Stationary Bandit

New World Bank President

President Bush has chosen former US Trade Representative Robert Zoellick as the next World Bank President.  I do not know if this is a good choice or not.  Zoellick has a reputation for being pragmatic.  I am not sure pragmatism is the most important virtue for the next World Bank President.  An understanding of how to limit principal agent problems in a non-profit institution and why countries remain poor seems more important. Dani Rodrik worries that he has an old-school understanding of development- more markets and less government.  Rodrik writes that “one needs to go beyond these old-fashioned ideas that pit states against markets if one wants to make progress against global poverty.”  Quite so.  But leadership at the World Bank that stresses markets more and states less would be a refreshing change in approach if the the World Bank pushes for market-oriented reforms rather than uses the rhetoric of market reforms to support failed policies that already exist.

Discrimination in Economics?

Christopher Hayes recently argued that the economics profession has mafia-like characteristics.  Heterodox approaches receive shoddy treatment by mainstream practitioners.  They publish in relatively less prestigious journals and have positions outside of the elite schools.  In many ways, Hayes presents nothing new as some heterodox economists have made similar claims.

Recently, Scott Beaulier and I examined this claim with regards to one heterodox school of economics- the Austrian School (here is the paper).  The evidence we collected did not indicate that Austrian economists face much discrimination in publishing.  Rather, many Austrian inclined authors wrote articles on topics that did not correspond to the topics that appeared in the American Economic Review.  For example, the New Growth theory did not attract attention from Austrian oriented economists throughout the 1990s yet many articles on the topic appeared in the top journals.  Simply put: self-selection explains more the current status of Austrian economics than discrimination.

Darfur or Harare-Which is a worse crisis?

The tragedy in Darfur has received substantial attention yet a greater disaster continues in Zimbabwe.  Economic collapse, hyperinflation, increasings levels of HIV/AIDS, food shortages, and a dictatorial regime has severely harmed the lives of millions in Zimbabwe for years. Hundreds of thousands citizens of Zimbabwe have fled to other countries in the past decade.  Like the Sudan, the light at the end of the tunnel has yet to appear.  Who knows when either el-Bashir or Mugabe will no longer rule their respective countries.  Yet, I have yet to see a banner for SaveZimbabwe.org or hear of a rally for the people of Zimbabwe.  Why?

Do Blogs Undermine the Hayek Industry?

Tyler Cowen thinks so.  He writes

Many of Hayek's insights are deep and relatively philosophical; it is hard to put them into a snappy blog post.  For better or worse, it is easier for a market-oriented blogger to follow Becker, Alchian, or even Mises than Hayek.

His analysis concerns me.  I agree that Hayek does not condense easily into witty phrases.  It requires much more effort to apply Hayek's ideas to many public policies.  Hayek does not reduce to simple libertarian slogans.  What concerns me is that Tyler's implication that blogging favors "shallow" discussions of issues rather than deep discussion.  If so, how long will the blogosphere remain credible as a source of information if it supplies superficial analyses of issues?

Who will Preside over the World Bank?

The impending resignation of Paul Wolfowitz from the World Bank raises the question:  who will become the next World Bank President?  I have no idea who will become Wolfowitz’s successor (nor do I wish to speculate) but a few concerns have arisen as I have watched the current crisis that will, in all likelihood, affect the selection process.  The treatment of Wolfowitz since his arrival and the difficulties that plagued the Wolfensohn era (documented by Sebastian Mallaby) reveal the internal problems of the Bank.  So I ask: who would want the job?   Poor management has characterized the Bank for more than a decade (at least) due to its bureaucratic structure and oversized staff.  It seems unlikely that any individual can overcome the problem without significant restructuring of the organization.   Furthermore, the task the Bank has undertaken- ending extreme poverty- may be too grandiose.  No Bank President has made much progress on the stated goal.  Recently declines in poverty have largely occurred without much Bank involvement.  Based on this metric, all the Bank President’s have failed.  Given the unruly nature of the staff and near impossible institutional goal, I ask again, who would want the job?  The current incentive structure suggests a self-selection mechanism exists that does not necessarily lead to the best candidate accepting the job.  Only time will tell if the next President has the management skills and understanding of the sources of poverty to improve effectiveness of the World Bank.

Inflation in Zimbabwe

The policies of the Mugabe regime continue to devastate the standard of living in Zimbabwe. 

Zimbabwe's rate of inflation surged to 3,731.9%, driven by higher energy and food costs, and amplified by a drop in its currency, official figures show. April's inflation rate jumped up from the 2,200% recorded last month, the Central Statistical Office (CSO) said.  The announcement came after Zimbabwe's government created a commission charged with finding a way to curb the country's spiralling cost of liing.  There is high unemployment, and fuel and food shortages across the nation.

Here is the story.  Of course, this could be a public relations stunt by the West.  More likely, the problems have arisen from the government printing press working overtime.

Blogging Again

After not blogging for a few months, I have decided to resume.   Dani Rodrik's relatively new blog has motivated me to offer my analysis and thoughts about the state of economic development thinking and the plight of Africa.  He has certainly raised the level of discourse.  More to come...