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Out of the cataclysmic Indian Ocean Tsunami and an effort to put millions of lives back together will come, hopefully, a new look at how to encourage economic development. With the exception of Phuket [generating a third of Thailand’s tourism], the areas hardest hit were among the poorest in Asia and Africa. One of those grim anomalies of a globalized world economy is that reconstruction, not physical destruction and loss of life, is the the tsunami’s chief economic import. These areas and their populations alas! counted for little in the world economy – or towards their own improvement.
That’s why among the few items of good news is the announcement James D. Wolfensohn will not get another term as president of the World Bank. More important, is the rumor the Bush Administration will couple its nomination of a new president with turning its attention to this huge international lending agency. The White House’s intent, reportedly, is to return the Bank to fundamentals. After its initial incarnation as a reconstruction device for post-WWII industrial Europe and Japan, its goal was expanding infrastructure in backward economies. Once upon a time identified, with its Siamese twin, the International Monetary Fund, as immune to the intellectual corruption of hypocritical UN bureaucrats [who have just given us the world’s biggest financial scandal in Iraq oil for food], under Wolfensohn’s 10-year-arrogant rule, the Bank had become completely a creature of the chattering classes.
Milord Maynard Keynes, the rabbi of the Bretton Woods Accords which institutionalized the post-World War II world economy, is said to have said: “The clerks have got it wrong again; the Bank should be called a fund and the Fund should be called a bank”. The concept got lost very quickly.
The wily Gene Black [president, 1949-62], despite his “just an ol’ Kentucky hillbilly” act as shrewd an operator as ever scammed Wall St., saw the Bank’s role as building economic triggers, infrastructure projects too expensive and too long of maturation to be appetizing for private sector investors. Snap those triggers, he and others argued, the latent entrepreneurial energies existing in all societies would explode. But even Black arbitrarily set up the concept of a profit for a “bank”, ironically abandoning its original 100% eleemosynary character.
With the penetration of primitive Marxism throughout the backward societies – led by such pseudo-intellectuals as India’s Jawaharlal Nehru and Ghanna’s Kwame Nkhruman, learned during their sojourns in fashionable Bloomsbury or Georgetown, hard-nosed charity for fundamentals increasingly was seen as not only unfashionable but “neocolonial”. Increasingly with the growth of so-called “non-government organizations” [NGOs], often responsible to no one except their intellectually faddish foundation grant-givers, the Bank came under attack for not doing “more”. “More” meant solving all societal problems – from wiping out diseases to “empowering” women.
Robert S. McNamara [president, 1968-81], after his ill-fated U.S. Defense Department tour, was the apotheosis of the Bank’s effort to become the source of all good for the “underdeveloped” world. He initiated a huge bureaucratization. No worthy goal was to be beyond the Bank’s reach. For years he refused to visit Wall St to court investors because it would damage the Bank’s image in the eyes of recipients, an index to his unrealism. With his adoration of technocracy, he loaded the Bank with young, eager, idealistic – and inexperienced PhDs.
More than half a century after theories of economic development for backward societies became fashionable, we know very little more than we did at its beginning. The reason is obvious: economic development is in the minds [if not the souls] of men, not in statistics or planners’ logic. Yes, we know some cultures are more nurturing toward development. But theories of “the Protestant ethic” have long since been abandoned. “The [slow] Hindu rate of development” gave way to a mini-boom after the Soviet implosion returned the Indians to their entrepreneurial origins. Once sacrosanct Confucian barriers didn’t hold back the South Koreans.
On the other hand, neither British “reserved” places for Malays in colonial schools nor Mohammed Mahathir’s post-independence Malaysia “crony capitalism” has altered very different development patterns for Malay and Chinese ethnics living side by side. An American strategic military highway into the northeast [and corruption among police and military] turned into a vehicle for making Thailand a major grain [corn] exporter. But a U.S. AID road and port at Sihanoukville [the logistics support for the Tet Offensive, incidentally] hasn’t reduced Cambodia’s rice exports’ dependence on Chinese middlemen in Vietnam. Research which set off “the green revolution” in Taiwan and subsequently Asia and Africa, never took root in Mexico or the Philippines where it was housed.
Like most history, there is no divining economic development. The current rapture over raising funds for tsunami relief will fade. But will a Bush Administration effort to get back to basics at the World Bank?
Sol W. Sanders, (solsanders@comcast.net),
is an Asian specialist with more than 25 years in the region, and a former correspondent
for Business Week, U.S. News & World Report and United Press International.
He writes weekly for World Tribune.com.