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Tuesday, March 15

Finger of Shame

The author of The Glittering Eye website wrote Pundita to inform her that he'd added her thoughts to his roundup of blogosphere opinions about Jeffery Sachs's ideas for ending the worst poverty. The roundup is interesting because it shows quite a range of thoughtful opinion and provides some good source material for those wishing to go more deeply into the subject.

The Glittering Eye author also published praise for Pundita's blog, which will greatly please the team when I read it to them at our next policy meeting. Here we must take a moment to correct the author's guess that Pundita is an American female residing in the United Kingdom. Pundita is an American female who resides so close to Ground Zero that our commuting route was shut down by the 9/11 bombing of the Pentagon. We live a short Metro ride from downtown Washington, DC and the Pentagon. So as with all Washingtonians, Pundita is very heavily invested in the successful outcome of the war on terror.

I also note that the author indicated he had just begun to plumb the essays on Pundita's blogspot and thus could only give his readers his initial impression. He noted that Pundita's focus is "foreign affairs with a special concentration on international development."

Pundita's essays on development are in the manner of playing Dutch Aunt. The first time I heard about Barnett's Core & Non-integrating Gap thesis I blurted, "The Core is everyone who knows how the World Bank works. That leaves Americans and Arctic penguins to fill the Non-integrating Gap."

Amazon chieftains wearing nothing but feathers know more about the workings of the World Bank and the IMF than Americans. That's why I have written about development policy--not because I have a particular interest in the topic but because the system of development banks and what they've created is a piece of the puzzle that more Americans need. That's in order to gain a clear picture of today's world outside US shores and how US foreign policy intersects with it. The World Bank is not only a bank, it's also an instrument of US policy. But while nobody in America was paying close attention, some bright souls outside our shores said, "Wait a minute. If they can do it, we can do it."

So the situation today is akin to a favorite plot vehicle of horror movies. She wakes in the dark and nudges hubby: Dear, there's something in the room with us. Nah, it's just the house settling. Shhhsh; did you hear a floorboard creak? All right we can settle this by turning on a light.

African Development Bank
Asian Development Bank
Brazilian Development Bank
Caribbean Development Bank
Central American Bank for Economic Integration
Council of Europe Development Bank
Development Bank of Singapore
Economic Development Corp. of Goa
Eastern & South African Development Bank
European Bank for Reconstruction & Development
Hungarian Development Bank
Inter-American Development Bank
Islamic Development Bank
Korea Development Bank
National Development Bank of Sri Lanka
Nordic Development Bank
North American Development Bank
Russian Regional Development Bank
World Bank Group (IBRD, IDA & related)
I've gotten tired of adding to this list

For added scare effect I didn't separate the regional development banks from the multilaterals--the ones that lend to entire regions around the globe. And the mix helps illustrate the rise of regionalism and its challenge to the policies of the multilateral institutions.

So when critics talk about reforming the World Bank, they're treating the Bank as if it operates in a vacuum. And when they talk about reforming the International Monetary Fund, what about the Arab Monetary Fund? And what about Citibank and other commercial banks that follow in the wake of the development banks like sharks follow the wake of an ocean liner?

It's not only the development banks that lend to the poorest governments. If there's even a hint that a poor country can be mined for a valuable natural resource, the commercial banks throw loan money at the government. That's after they see that a MDB (multilateral development bank) is willing to risk writing loans to whatever dictator or junta controls the resource.

Regionalism has meant that the World Bank is not as effective a US policy instrument as it used to be. Governments have gotten good at playing one development bank against another to squeeze out more loans. And they've set up regional banks that resist multilateral policies.

Meanwhile, the development bank system set in motion conditions that at best treat only the symptoms of the worst poverty in the LDCs (less developed countries) and at worst, created horrors that almost defy description.

The tragic irony is that the horrors during more recent decades arose from well-thought projects. It's just that the planners overlooked a few factors that only emerged on their radar after the disaster struck.

Truly, if you want to play God, you need to consider an awful lot of factors when it comes to project planning and execution. That's what the Bank economist meant when he told me the Bank is proof that you can't fix anything in this world without breaking something, somewhere down the line. So you have to be really, really smart about how much breakage you'll allow and how to manage it.

It's possible that Jeffrey Sachs has the idea of circumventing the mechanism of development bank loans or least greatly supplementing them with outright aid. Without having read his book (or even the Time excerpt) I'm guessing he's envisioning a kind of global Manhattan Project to eradicate the worst poverty. But then the problem becomes, who runs the project?

This problem arose during US relief to the tsunami victims. The Indian government told the US, "Thanks but no thanks" because they saw the offer as an attempt by the US to gain more influence in India and make bereft Indians into poster children for American largesse.

Then an Indian Yogini who lives in a literal backwater peeled off 20 million dollars to throw into the relief pot for Indian victims. What she pulled out of her pocket is peanuts in India. There are temples in India that take in one million dollars a day. It's nothing for many Indians to blow a million bucks on a wedding. Stop and think how much money that translates to in rupees, and how far a rupee goes in India.

As for China--have you ever seen Shanghai? That's Bling Bling City. Last season an Amazing Race team had to beg on the streets in Shanghai as part of a game penalty. They made so much money so fast, one team member said she was returning to Shanghai to beg full time after the show ended. It's nothing for large numbers of Chinese to walk into car dealerships and plunk down the full price of an expensive imported car.

As for poor Africa--there's so much money sloshing around Africa you don't even want to think about it. So if you really want to know how to help the poorest of the world, Pundita will tell. The way is to stop making an industry out of helping the poorest. The way is to treat people as if they're people not much different from you.

What do you do, if you see someone in your neighborhood not lifting a finger to help with a much-needed community project? You point the finger of shame, isn't it so? You ask them, "What's wrong with you? Why don't you help?" And you don't take excuses.

As soon as poor Indian villagers hook up with talk radio, they start pointing the finger of shame right and left at greedy, corrupt officials in their village. That's how they get projects done--and without the money for the projects being ripped off.

Even 10 years ago, it was not possible to apply this time-honored method toward getting people in LDCs to show more heart toward each other. Today, with the Internet, satellite TV and talk radio, it's easy to point the finger of shame.

That's what Jeffrey Sachs is trying to do: point the finger of shame at America and the West about the horrible plight of Africa's poorest. But....what's wrong with the Africans? Do they lack a gene that renders the richest among them incapable of turning out their pockets to help their own poorest? Only when a World Bank official is around.

Now let's back up and take a closer look at the Amazing Race team begging in Bling Bling City. They were begging with a cameraman in tow. So of course Chinese lined up to be filmed giving money to begging Americans.

Human nature. Amazing thing about it is that it's the same for all. Time to stop treating peoples in the poorest countries as if they're a different species. That doesn't mean halting all development projects and aid. It means shifting much more responsibility for development and aid back to where the responsibility belongs. It also means ceasing to use aid as a foreign policy instrument.

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