- The Washington Times - Wednesday, September 27, 2000

The World Bank's new report on global poverty is chock full of precisely the kind of wrongheaded economic thinking that the Bank has become so (in)famous for. Congressional Republicans should seize upon this most recent study on "the extraordinarily uneven" gains from global capitalism as evidence the Bank is hopelessly left-leaning and infested with politically correct scholars who haven't the slightest clue about how to help nations create wealth and prosperity. The Bank is a deterrent to economic progress and the U.S. does a great disservice to the world's poor by continuing to fund it.
What is creating all the fuss over this report is its boneheaded conclusion that global capitalism is failing to pull the poor out of poverty. This is a strange conclusion indeed, given that the trend away from command and control economies and toward free markets is lifting living standards almost everywhere around the world (outside of Africa). How could the Bank disregard all evidence of material progress and conclude that world poverty is a bigger problem today than 10 to 20 years ago? Because it uses a new elastic definition of "poverty." According to the gobbledy-gook in the report, poverty is not just a lack of money, but "powerlessness, voicelessness, vulnerability and fear." Heck, by this definition we could all be in poverty.
The report's conclusions from the faulty findings are even more off target. The Bank's chief economist says "global capitalism is failing the world's poor." Therefore, what is needed is a bigger government sector in health care, greater political rights for women and even affirmative action for the poor and minorities. The key to conquering poverty says the report is to give more political power to the poor. No, the author wasn't Che Guevera, but there are so many sophisms in this report that it sure sounds like him bellowing from the grave.
Some of the report's conclusions are simply factually inaccurate. For example, the Bank says the world's poor are getting poorer and that they are more vulnerable to disease. Dead wrong on both counts. In fact, worldwide per capita living standards have more than doubled since 1960. The world's two most populated nations, China and India, have recorded stunning progress in living standards over the past quarter-century. How? By privatizing state owned enterprises, moving toward free market policies and establishing private property rights in agriculture, by cutting the government sector, and by chopping confiscatory tax rates.
The past 30 years has witnessed the greatest era of global prosperity in world history, and the Bank completely buries the lead, by emphasizing "income gaps" rather than "income gains." Globalization has been a big component of the success story. International trade is bringing new and higher-paying jobs to poorer nations where historically jobs at livable wages outside of agriculture have been scarce to nonexistent.
As for health care, the progress here has been even more thunderous. The infant mortality rates in developing countries have been cut by more than half, just since 1970 in most non-African third world nations. Life expectancies have soared even in the poorest countries like Bangladesh and India. This is mostly due to incredible gains in nutrition, sanitation and basic health care. The world's inhabitants are less vulnerable to disease today than ever before in human history.
Just about the only place on Earth where economic and health progress has not occurred has been Africa. But the failing African nations tend to be the least connected to the forces of globalization. Global capitalism is not the cause of the horrible epidemic of death and economic backsliding in Africa. Global capitalism appears to be these nations only possible salvation.
The World Bank hasn't a clue to as to what causes countries to get rich. It's not really very complicated. A recent Heritage Foundation report shows that nations that have the most economic freedom have the most economic progress. Nations that are the most economically free have per capita incomes that are roughly 10 times higher than those that are not free. Phil Harvey of DKT International and I recently used the Heritage index on economic freedom and discovered that nations that have the most open and free economies have life expectancies for their citizens that are 20 years longer than for residents of the most unfree nations. This may be hard for the World Bank bureaucrats to comprehend, but economic freedom (i.e. capitalism) really is the panacea to better health and greater wealth.
After reading through this most recent report, it is hard not to sympathize with those leftwing protesters who rallied in front of the World Bank and IMF buildings last Spring in D.C. They were right: These institutions are dangerous. There's no evidence the billions of dollars of development aid over the past couple of decades has done much good, and the "free" economic advice it offers is even worse.
One sure way to advance world economic prosperity is to stop United States government funding of the World Bank.



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