Comments on: Ideas which look sensible but aren’t, an occasional series

By: Crooked Timber » » Wolfowitz for the World Bank!

Crooked Timber » » Wolfowitz for the World Bank! — Tue, 22 Mar 2005 19:48:56 +0000

[...] The great danger at the World Bank at the moment is, as I’ve posted before, “Rights Based Lending“. Wolfowitz is likely to [...]

By: dsquared

dsquared — Wed, 19 May 2004 16:46:46 +0000

So you’re not nearly as against the concept as your initial posting suggests, merely against this form of it as being unnecessarily crude. Which makes for a very different starting place in which you can’t conjure up all the people that a rights-based conditionality is going to kill as opposed to all the people that the lack of one is going to save. You’re really arguing about the details of a proposed shift in policy, not the general substance of it. Yeh, maybe, but it’s an important detail. All of the examples I gave were real ones and ones which a “maximalist” concept of rights would certainly throw out. The impetus for Wolfensohn’s comments was the Shirin Ebadi speech, and would certainly put Iran (along with Vietnam and Cuba, none of which are small countries) in the category of definitely totalitarian and definitely developmental. Also, it’s much easier to define a good governance record than an acceptable rights record, and thus rights-based lending is intrinsically much more political. That’s a huge potential disadvantage; as I imply in the original post, policisation of the aid process has a really bad track record.

By: Timothy Burke

Timothy Burke — Wed, 19 May 2004 16:04:21 +0000

Ok, fair enough—but I think your last response suggests just why I don’t think the categorical language of your initial posting is justified, or offers sufficient reason to not have a rights-based approach to developmental aid. Here instead what you’re saying is that good governance conditionalities may already implicitly contain some “rights-based” components, or favors those benefits in some manner. So you’re not nearly as against the concept as your initial posting suggests, merely against this form of it as being unnecessarily crude. Which makes for a very different starting place in which you can’t conjure up all the people that a rights-based conditionality is going to kill as opposed to all the people that the lack of one is going to save. You’re really arguing about the details of a proposed shift in policy, not the general substance of it. I would also suggest that the class of “totalitarian regimes which are developmental” is a perishingly small one, and generally requires modifications at either end of that category (e.g., not-so-totalitarian or not-so-developmental) in order to find any state that can meaningfully occupy the category.

By: dsquared

dsquared — Wed, 19 May 2004 15:58:02 +0000

Your basic criticism is that rights-based lending is bad if it leads to the cessation of worthy projects with save lives. I have yet to see from you how that distinguishes a rights-based conditionality (which, as others have noted, need not be applied with a sledgehammer, as you assume) from other conditionalities. I am in favour of “cessation of worthy projects which save lives” in all and only all those cases where it is carried out in the context of a realistic plan aimed at saving more lives elsewhere or at another time. I consider governance-based lending to be a successful version of such a plan and rights-based lending not to be (for example, rights-based lending would AFAICS more or less cut Vietnam off from the flow of lending forever or until there was a revolution, despite a very good track record of governance and effectiveness of WB programs there). Your argument also assumes no relation between a government which is rights-based and good developmental outcomes No, it assumes that there isn’t enough of a relationship over and above the relationship already captured by existing governance-related lending to justify the costs of implementing this highly uncertain approach. Note that a complete cessation of aid to the DRK has not resulted in a change of government for rather longer than teh “short” period you hoped for. I also think you’d agree that it is a fairly well-established empirical result in political science that when a tyranny is put under the stress of an economic collapse, liberal democracy is not usually the first result. So my view is that governance-based lending captures all or nearly all the benefits which rights-based lending promises, does not arbitrarily exclude totalitarian regimes which are also developmental, and is more difficult to use as a weapon of foreign policy.

By: Timothy Burke

Timothy Burke — Wed, 19 May 2004 15:06:54 +0000

What I’m suggesting, Daniel, is that the slippery slope beckons you because your criticism of rights-based lending applies grease to the slide and jumps with abandon at the top. Your basic criticism is that rights-based lending is bad if it leads to the cessation of worthy projects with save lives. I have yet to see from you how that distinguishes a rights-based conditionality (which, as others have noted, need not be applied with a sledgehammer, as you assume) from other conditionalities. Your argument also assumes no relation between a government which is rights-based and good developmental outcomes, and therefore you don’t have to deal with the possibility that a short cessation of aid might compel a shift to a mode of governance which would save lives overall, or at least you don’t think this is a possibility you need consider. Again, I ask: if you don’t see a slippery slope here, what is the basis of the distinction between this conditionality and others? I agree that the WB reformed itself considerably during the 1990s, but that’s precisely one of the sources of my confusion about your argument here, because a substantial part of that reform became a strong insistence on good governance—not merely project-based, but in general—in recipient nations. Whether states have generally transparent procedures, accountable bureaucracies, and so on already determines at least some of the funding decisions the WB makes. That being said, you are far too certain that WB money—or any expenditure on development—results in saved lives, good outcomes and so on. This is not a charge about corruption a la Easterly—that’s the easy part of it—as much as it is a general skepticism about the degree to which development aid on the ground has a reasonable relationship to tangible outcomes. Timothy Mitchell’s Rule of Experts, though it’s a book about which I have many misgivings, is a pretty good sketching of why it is so hard to make clear claims about the relationship between most development funding and concretized outcomes like “saving lives”.

By: Abiola Lapite

Abiola Lapite — Wed, 19 May 2004 14:15:10 +0000

——-BEGIN PGP SIGNED MESSAGE——- Hash: SHA1 Whoever you are, you’re an imbecile of the lowest sort – you’re so stupid you even repeated your mistake after I’d so helpfully pointed it out to you – and you can be sure I’ll be complaining to the administrators of this site about you. There’s something about the anonymity of the internet that brings out the worst in cowardly dimwits like yourself who have nothing worthwhile to add to the conversation …——-BEGIN PGP SIGNATURE——- Version: GnuPG v1.2.4 (MingW32) – GPGshell v3.10 Comment: My Public Key is at the following URL: Comment: http://www.alapite.net/pgp/AbiolaLapite.txt iD8DBQFAq13GOgWD1ZKzuwkRAnAvAJ9HpTXntrA9RqCfV9jN9IuLGveNugCeP2pt KamTHkHZH9e5+HT1RUzHLVA= =JRyd——-END PGP SIGNATURE——-

By: abiola lapite

abiola lapite — Wed, 19 May 2004 11:31:04 +0000

——-BEGIN PGP SIGNED MESSAGE——- Hash: SHA1 Does this mean you plan to keep it up forever? Superb! ——-BEGIN PGP SIGNATURE——- Version: GnuPG v1.2.4 (MingW32) – GPGshell v3.10 Comment: My Public Key is at the following URL: Comment: http://www.alapite.net/pgp/AbiolaLapite.txt iD8DBQFAqzTNOgWD1ZKzuwkRAhkxAJ4hoesGQ8nMG0+GGGZlx8oDItsXHACfYlA/ hDra2+WgpPSq9hUxxwex3jw= =Qmw6 ——-END PGP SIGNATURE——-

By: Abiola Lapite

Abiola Lapite — Wed, 19 May 2004 11:20:22 +0000

——-BEGIN PGP SIGNED MESSAGE——- Hash: SHA1 I just wanted to point out, in case anyone cares, that the comment attributed to me at May 19, 2004 02:03 AM above was a fraud, and a rather obvious one at that: the fact that a different message hashed to the same value (ending with BYHdOQJtuKs2nGgkguynNRM= =uc4Q) should have been enough to give the game away to the observant. It’s precisely because of idiots like the one who tried to impersonate me above that I think GPG-signing of comments so important.——-BEGIN PGP SIGNATURE——- Version: GnuPG v1.2.4 (MingW32) – GPGshell v3.10 Comment: My Public Key is at the following URL: Comment: http://www.alapite.net/pgp/AbiolaLapite.txt iD8DBQFAqzTNOgWD1ZKzuwkRAhkxAJ4hoesGQ8nMG0+GGGZlx8oDItsXHACfYlA/ hDra2+WgpPSq9hUxxwex3jw= =Qmw6——-END PGP SIGNATURE——-

By: dsquared

dsquared — Wed, 19 May 2004 07:36:00 +0000

I’d also add that you haven’t addressed at all my point that your wild claims of corruption and redirection of funds from WB projects are a) heavily reliant on the pipeline and hydroelectric industries and b) heavily reliant on things that happened in the 1980s, in a more or less completely different World Bank management structure. Since I’ve also had this argument with Abiola, I’d hazard a guess that you are similarly taking these examples from Easterly’s book?

By: dsquared

dsquared — Wed, 19 May 2004 07:30:40 +0000

The critique offered here is sufficiently sweeping that NO conditionality could possibly be acceptable. How can Dsquared justify a conditionality (and there’s a zillion of them, as p o’neill observes) that might prevent the expenditure of money which could potentially save at least a few lives, if we grant (and I don’t) his argument that these projects save lives? Timothy, I can’t understand why you’re so keen on forcing these words into my mouth that you’re prepared to make ridiculous statements like your claim that World Bank projects don’t save lives. I am in no way committed to your slippery slope fallacy. For example, Glaxo Wellcome’s practice of selling pharmaceuticals for money, almost certainly results in avoidable deaths among people who can’t afford drugs. However, I am in favour of the practice of selling drugs for money because it appears to be the most efficient way to organise the system as a whole. If, on the other hand, Glaxo were to decide that it would only sell drugs to people who endorsed the Glaxo Wellcome mission statement, fine though that document is (it even contains “respect for diversity”), then I would say that this was an unwarranted use of power which was not related to the purpose for which Glaxo Wellcome was meant to serve. I am able to help myself to a generalised version of this argument, which means I am not committed to your slippery slope unless I suddenly go off my rocker and start believing weird things about the effectiveness of World Bank projects. Abiola: that huge great ugly PGP key doesn’t need to be repeated more than once per thread, thanks.

By: vivian

vivian — Wed, 19 May 2004 03:37:54 +0000

This idea has come up in the academic literature in the last couple of years. I haven’t read the Wolfensohn piece, but there are two twists that make the idea a lot more respectable. Pogge’s idea is that the world not hold new democracies liable for loans given to evil/thieving/repressive prior governments. This will (1) free up money the new democracy needs to stabilize, (2) shame existing democracies into better behavior, into forgiving past loans that should never have been made, into treating despots with less respect and legitimacy. It will also (3) reduce the incentive to stage a coup against a fledgling democracy, knowing that the rest of the world will not grant one powers to borrow money or sell off resources or assets. Kremer and Jayachandran suggest that despots are poor risks for loans, and so they propose a country be certified as a democracy and thius likely to both use more of the money for the stated purpose, and to repay the loan in the future. One might reply to the Zimbabwe example from above that of the many ways the developed/democratic world has to help feed the people in Zimbabwe, loans to Mugabe are not the most direct, the most moral or necessarily the most likely to succeed. We could just give the food aid (or subsidize neighboring states to give the food aid, w/o expecting repayment). Same for other urgent programs like vaccination ~~no reason to treat these like potential profit~~making ventures or even to expect them to break even. The choice between WB loans for necessities and no provision at all is a false dichotomy. (realistic description of likely policy proposals from current government, but not a full spectrum of political possibility)

By: Matt Weiner

Matt Weiner — Wed, 19 May 2004 02:53:43 +0000

megapo—Let me open by saying that I have no experience of life in a developing country and in general have no idea what I’m talking about. (I mean it—I’m a rank amateur.) What I was thinking of was something under which debt lent by private banks (and maybe public ones?) incurred by a particularly rank regime would not be binding on its successor. This wouldn’t mean that developing countries could default on anything they wanted to, but it would mean that the next government of N. Korea wouldn’t be on the hook for the debts that Kim Jong Il is running up (if anyone is lending money to him—substitute an example that makes sense if you like). This sort of default wouldn’t destroy the new regime’s ability to borrow unless all the lenders clubbed together to punish them—it wouldn’t imperil payback of future loans. (Given what Abiola says, there’s no reason to think that the lenders would club together.) The Weiner Plan would have a blacklist of odious regimes agreed upon by some reputable international institution (yeah, I know, I’m not saying there is one) so banks would know what they were getting into; and I suppose old debts would be grandfathered for the same reason. Maybe targeted development loans would be exempt. And yeah, I don’t have that much sympathy for international lending institutions—at least not for ones that fund the looting of the world’s worst dictators and take their interest out of the hide of the people after the dictators have fled. At least, I think it’d be OK to give them fair warning that that business plan won’t work any more. And—there are going to be billions of holes in the theory I’ve outlined. I’m just mulling it over as a matter of abstract principle, sort of.

By: abiola lapite

abiola lapite — Wed, 19 May 2004 02:03:06 +0000

——-BEGIN PGP SIGNED MESSAGE——- Hash: SHA1 Megapotamus: Hypothetically, if a nation were to default on its debts, the result would be a severe negative impact on its credit rating, and increased difficulty in borrowing further down the track. The reality is that defaulting has never had a particularly long-lasting effect on the ability of a nation to borrow money. This is why it looks like a good way out of a bad spot, as long as you have no sympathy for major international moneylenders. ——-BEGIN PGP SIGNATURE——- Version: GnuPG v1.2.4 (MingW32) – GPGshell v3.10 Comment: My Public Key is at the following URL: iD8DBQFAqpnHOgWD1ZKzuwkRAh5HAJ9KkuqE/3USQ2AnnvQ+ae6n41WHggCeNEEn BYHdOQJtuKs2nGgkguynNRM= =uc4Q ——-END PGP SIGNATURE——-

By: Giles

Giles — Wed, 19 May 2004 01:56:26 +0000

There is also the question of whether or not it is more efficient/effective to lend to regimes with the same values as you – both from a commitment perspective and an educational one. So although there are moral problems about this approach, economically it may make sense.

By: David Sucher

David Sucher — Wed, 19 May 2004 00:57:56 +0000

A bit too ad hominem to be convincing.