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Cowen Defends Existence of World Bank

Summary:
I think America and yes DT [Donald Trump] should pick the next [World] Bank president and should pick an American.  How do you think it is going to go the next time the Bank calls for more capital from the US and UK?  Whose certification there do you think is most important?  And which country is the most nervous about the World Bank doing something geopolitically unpopular, as say the UN repeatedly has done?  All this will run most smoothly if the U.S. feels, to some extent, that the Bank is its preserve.  And of course the “we’ve really got to up China’s quota and get it more involved” days are long since past. This is from Tyler Cowen, “The World Bank Reappointment Process,” Marginal Revolution, January 9, 2019. What Tyler is getting at with his second and

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I think America and yes DT [Donald Trump] should pick the next [World] Bank president and should pick an American.  How do you think it is going to go the next time the Bank calls for more capital from the US and UK?  Whose certification there do you think is most important?  And which country is the most nervous about the World Bank doing something geopolitically unpopular, as say the UN repeatedly has done?  All this will run most smoothly if the U.S. feels, to some extent, that the Bank is its preserve.  And of course the “we’ve really got to up China’s quota and get it more involved” days are long since past.

This is from Tyler Cowen, “The World Bank Reappointment Process,” Marginal Revolution, January 9, 2019.

What Tyler is getting at with his second and third sentences is that increasing the capital of the World Bank, courtesy in part of U.S. taxpayers, will be easier to do if the head of the World Bank is an American. I agree.

But it strikes me that believers in economic freedom, which includes the freedom of people not to pay for the World Bank, should not want to increase the capital of the World Bank. Tyler Cowen seems to disagree. He doesn’t say why, but seems to accept that the World Bank is a good thing that deserves subsidies from governments. I disagree.

David Henderson
David Henderson is a British economist. He was the Head of the Economics and Statistics Department at the OECD in 1984–1992. Before that he worked as an academic economist in Britain, first at Oxford (Fellow of Lincoln College) and later at University College London (Professor of Economics, 1975–1983); as a British civil servant (first as an Economic Advisor in HM Treasury, and later as Chief Economist in the Ministry of Aviation); and as a staff member of the World Bank (1969–1975). In 1985 he gave the BBC Reith Lectures, which were published in the book Innocence and Design: The Influence of Economic Ideas on Policy (Blackwell, 1986).

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