I am not opposed to the idea of having business leaders lead the World Bank. In fact, I am impressed the most with the achievements of a former World Bank president, Robert McNamara, who was a Detroit-based auto executive and head of the Pentagon before he came to the World Bank. Also successful in his tenure was James Wolfensohn, who led several businesses (including automobile) and commercial banks before heading the World Bank. So why am I not enthused about Ms. Nooyi’s hitherto undeclared candidacy?
My reservations about Ms. Nooyi stem from how she has promoted “fizzy drinks and snacks” to those who were depressed and grieve stricken by America’s wars. In January 2003, Ms. Nooyi spoke at Davos about the resilience of the Pepsi brand and the ability of its products to be recession proof. Dan Roberts quoted Ms. Nooyi in the Financial Times: “This is the first time I feel great working for an old-line business making fizzy drinks and snacks … The more people sit in front of their TV [worrying about war], the more they eat comfort foods."
In my day job as a professor of management I would view her statement about increasing shareholders’ equity as virtuous. After all, businesses exist to make profit. However, when I moonlight as a blogger, I can’t ignore the moral conundrum. What to think of a person or a business who see no harm in profiting from others’ grief. Sipping fizzy drinks and munching on calorie-rich snacks will not bring people out of depression. Such products, however, are more likely to exacerbate obesity-related illnesses that have become prevalent amongst low-income households in the United States. I, for one, cannot take comfort in pushing ‘comfort foods’ to the vulnerable.
And while Ms. Nooyi’s candidacy is yet undeclared, Jaffrey Sachs, a professor of development economics at Columbia University and a renowned author, has been actively campaigning for the gig at the World Bank. Professor Sachs argues that previous presidents of the World Bank were not specialists in development and hence, it’s time to consider someone with expertise in development studies for the job. He has lined up support from several African heads of states for his candidacy.
Professor Sachs’ credentials are impeccable. He became a tenured professor of economics at Harvard University at the age of 29. He has led the United Nation’s Millennium Project in the past. He has authored several well-regarded books on development and poverty. He has advised governments on how to mitigate poverty.
His achievements though are not without controversy. His economic shock therapies for struggling economies were not always therapeutic. His forecasts about the success of interventions often fell short. His Millennium villages have been rated as a “failure” by many. The Economist recently pointed out that Mr. Sachs had boasted of launching several thousand Millennium villages by 2009 and beyond. In fact, only 80 Millennium villages are operational today.
William Easterly, a professor of development economics at the New York University and a former World Bank economist who was fired by the Bank for criticising its policies, is suspicious of interventions proposed by the likes of Mr. Sachs. In a satirical piece in Foreign Policy, Professor Easterly explains how he would not lead the World Bank. “My accomplishments speak for themselves, having successfully offended every official or interest group in any way connected to the World Bank, even the head of maintenance,” writes Professor Easterly as he takes a shot at Professor Sachs who once complained of “idiots” at the World Bank.
Professor Easterly’s book The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good argues that “we in the West need to face our own history of ineptitude and draw the proper conclusions, especially at a time when the question of our ability to transplant Western institutions has become one of the most pressing issues we face.” He argues that the aid money often ends up supporting corrupt dictators in the developing countries and at the same time make the governments in aid recipient countries more accountable to donors than to the masses.
While being critical of the World Bank, I also see great value in what the Bank has accomplished over the years. I see the World Bank as the world’s leading think tank on development economics. Hundreds of economists, engineers, and other experts at the World Bank produce thousands of reports, academic and working papers, and books every year. The research produced at the World Bank competes in quality with what is being produced by leading research centres on development economics. The Bank has no competition in research volume as it stands far ahead of the rest.
It would be naïve on my part to expect the World Bank to be able to mitigate poverty across the globe. Mitigating poverty is a formidable challenge that cannot be accomplished by a single institution. The World Bank can, and to a large extent already has, become a clearing house of information and data so that policymakers, NGOs, and others concerned with improving the lot of the very poor across the globe can adopt evidence-based planning using the resources and intelligence available from the World Bank. At the same time, the Bank may continue funding necessary infrastructure in developing economies in a more transparent fashion. Such projects help the Bank to monitor and document their impacts so that others may learn from the Banks’ experience.
The views expressed by this blogger and in the following reader comments do not necessarily reflect the views and policies of the Dawn Media Group.