Wolfowitz and Corruption Fetish

So today there is a huge showdown in the Bank over Wolfowitz, and it looks like he might actually be forced out. A decision will be made this week. Wolfie is protesting his innocence saying that he is subject to a “smear campaign” (which begs the question: Is it even possible to smear someone like him?) Steve Clemons has some of the gritty details (here and here), and George W Bush is, expectedly, speaking up in support of his demented crony.

I have to say, this is more than I had expected; I thought that this would be swept under the rug quickly, but all credit to the unity and determination of the Workers of the World (Bank) who, with nothing to lose but their very comfy contracts and 5-star junkets in starving countries, have made enough of a big deal about this that the Executive Board had to do something. It also helped that pretty much everyone in the development world despised Wolfowitz and couldn’t wait for a chance to lay into him.

On a more theoretical, academic and mundane note: I have always had a lot of trouble with the World Bank’s obsession with corruption and democratization, a fetish that started with Wolfensohn’s reign in 1994 and continues to grow.

The case the World Bank has incessantly tried to make since the mid-1990’s is that fighting corruption and democratizing are the keys to unlocking sustained economic growth and development. After a thorough review of the development literature, one will find that the simplistic relationship that everyone talks about between corruption and democracy and development has very flimsy support in the real world.

The theoretical, quantitative and case-study evidence on this is really missing, and relies heavily on some really shoddy statistical work that frankly makes very little sense.

My personal take from reviewing all this literature is this: corruption and democracy have very complex interactions with one another and with other factors that in turn influence growth and development. It is too complex to be able to generalize it across countries across different points in time, and it is misleading to attempt to study it in a simplistic cross-country regression. The simplistic mantras of “corruption bad” and “democracy good” are quite misleading and possibly as wrong as saying “corruption good” and “democracy bad”.

However, this does not just say that we should just forget about these things; we have to remember that these are important issues not just for their impact on development, but for their own right. It is a mark of the short-sightedness of some development economists that they only view the issue of democracy in terms of its impact on growth, ignoring its importance in its own right.

But what we should say about this is that the attempts from an international institution with as much clout as the World Bank or the IMF to crusade around the world with this message and packaging it as a necessary and sufficient precondition to development and growth has in itself possibly been harmful to the causes of development and growth.

This is at best irrelevant and promises false results that will lead to skepticism towards the virtues of democracy and anti-corruption; but at worst, could lead to political and economic implications that then complicate things for developing countries. The best example of this is how democratization and liberalization have, in many cases, lead to certain elites managing to capture power and special interests in their own hands, and weakened the government’s ability to undertake positive policies for development.

This is a very complex issue and I have not discussed it here thoroughly enough, but I will discuss this more in the future. Suffice to say for now: The World Bank should certainly tread very carefully when discussing these issues. However, they should certainly be very assertive in throwing Wolfowitz out on his ass for what are surely corrupt and despicable acts with no potential good for anyone but him and his cronies.

Wolfie About to Bite the Dust

Paul Wolfowitz, one of the most detested people in the world, the “mastermind” behing the Iraq War and the crazy fanatic hell-bent on using the World Bank to ruin the rest of the world, seems to be on his way out. Good fucking riddance.

Executive Summary of the whole affair: After ruining the Middle East, Bush decided to send Wolfie to the World Bank so he can apply his unique blend of incompetence, racism, dogma, idiocy and demagoguery to the rest of the world. He came in and branded himself as a crusader against corruption, going out of his way to piss off everyone in the world by fucking over governments that disagree with Bush under the pretense of ‘fighting corruption’. Meanwhile, he promoted his girlfriend and moved her to the State Department and got her the highest sallary in the State Department, even higher than Condi! He also subverted the rules to get this done, and hired a couple of mercenaries from his days in the US Government to go around the Bank and terrorize the fuck out of anyone who objects to anything he says. Word got out of this whole affair and now the Workers of the World (Bank) have united against their boss.

A friend of mine who works for the Bank sent me this email on the beautiful staff meeting that happened there yesterday:

I just got out of a question and answer session with the Chair of the World Bank Staff Association, in which she called on Wolfowitz to resign because “his conduct has compromised the integrity of the World Bank Group and has destroyed the staff’s trust in his leadership”…. to his face! Once the calls of “Resign! Resign!” from the crowd of staffers subsided, Wolfowitz provided a meek statement that he cannot talk about the details currently under review by the Executive Directors, but that he had tried to excuse himself from the matter of his girflriend’s promotion at the outset, yet now “regrets not have excused himself completely”.

One of the best perks about the WB job for Wolfie was that he has had a very convenient excuse to not answer anyone about what happened with Iraq. Since getting this job he has refused entirely to answer any questions about Iraq, citing a conflict of interest. It is good to know that that will soon be over. Though Steve Clemons has a very interesting piece of gossip about Wolfie going around DC these days with a merry kit of fabricated nonsense talking to “influential journalists” and trying to convince them that he was right about Iraq and that Saddam was indeed best buddies with Osama.

In other news, Bush is looking for a new ‘War Czar’, in what could arguable be called the worst possible job in the whole world. Who better to fuck up Bush’s last days in office than a man significatly responsible for starting his wars. Let’s hope Bush assigns it to him! Anyone up for starting a campaign on this?

Further Reading:
The FT calls for his head
Wonkette has been following this affair minute-by-minute, with relish.