49 AM
Tino's account matches the information I was able to gather as of May 4. Barkley's account is littered with namecalling (Fox Noise), and three attacks on alleged motivation combined with one questionbegging, one irrelevant defense of the WB, and two irrelevant attacks on Wolfowitz, in an apparent attempt to pad out a thin argument. The "lying" charge sounds suspiciously familiar. Where have we seen that one before? Clinton's impeachment. Martha Stewart. Scooter Libby. Getting someone on "lying" these days amounts to an admission that the underlying case had disintegrated.
Posted by: Constant at May 15, 2007 2:28:04 AM
I can see the point that W should resign just because he's ineffective now (i.e. people believe a story about him), but he certainly has a case to make that if anyone can make someone "ineffective" with false accusations to a remarkably stupid media (whatever the true story is, the coverage has been incredibly unthorough) it's a setup for future problems. If he is indeed telling the truth, he probably shouldn't cave, if only for the sake of precedent. Don't let them think they can get away with that sort of thing, blah blah blah.
Just saying he has an argument there.
Posted by: Joe Bingham at May 15, 2007 3:35:10 AM
Wolfowitz, as much as anybody, started one of the stupidest wars in history. It's hardly surprising that the employees of the World Bank don't want to be shamed by having such a leader. That, knowing how many enemies he has made, he then engaged in corruption on behalf of the girlfriend who encouraged his delusions about the Middle East only shows what horrible judgment the man has.
Posted by: Steve Sailer at May 15, 2007 3:42:45 AM
Let's start with neutral points that should apply in every situation:
1) Lying matters. It matters especially in a leader. Who will follow a leader they cannot trust?
2) Confidence matters. Fair or unfair, if the people underneath you think you are a chump, you aren't going to get anything good done.
3) If you keep a non-trusted leader in a position of leadership, you run a very real risk of weakening, and in some cases even killing, the institution being led. If you are running a big organization, and if you are not a totally self centered egoist, you understand going in that in the final analysis what's good for the organization is what counts, not what's fair to you.
4) Any public organization is weakened if its clients and supporters feel that there is a hidden agenda at work in the way it approaches its work.
5) Leaders of large global organizations have be street smart and savvy enough not to fall into obvious traps. If they expect the world to be fair or situations to be clear on the surface, they are out of their depth.
Now let's review some neutral historical facts on the Wolfowitz situation:
1) The situation with his girlfriend was a sticky situation. Handled at the best of times (before he signed his contract and came on board) and in the best of ways, it wasn't going to be easy to resolve given her legitimate interest in her own career.
2) The ethics committee did not go out of their way to be helpful to Wolfowitz. Whether this was due to laziness, stupidity, spinelessness, or strategic game playing is hard to tell, but it is clear that they did not act to make it easy for Woflowitz.
3) What Wolfowitz did went beyond what they told him he could do.
4) What Wolfowitz did went way, way beyond any salary increases his girlfriend could have expected to have won in the normal course, and had an outsized impact on her likely pension even beyond the salary.
5) Wolfowitz omitted (and evidence shows, deliberately omitted) to inform the ethics committee or the board of the specifics of how he resolved the situation.
6) Wolfowitz has falsely claimed that he did disclose all. He now admits that he was not the source of any disclosure, but points to an anonymous communication from a disgruntled World Bank employee as the source of the claimed disclosure. Given the sheer ludicrousness of taking credit for an anonymous complaint as his own disclosure, Wolfowitz has followed his earlier lack of candor with deliberate deception.
7) The bank's fight against third world corruption did not begin on Wolfowitz's watch, but before, although Wolfowitz and his apologists have attempted to portray it as his idea.
8) There are legitimate questions about whether Wolfowitz has been neutral and evenhanded in the way the bank has handled the anti-corruption campaign. Cutting off Uzbekistan is hard to argue with given the regime in place there, but questions arise as to why it happened only after Uzbekistan broke with Wolfowitz's old buddies in the Pentagon, and to why similar sanctions are not being applied against equally corrupt regimes friendly to US interests (e.g., but not limited to, Pakistan). Bank staffers opposed to the way Wolfowitz has "fought corruption" are not necessarily opposed to a fair, neutral and well implemented fight against corruption.
Now some conclusions:
1) Wolfowitz's behavior in granting the raise was questionable at best, and his defense has been untrustworthy.
2) If Wolfowitz was not corrupt, he was naive, and running an organization like the World Bank is no place for someone who can't spot traps being set. (Cf. running Harvard, which is no job for someone who spouts off at a conference like it is a dorm room bull session, failing to understand in that position and that setting that every word needs to be measured and calculated lest it be too easily twisted.)
3) Wolfowitz's handling of the anticorruption campaign has been clumsy at best, and directed by an outside agenda at worst. If the Bank is perceived to be an agent first and foremost of US foreign policy, its effectiveness is weakened. If the anticorruption policy is perceived to apply only to non-allies of the US, its seriousness is in doubt.
4) Whatever Wolfowitz has said about corruption in the past, given his own history, he will have no credibility on the issue going forward, and, predating Wolfowitz, it is an important issue for the bank to address.
5) Wolfowitz no longer has the confidence of important constituencies at the bank, including most of the employees and the European nations that provide most of the budget.
6) A person concerned about the welfare of the bank in Wolfowitz's place would have resigned for the good of the bank.
7) A US patriot in Wolfowitz's place would have resigned to ensure that US control over the bank was not endangered.
Some questions:
1) Given that Wolfowitz really will be unable to lead the bank effectively, why isn't he resigning?
2) Is he just hanging on to get a large severance package, the bank and US interests be damned? Is there any truth to the rumor that he gets a $400k severance package if he can just hold on to June 1?
3) Whatever cupidity or ego drive motivates Wolfowitz, are the people propping him up playing a deeper game, with the end game being the weakening, and potential destruction, of the World Bank as a major international player? Do they want a weakened Wolfowitz in place, or a destructive board fight, as a means to achieving a larger goal of crippling the bank? Does anyone think Dick Cheney, who appears to be managing this for the administration, has the bank's best interests at heart or believes in its mission?
Posted by: JustTheFacts at May 15, 2007 5:34:55 AM
^Wolfowitz didnt grant the raise, the ethics board commitee did. The matter hinges around confusion over whether the board instructed wolfowitz to personally oversee the raise(this is what wolofwitz claims to have interpreted their advice as) or to delegate it(this is what the ethics board claim their advice was). Neither course of the action is stated by the ethics commitee explicitly in their instructions to wolfowitz, but some of their instructions to wolfowitz defintely seem to imply the former more greatly than the latter.
Which ever the case may be the one thing that is clear - at least to me- is that the media reaction has been on the whole disproportionate and misleading. It seems most people werent even concerned with what actually happened is or happening, they just want to get wolfowitz and assure thmeselves even if he is innocent in this case that it is but cosmic justice for his involvement in the iraq war.
Posted by: Gold standard at May 15, 2007 8:46:59 AM
I have a great idea that will end this fight once and for all. Kill the World Bank. It is superfluous at best, and a disincentive for dictators to create institutions that create wealth. Not to mention the opportunity cost of the money and brains being wasted at the World Bank.
Posted by: happyjuggler0 at May 15, 2007 12:36:41 PM
Much of the discussion seems to center on whether Wolfowitz deserves the treatment he is getting. This is very much like the arguments we sometimes hear when nominees for federal positions go through a rough confirmation process. The nominee is a nice guy/gal and shouldn't have to put up with such treatment. Balderdash. They work for us. If we need to rough them up on the way to getting the job done, so be it.
Wolfowitz is no more important than anyone commenting here, and certainly has no more claim to good treatment than the poor clients of the Bank. This craze to treat those at high levels better than the rest of us, to coddle them and put their needs ahead of the needs of the organization for which they work is wildly at odds the traditions we tell are ours. Heck, just look at the more recent post on the virtue of putting job and society ahead of friends and kin. If that is good advice in general, why is it bad advice when dealing with the powerful?
It is no surprise that people in power try to subvert notions of equal treatment, but we have no reason to let them get away with it. If the cost of keeping me is greater than the benefit of doing so, my employer would dump me in the blink of an eye. The same is true with most of us. Few of us have the resources to fall back on that someone as well connected as Wolfowitz has. I see no reason to care more about Wolfowitz than about a Chrysler worker soon to be at the mercy of Cerberus or a low-tech rice farmer who faces subsidized US rice prices. Wolfowitz is well placed to take care of his fate himself.
What is the outcome, in terms of institutional goals, if Wolfowitz stays? What are the outcomes if he goes? Those are reasonable questions to ask. Is somebody out to get him? Oddly enough, there are others who have suggested that Bush wants him there because Bush doesn't like to lose, so Wolfowitz stays. I don't really care either way. My view is that we ought to be far more willing to dump highly placed individuals when their performance is brought into question, because they will have rigged the game as much as they can to stay. If it became clear that good performance with regard to institutional goals was more likely to be rewarded, while efforts to curry political favor are less likely to be rewarded, we would generally see better results.
Posted by: kharris at May 15, 2007 12:58:16 PM
What Wolfowitz is doing is indicative of the administration he came out of. Power for power's sake. He certainly is not doing it for the money. With his political connections one of these rich rich Private Equity Funds would snap him up in a minute, the compensation there dwarfing anything he can or will get at the World Bank.
Just like the old line, no one should be allowed to be President of the United States who wants to be President. The desire in and of itself is proof of lack of competence for the job. Precisely because Wolfowitz wants the job so badly, he should be terminated.
Posted by: Murphy at May 15, 2007 2:39:17 PM
Steve, all of those employees at the WB who feel that strongly about PW's past have a perfectly good way to express themselves: get another job. After all, they're the best and the brightest, aren't they? Couldn't they walk into another 6 or 7 figure job at Citibank? Or did they get their jobs the same way PW's girl got her's - by "knowing somebody"?
In any large organization, that jobs at the top are disproportionally populated not by the meritorious, but by the related.
I'd object to PW's treatment a lot less if I felt that it was not the exception to the rule, caused by antipathy about his role in US foreign policy, and that future hire and fire decisions in the WB were going to be held to a higher standard.
Posted by: bud at May 15, 2007 2:43:41 PM
Will and Constant,
Yes, of course the WB staff does not like PW and never did. He should have known that. Therefore he should have
been all the more careful about his conduct and made greater efforts to get along with these people and not give
them red meat by engaging in personally corrupt conduct. It is rather like Bill Clinton's problem. He should have
known that he had enemies out to get him, especially on any kind of immoral conduct. Thus, he goofed.
And, of course, the basic problem with Tino's first paragraph is that the charges are not bogus, and PW has
openly lied about the whole business.
I would note a further point here. Not only did he engage in all this favoritism for Riza, but he brought in
a pair of completely inexperienced hacks from the administration with him, got them overblown salaries, and
one of them, Robin Cleveland happens to have a record of corruption in steering contracts to her brother. This
is how one fights corruption? You folks really don't get it, do you?
As for Summers, let me emphasize, he did not fall because of his comments about women. He fell because he
lied to the faculty about Shleifer. This has been reported, although lost in the shuffle. Basically, Summers
and Wolfowitz have the same problem, lying to overseers and associates out of sheer arrogance. Summers was made
to leave. Wolfowitz should leave also, and for his own good he should have resigned.
Posted by: Barkley Rosser at May 15, 2007 6:01:19 PM
Wow. For a group of people who seem all-consumed with efficiencies - market and otherwise - it should be evident that Wolfowitz in his present position has proven to be inefficient. Not to mention ineffectual, a trait that seems to have served him well in his previous position. If he keeps fucking up enough, soon he'll be running an entity with some teeth. I wonder how he feels about Dubai...
Posted by: fustercluck at May 15, 2007 8:11:16 PM
"From 2000 to 2004 the bank's lending to improve public-sector governance grew 11 percent annually."
Mallaby gives a perfect example of one of the (many) critisims Easterly has leveled at the World Bank: using dollars lent (inputs) rather than amounts of curruption (outputs) as a measure of the bank's sucess.
Posted by: Josh Weinberg at May 15, 2007 11:23:34 PM
Josh Weinberg,
Well, indeed it is hard to measure reductions in corruption.
Do you think there is any evidence that Wolfowitz's initiatives
have been more successful than what was going on before him?
I am not aware of any offhand.
The point of Mallaby's argument was not that these initiatives
were necessarily successful. Indeed, he quoted some officials
as noting that such efforts, including those of Wolfowitz, may
not work at all. The point was that Wolfowitz has been painting
himself as the one and only source of such efforts, with the
attacks on him supposedly coming from people who somehow are
opposed to "fighting corruption." This is simply the worst
sort of lying humbug and baloney, as Mallaby clearly points out.
Also, for the record, Easterly had an editorial column in WaPo
quite recently very vigorously calling for Wolfowitz to resign.
Do you agree with that, or were you trying to join Tino and company
in somehow justifying saving Wolfie's hide?
Posted by: Barkley Rosser at May 16, 2007 2:27:16 AM
"Wolfowitz didnt grant the raise, the ethics board commitee did."
Booshwa. The committee agreed that some settlement should be made that involved a raise. The magnitude of the raise - several times what she could have expected under the best of circumstances - was not set by the committee, and, Wolfowitz's lying claims to the contrary, was not disclosed to the committee.
One of the things that bothers me about Wolfowitz is that much of his defense involves made up, patently false "facts" such as this one. He didn't start the anti-corruption drive at the bank, and there is a fair argument that he derailed it by subverting it to US foreign policy concerns. He did set the level of the raise, right down to specifying that she would receive uniformly high performance reviews in the future. He did not disclose the contract he dictated to the bank, but instead told those involved in it to not disclose it to seemingly essential overseers such as the bank's general counsel. It is not a legal settlement, because the bank is immune to lawsuits. The list of falsehoods disseminated by and for Wolfowitz could go on, and on, and on, all of which further define his mandacious and self-centered character.
As for why people don't leave the bank - setting aside the power of inertia, or the desire to finish up the time to a nice pension, there is the possibility that some of them actually believe in the bank's mission and feel (however wrongly) that they are doing important work. It's like asking why a law professor writing about and teaching tax policy doesn't leave academe to practice - sure, they could, in a heartbeat, but maybe they prefer the psychic income to the cash, given that they have enough cash income as it is.
I still don't get why anyone defends Wolfowitz. He is not a nice man. He is not a competent man. Last but not least, he is not a man to put any cause - whether it be his country, or an institution - ahead of his personal interest.
Posted by: JustTheFacts at May 16, 2007 5:04:51 AM
"It's like asking why a law professor writing about and teaching tax policy doesn't leave academe to practice - sure, they could, in a heartbeat, but maybe they prefer the psychic income to the cash, given that they have enough cash income as it is."
IMHO, it's like telling the law professor that he should quit, because the new dean of the law school is a corrupt criminal.
Posted by: Barry at May 16, 2007 2:23:16 PM
happyjuggler0 hits it dead on
why does this institution exist? we should praise anything that 'discredits' it
unless it seems marginally appropriate to appropriate from some to give to others for .. umm.. marginal utility
we'd be better off buying bonghits for each of our undergraduate friends in academia (they'd think more clearly)
or ... perhaps you'd care to name one successful (10 year) project of the institution
Posted by: rluser at May 20, 2007 2:13:18 AM
Posted by: 鑽石 at Apr 2, 2008 8:23:02 PM
