If knowledge suffices then wisdom is superfluos

The least I seek here is to try to transmit wisdom, since I am too well aware of how correct Hermann Hesse was when in Siddhartha he wrote 'Wisdom is not communicable. The wisdom which a wise man tries to communicate always sounds foolish...Knowledge can be conveyed, but not wisdom."

And much less do I seek to transmit something as a wise man, since I recognize well the impossibility of being one; something clearly summarized by Socrates arguing that the only possible human wisdom is to know oneself not wise, or only possessing wisdom absolutely devoid of value.

But both you and I, perhaps not in our minds, but definitely in our hearts, nonetheless know, or intuit, or want to believe, there is someone who is wiser than other. Where? We do not know, surely not among the besserwisser. Where then? Assuming it has to do with God is a good start.

I say this because in a world with so much information and so much knowledge, time after time we face the dilemma of if knowledge is enough, then wisdom is superfluous and worthless; and I fear that those words contain the danger that we will get bogged down forever in a knowledge dictatorship.

With no doubt our society is being increasingly cornered by producers and worshipers of information and knowledge, who do not leave space enough for questioners to put their information and knowledge in a more correct perspective.

The above occurs in all fields. For example, in the financial area that is the only possible explanation for why our financial regulators so ingenuously assigned so much power of decision over the financial flows to some few and humanly fallible credit rating agencies.

What a pity that nobody read to regulators from the Apology of Plato, where speaking as Socrates says. "Artisans have real knowledge of their arts, but take that to mean that they are most wise with respect to the most important matters”. As I see it this hubris filled petulance spoils all their knowledge. 

And how do we rid ourselves of that knowledge dictatorship without having, like some of our primitives, resort to that remedy worse than the disease that is the cult of dis-information and ignorance? 

That’s not easy, but at least I think we have a better chance of doing so if we can prevent the configuration of incestuous technocratic majorities in our decision-making bodies. Multidisciplinary teams, with great variety of experience and lots of humility, are the ones that should configure our boards and ministries.

I introduce the factor of humility, because one of the main reasons the world is going through current financial turbulence, is because many expert professionals simply did not know, or did not dare to recognize, as Socrates did, that they did not understand anything of what they were approving.

Friends, let us remember that not understanding what happens, not necessarily make us less aware of what is happening.

Translated from “Si el conocimiento basta la sabiduría sobra” published in El Universal

Do the financial risks add up to a constant number?

I am no physicist and one my biggest frustrations is how little I really get to understand of what the greatest thinker that has coincided with my life span, Albert Einstein, explains. Therefore I might be completely off the wall when I refer to having heard something like that the mass of the university, though it can take many shapes, is by the end of the day always a constant number.

Nonetheless these line of thoughts have lately crossed my more financially oriented mind when exposed to facts that seems to suggest that no matter what we do with the risks, no matter how we hedge them, no matter where we hide them, at the end of the day their amount could remain a constant. If this proves correct then it must have great implications for how we design or perhaps even abandon our efforts to design our regulatory systems. At least it would not be so easy for our current bank regulators to go into their total immersion of risk adverseness, expecting to be applauded, if we knew that all they were doing was pushing the risks around.

We must allow our banks to be banks again

Our commercial banks besides being able to repay our deposits are supposed to help generate the economic growth that creates decent jobs and to distribute the opportunities in the society to those most able…otherwise a mattress would suffice.

Bank regulators, through the Basel Accord, 1988, and all the ensuing regulations, created a methodology for calculating the minimum capital requirements of the banks that was exclusively based on the perceived risk of default in their lending operations. And they followed it up by appointing the credit rating agencies as their commissars or official risk perceivers.

The above immediately created a world of opportunities and perhaps even needs for regulatory arbitrage and which has now degenerated in the current state of general and absolute incomprehension about what is going on.

The promised risk elimination has just turned out to be the hiding and the dangerous accumulation of risks. In my country whenever there is a tremor everyone applauds as these help keep the big earthquakes away, but Basel is only managing to keep the tremors away.

To further evidence the current confused state of affairs in developing countries we see how the banks finance more and more the public sector and securitized consumers instead of entrepreneurs; and in develop countries we frequently find more courses that analyze how credit rating agencies might change their opinions about a firm than courses about how to analyze the finances of a firm.

Now if we are ever going to have a chance of getting out of this mother of all the financial imbroglios there cannot be much doubt that we urgently need to start doing some back tracking on our current bank regulations… and allow our banks to be banks again.

There are risks in shying away from risks

Friends and development experts, would you please comment on the following

When the Bank Committee of Basel decided on the minimum capital requirements methodology they loaded up new expenses on the credits already more expensive because they were perceived to be of higher risks and this resulted in the introduction of a regulatory bias against risk taking in the commercial banking sector.

It is indeed sad when a developed nation decides making risk-adverseness the primary goal of their banking system and shies away from risks and places itself voluntarily on a downward slope, but it is a real tragedy when developing countries copycats them and also fall into the trap of calling it quits.

More from this perspective on http://www.subprimeregulations.blogspot.com/

There is a dangerous regulatory arbitrated run towards safety

Credits which are perceived as having a lower risk than others have a natural market advantage that translates into lower interest rates. But the bank regulations that have been developed by the Basel Committee on Banking Supervision, by applying minimum capital requirements based on the risks perceived by the credit rating agencies, have added through their regulatory arbitration an additional and artificial benefit that biases the market in favor of "low-risk" credits.

The above is producing a run towards either a more objectively "safe portfolio" or providing further stimulus for "risk-hiding". Since the largest needs for development do not ordinary make a living in the land of the low risks it is clear that development finance is the largest victim from this run and we could even say that the development power of the commercial banks in developing countries has as a result been severely diminished.

But also developed countries will pay for this, not only as already evidenced by the subprime-mortgage mess, but also since no society can survive as viable maximizing risk avoidance. As I see it our future generations will pay dearly for this baby-boomers invented run to safety.

Do we then need two World Banks?

Krishna Guha and Eoin Callan in the Financial Times of September 13 and in reference to a report on the role played by the World Banks internal anti-corruption unit the Department of Institutional Integrity (INT) were told by Paul Volcker, the main responsible for that report, that “his inquiry had ‘reconfirmed’ there was ‘ambivalence’ in the bank as to whether they really want an effective anti-corruption program or not”. 

Wrong! Having been an Executive Director at the bank (2002-2004) I sincerely believe that an overwhelming majority of the bank staff clearly comes out in favor of more and better anti-corruption efforts but that these do not come into fruition only because part of the management, rightly or not, believe that these could hinder the bank from operating efficiently… at least as they wish for it to operate for whatever reason efficiently. 

If we discuss “ambivalence” then perhaps we should also discuss what Volcker’s report does not touch upon and that is perhaps the single most outstandingly ugly blemish on the World Bank’s reputation. To see what I refer to please search out INT on the external website of the World Bank and then click on the list of Debarred Firms and Individuals. On that list you will find, duly named and shamed, the names of many individuals that one way or another after a due process have been considered involved in corruption, but that list does not include one single name of those officers of the World Bank that presumably must also have been involved in these acts of corruption one way or another. Susanne Folsom the Director of INT, on a Q&A session on that same site mentions, “We’re often asked why we don’t publicly name Bank staff who are terminated for fraud and corruption as well. The Bank’s rules don’t allow such disclosures….” 

What credibility can you get naming others while not being willing to name your own? It might very well be that the “ambivalence” on anti-corruption in the World Bank is insurmountable but if so perhaps what we need is to have two world banks since the world definitely needs one that comes out completely and unabridged against corruption. And mind you I am far from being a zealot on this issue, since life has taught me well that zealousness frequently carries within its own even more dangerous breed of corruption.

Please...while you are busy leaving Iraq

Excessive weight given to credit rating agencies guarantees systemic risks

As an Executive Director I got invited to make some comments at a "Risk Management Workshop for Regulators: Assessing, Managing and Supervising Financial Risk" arranged by the World Bank in Washington during the week 27 April – 2 May 2003. This is what I told them about the credit rating agencies.

“I simply cannot understand how a world that preaches the value of the invisible hand of millions of market agents can then go out and delegate so much regulatory power to a limited number of human and very fallible credit-rating agencies. This sure must be setting us up for the mother of all systemic errors.”

I never got invited to speak to them again.

You could read more on this subject in my blogs:

http://www.subprimeregulations.blogspot.com/ and

http://teawithft.blogspot.com/ looking up under the labels of credit rating agencies and subprime banking regulations.

And why does not the US use the World Bank for their infrastructure needs.

Felix Rohatyn and Warren Rudman in “Federal action is needed to rebuild America” Financial Times August 23, come out in support of a proposal for a new bank to address “the critical needs of infrastructure”. This, at least in Rohatyn’s case, being from the private sector sounds a bit surprising. But, if they are right, why would the US need a new bank for that? … when there is International Bank for Reconstruction and Development, IBRD, better known as the World Bank.

Not only would the US by using the World Bank set a great example and help to scale that institution for some really big globalized action that might be needed but also, at least for a start, the World Bank would probably be quite covenant lite… sorry I mean conditionality lenient with the US.

The local web correspondent

I have an idea that I am going to present to the press and other media and just in case I can patent it or at least to avoid that someone else patents it am jolting it down here and I will publish somewhere on one of my many blogspots.

I believe that a newspaper that creates a special very local page for local communities such as condominiums, senior resident homes, companies and other and then appoints a member of that community as its local correspondent is placing itself in a privileged position to defend its interests in these difficult times. The local correspondent would work for free though special identifications and rewards like giving out some prizes to the best of them and raffling other prizes among them would help to stimulate them.

The local webpage where only members of the community can be registered will be a part of the medias overall page.

Alternatively communities themselves could set up their own page and negotiated their linkages.

"The local web correspondent" © Per Kurowski

"The community web correspondent" © Per Kurowski

Odious debt should not be granted relief while odious conditions remain.

I am a citizen from a country that I consider corrupt and that needs to change a lot before any new debt could do it any good.

In this respect I urge you not to give debt relief to corrupt governments as that will only allow those addicted to debt to be able to hit the bars again, in the same shameful ways as before.

If the concept of odious debt is applicable in the sense that some debts should not have to be repaid if contracted in an illegitimate way, castigating the creditor, then the same concept should clearly also apply to the granting of any debt relief, punishing the debtor.

The World or Mother Earth lacks representation

Wolfgang Münchau in “This gentlemen’s agreement fails Europe too”, Financial Times July 9, makes a good case for why Europe by splitting up the European representation in international institutions such as the International Monetary Fund (he argues that it is to preserve many plum jobs) ends up in fact with having no real representation at all.

I understand and agree with his point of view especially since it goes hand in hand with my opinion that since all the votes, and all the Executive Directors, and the Presidents, and so many of its staff are assigned on pure local considerations, it is the “international world”, the global order, or mother-earth itself, whatever you want to call it, that ends up being the most under represented party in these global institutions.

If we are going to be able to manage the global challenges it is urgent we look for means to break away from our parochial local chains. What about splitting at least 50% of the chairs at the Board among varied constituencies such as migrant workers, multinationals, media, educators, environmentalists, NGO’s, accountants, farmers, manufacturers, entrepreneurs, service providers like nurses or plumbers, and so on? Just beware, diversity is much more about life experiences and mindsets than about gender or race.

The only constituency that has currently a representation in IMF, in fact a 100% representation, is the constituency of central bankers and this need to be changed. Europe, if you must insist on naming the next managing director in the IMF then at least do the world the favour of appointing some finance knowledgeable person that has never worked for any central bank. That would provide us with much more needed diversity than just appointing another central banker based on the local consideration that he is from Asia, Africa or Latin America.

And this is no joke, incestuous groupthink is about the most dangerous limiting factor when it comes to impede clear thinking and effective actions.

The Basel Committee is just a mutual admiration club of firefighters trying to avoid bank crisis at any cost - even at the cost of growth.

A fairly reasonable petition to the European Executive Directors of the World Bank

For countries to develop... please... let them learn to bike... on their own

The following is extracted from my Voice and Noise. It reflects what I said to my colleagues at the World Bank Executive Board while discussing in 2004 the issue whether developing countries should be allowed to use more their own country systems.

Intro: Whether to let the countries learn and develop on their own in their own way and assisting them by freely giving some of the very scarce resources or whether to impose some conditions on how they are to manage these resources is one of the most difficult balancing acts of any development policy.

There must be thousands of examples of how development funds have been squandered to no avail by bad governments and crooked politicians, and certainly there are thousand of examples of how good-intentioned agencies have, in a quite similar and yet opposite way, squandered these scarce funds by imposing absolutely misplaced rules and conditions.

As I never believed that you could create good artists by having students practice painting by numbers, this little spot number 17 blue, and as those wanting to impose more and ever stricter conditions on the borrower were in the clear majority, my devil’s advocate instincts and my normal tendency of siding with the weaker inspired me to take a very strong position in favor of allowing for a more frequent use of the countries’ own systems... and so... please...

Let them bike

Friends, listening to your exhaustive list of concerns [about how the World Bank could best assist countries in their development] I was reminded of the moments when I had to teach my daughters how to ride their bikes: I heard their mother’s anxious calls in the background; I felt my own nervousness; nonetheless, I just knew I had to let them go.

One could find and read thousands of manuals about how to put a bike together safely; about all the safety implements a kid should wear, such as helmet and wrist-guards; about all the precautions he or she needs to take, not going downhill or out on the main road; but nowhere can you find even a single manual that clearly and exactly instructs you how to learn to ride a bike. Left leg up, right leg down! Or was it right leg up first?

We need to understand that development is a bit like learning how to ride a bike and, at the end of the day it is something that must be done on one’s own. In fact, no matter how much we could help in the preparations, we will not stand a chance to achieve lasting results if we are not willing or do not know how to let them go.

It is not easy to let go, I probably even closed my eyes for fractions of seconds after letting my girls roll away on their bikes, but I let them go and they know how to ride a bike now.

So, my colleagues, in these discussions, not as caring parents but as caring development partners, let us try to act accordingly, letting them go, always remembering that, at the end of the day, countries need to do it on their own. What else could ownership mean?

Of course, anyone might fall trying, but that is exactly the risk we need to be able to take if they are going to achieve real sustainable development results and, if they fall, there is probably nothing more to do than to help them rebuild their confidence so that they can just have another go at it.

Moreover, if you try to hold the bike while they ride it, the bike might not really behave like a bike, and so they might never get the hang of it. What we really should be concerned about is that they have what is most needed at the time of trying: sufficient confidence in themselves. In fact, what unwillingly might be the first victim of all our other secondary concerns is precisely that, their confidence.

So, my colleagues, let them go, again and again and again, learning to ride their bike, and as they believe a bike should be ridden.

I know it is not as easy as it sounds and in fact I would only give someone the freedom to try it on their own whenever he or she convinces me he or she is truly ready for it, in a sufficiently confident way.

.

The anti-corruption experts are but another sublime form of corruption.

I am opposed with passion to corruption, how could I not be, I come from Venezuela, and I fully support with all my heart the valiant work of all those anti-corruption warriors out there in the world. But, having said let me also unequivocally state that anyone who sells himself as an anti-corruption expert is in my opinion just engaged in another though perhaps more sublime version of corruption.

Corruption is about life and human weaknesses and should therefore always be fought by people and not by experts.

A B- donor?

Once again I heard in a development forum complains about the volatility of the commitments of donors. Would not rating the donor’s credibility be a good pro bono cause for the Credit Rating Agencies? Perhaps the tax deductibility allowed to funds collected by those donors could also be a function of those ratings.

Two brief comments on naming a new World Bank President

1. I would love for the world at large to be able to put forward their proposals for a new president at the World Bank but, having been an Executive Directors and having seen how so few of these EDs are truly allowed to speak out their own voice, I would also like to see that once they have received the list of candidates, they are isolated from any further interference from their capitals, and forced to reach a consensus between themselves as Executive Directors individually responsible for the Bank and the World.

2. If we are going to waste time just to haggle on who is going to be the next President of the World Bank, I would much rather have just about anyone named so that the Bank could go back and focus at the real issues. While an Executive Director of the World Bank (2002-2004), I calculated the cost of each of the EDs jointly debating an issue to cost around 80.000 US dollars per hour. Therefore I raised my voice quite noisily when the Board had to spend many hours discussing a salary increase of US$ 40.000 for our then president, Jim Wolfensohn, just so that he would earn as much as his counterpart at the IMF. Frankly, I do not know what I would have done with a Wolfowitz incident and now the follow up; I might have just gone berserk

The World Bank needs a president credible to the world (and to the USA).

My friend and as an Executive Director of the World Bank former colleague Otaviano Canuto is quoted in FT May 22 saying with respect to the appointment of the next president to substitute for Wolfowitz that the selection should be “based on the merits of a plurality of candidates regardless of nationality” and who could argue with that, though of course the problem of defining what are these “merits” remains.

The first and foremost merit that I believe a World Bank president must have besides the basics is to be able to generate enough credibility outside the small world of the World Bank. This is so since no matter how this multilateral twists and bends, the chances for most of the poor of this world to come out of their misery in a sustainable form lies in being able to connect with the real world. Also the World Bank itself is dependent on this connection if it is to strengthen its role as a global public-goods producer.

And so, unfortunately, we might be back to square one where the best we can hope for now, is for the United States to nominate a person that fully and truly represents the United States, and counts with the favourable opinion of Europe. By the way I would never view such a candidate as a foe but, if I did, I much more prefer to work with an impressive foe than with a diddling friend.

Let us not despair though; the time will come when the world will be ripe for Otaviano Canuto’s proposal, and much faster than what we can imagine.

Let us keep the eyes on the ball!

If we want good government results that have a chance of doing what is humanly good for humanity, in a shrinking world, that could only happen through more credible and better governed multinational institutions. But in this case, while rolling up or shirtsleeves to get going at it, we must also learn about how to prioritize our efforts.

Instead of beating the good guy on the head, just because he is more amenable to being beaten on the head, and start with a World Bank and that no matter Wolfowitz and some others, in relative terms, still stands out as a shining example of relative good governance in the world, we should all concentrate more on where good governance is much more lacking and much more needed, namely the United Nations.

May I humbly suggest we keep our eyes on the ball!

Per Kurowski
Chairman
The Voice and Noise Foundation for International Development and Global Strategic Action

And now it is for the World Bank to convince the world that it was more than about politics

Now when after so much procrastination, by all, Wolfowitz has finally resigned it is now the World Bank’s turn to convince the world that all this was indeed an institutional fight over what is right or wrong, and not some political bickering against an unpopular president.

Having had the privilege to act as an Executive Director of the World Bank (2002-2004), I am truly convinced of the high human quality of all its people but, given that out there, for instance in the world of blogs, there exist so many 100% professional haters who don’t care a iota for the World Bank as long as they get their sweet revenge on Bush or Wolfowitz, now the World Bank’s directors, staff and managers must act decisively on the fundamental governance issues, so as to distance themselves as much as possible from these loonies.

One of the first tasks has to be to review the whole concept of external assignments or secondments, since it beats me how it could have reached that point where someone could even have thought of this as a useful instrument for removing to a distant place a conflict of interest of the President, at the expense of the World Bank. Can you even think of a listed corporation trying to argue with the IRS about the deductibility of salaries paid in such a way?

As with this it should be clear that there was a serious problem even before Wolfowitz intervened pushing promotions and salary increases, something that the Executive Board also valiantly recognized, it is obvious that the institutional integrity teams, and all other, have some solid homework to do before they can re-launch the good governance and anti corruption initiative the world needs so much, and that unfortunately seems to have hit an iceberg, while still in port. I am certain that they will succeed.

The World Bank deserves more than a banal political row

The Ethics Committee proposed a solution to Mr. Wolfowitz’ “conflict of interest” that could have the poverty fighting World Bank paying out US$1.950.000 over the ten years of what could be his presidency (US$ 130.000 plus 50% benefits per year), while receiving absolutely no services at all. No matter how delicately you phrase it as a secondment, this sure must be a crazy and an unethical proposal. How come they did not just help her (or Wolfowitz) find another job for which the Bank did not have to pay? Should that have been so difficult?

Mr. Wolfowitz, who as President should know that something is not right just because an Ethics Committee proposes it; then went on influencing so as to raise the potential cost of this proposal for the Bank to US$2.700.000. For this Wolfowitz should resign; and most seem quite clear about that.

It is hard though for me to understand why there has been so little discussion about the Ethics Committee’s initial proposal. Although I was an Executive Director at the World Bank, 2002-2004, I came there from the private sector, and so I might not possess sufficient intimate knowledge of all the nuances of diplomatic affairs… (which could perhaps just be lucky me).

I sincerely believe that the overwhelmingly good staff, management, board members and presidents, present or past of the World Bank, as well as a world that needs a respected multilateral institution where global challenges can be discussed, they all deserve that this affair is handled correctly, on the basis of what is right or wrong, and not just as a banal political row, of a for or against Wolfowitz.

We need to make more of a world bank out of the World Bank

Sir of course the "World Bank has greater problems than Wolfowitz", as E.A.S. Sarma says, May 8, but if he as a Former Secretary of Economic Affairs of India really believes that "setting up an Independent People's Tribunal to place the policies and programmes of the World Bank under the scanner, is part of finding the path for their own development", then may I suggest he has himself a bigger problem, as so do those who like my country Venezuela believe they are better off outside the World Bank.

Lets face it, the World Bank, after 64 years of activities has an outstanding accumulated portfolio of $103bn which compared for instance just to the $62bn in remittances made only last year to their homelands by the Latin-American migrant workers is a drop in the ocean, much more so when the financial flows to the richest country of the world are such staggering amounts that we are better off not even mentioning them.

As I see it, the faster we split up the bank in two completely separate areas, one for the development issues of the poor, laggard or left behind countries, and one for the global world development issues, the better chances we have of making a big dent in the poverty and a truer world bank out of the World Bank. At the Word Bank's Executive Board instead of reshuffling the seats among countries, we need to assure the representation of international actors such as multinational corporations, migrant workers and international labour unions.

By the way, if I had the luck and honour to be left in that division of the World Bank in charge of helping the laggards catch up, I know exactly what I would do. I would put all my efforts to strengthen the confidence of the poor people in their own capacity, so that they dare to ride a bicycle on their own, instead of trying to make their misery more liveable, holding their bikes, or offering them scapegoats and excuses for their falls, such as the World Bank.

Growing difficulties to enjoy the booty

During the recent meetings of the World Bank, as a result of the current mess surrounding its president Mr. Wolfowitz, some issues were unfortunately relegated to the background.

One of them refers to the announcement of the Initiative for the Recovery of Stolen Assets, which, together with other agreements such as OECD’s against corruption, shows how the world progresses, very slowly but safely, on the path of better global governance.

The ease by which until now thieves managed to hide their loot is shameful; sometimes even under the noses of their victims. There is of course still a long way for an initiative like this to become an effective instrument ... but perhaps in less time than what the outlaws in the world suspect.

Parallel to official initiatives, the technological advances that allow access, archive and send information is converting civil society, citizens, whether we like it or not, into real-time investigators. It’s not they are searching, but when they do see a knowingly corrupt, and have their cell phone with camera in hand, they will take a photo of him in his moments of enjoyment, which will swell the truth-files until these explode.

In the same way, all those concealment of ill-gotten goods services, to which some corrupt countries have been dedicated are becoming more expensive; as that international community of civil societies develops and understands they have all better row in the same direction, if they are to have a chance for survival on an ever shrinking planet.

Finally and observing how in Canada an ordinary court recently began a trial on violations of human rights (the genocide in Rwanda), the day should not be far away when one of those millions of emigrants in the world who have been much forced to emigrate as a consequence of corrupt acts by their rulers, could successfully sue one he finds enjoying ill-gotten money in their new alternative country. The tests you would need to enter your claims, would all be sent to you on the web.

Does the above threaten the sovereignty of nations? Sadly yes! So therefore it is always much better for nations to free themselves, sovereignly, from their own corrupt.

One of the 4,292,466 shadow citizens of a shadow nation. (Insolently there are still records to be scrutinized)

Translated from El Universal

The World Bank, though in a hole, needs to dig deeper.

As a former Executive Director of the World Bank it is with much sadness that I have followed the Wolfowitz affair. It is clear that he should not have played a role in deciding the terms on which his girlfriend was seconded to the US state department and that he should now leave the Bank.

Having said that, I also find it important to question the appropriateness of the primary idea, put forward it seems by the Ethics Committee, since it does not seem to be correct either that the World Bank should be seconding anyone anywhere, even on reasonable and non interfered terms, as a tool to solve this type of conflict of interests, so as to allow someone to have his cake and eat it too.

In contrast while an Executive Director, we had to spend millions of dollars of the Board’s time just in order to debate a “measly” forty thousand dollar a year increase for the then World Bank president James Wolfensohn, just so that he would be able to earn as much as his counterpart in the IMF.

Now, after so much procrastination, by all parties, the only real solution for the World Bank, with or without Wolfowitz, lies in appointing a committee of true outsiders to dig deep and review all the World Bank’s current work related policies. The World Bank, when compared to other similar institutions, is very clean but of course, after 64 years of accumulating problem solving compromises, it should be time for a good scrubbing.

The world needs the World Bank to come out of all this smelling like roses, and the staff also deserve it.

Should Imus be banned from talking, or his listeners from listening?

The words we use are important to the extent they impact. When I see and listen to one of these commentator programs I do not care much for what words they use but much more whether they are trying to reinforce the good within us or if they are just out looking to exploit the bad that we all also carry inside. In this respect, having the impression that Imus geared himself to belonging to the latter group, I can’t really say that I object too much he is now suffering some of his own medicine.

Now, saying that reminds us that it is not only the speaking of the words that counts but also how we listen to them. The real difficult and perhaps unsolvable problem for a society might then be that instead of barring some radio or TV hosts, which in their disrespectful, vulgar and highly censurable ramblings might nevertheless be providing a needed input to some or something, it might perhaps be better served by barring from listening those in the audience that might not be able to adequately digest what is being said, and that end up supporting it providing bodies to the rating numbers.

Now, before someone bars me for suggesting some supremacy inspired censorship let me make absolutely clear that the only real censorship I really defend is self-censorship, and we should all be more aware of the much good that can come from it, not the least lower ratings for unworthy programs.

But, this is indeed a very difficult issue and all those that believe the contrary… well they are the only ones that we can with certainty say should be barred.

A wondrous world!

“The persistence of global imbalances brings with it an important financial stability issue—the problem of sustaining the financial flows needed to support the imbalances.”

From the Global Financial Stability Report by the International Monetary Fund, April 2007, page 15

What an opportunity we seem to have missed!

Daniel Smith in “Politicians cannot control Nigeria’s corruption crusade”, FT April 12, writes about Nigeria saying “its politics remains a stark scramble for power in which elites compete for domination of the state apparatus to reap the benefits of control over enormous oil revenues”, and so in fact little does the crusade againts corruption matter anyhow, especially while oil prices remain high. As is, the Nigerians now elect a government to whom hand over the oil revenues that in reality belongs to themselves, only to have to spend the next couple of years licking boots in order to get some of that same oil money back, while the elected government officials, arrogantly, not in need of other tax income, couldn’t care less about them.

It is only when you get to understand this that you really get a feeling for what a wonderful opportunity the world seems to have lost in Iraq. Can you imagine what having helped to channel the oil revenues directly to the Iraqi citizens in a transparent way could have done? That could really have been called democracy building, and the setting of a great example for the citizens of Nigeria, Venezuela and all the other oil cursed nations to follow.

The current analysis of the remittances takes the eyes away from much bigger issues

The press announces that “Migrants send home $62bn to Latin America and Caribbean” and the commentaries that generally follow evidence how much, by focusing the attention on the remittances as such and which could in fact be compared to the cash dividends of the corporate world, the development banks might be missing so much of the real story.

If these remittances represent 15% of what the migrants earn then the real underlying economic activity is worth more than $420bn, and a country such as El Salvador has just as much GNP produced by its emigrants abroad than the GDP produced in el Salvador; and who is to argue that someone from El Salvador is less El Salvadoran just because he works abroad.

This calculation does also evidence that way too much detailed and expensive attention has been given to the analysis of what channels are used for the remittances, and the costs of these transfers. Frankly, in my book, this amounts almost to a lack of respect for the migrants since indeed these transfers do certainly represent the least of their thousands of problems and hardships.

Let us hope the development agencies will soon start looking at the real issues, such as how to increase the earning potential of these millions of sacrificed migrants; such as helping in the development of temporary migrant worker programs that satisfy the interests and meet the concerns of all parties; and to study whether they migrants could be better off reinvesting their savings in their own and their children’s educations instead of perhaps only ending up providing temporary support to their ineffective national governments who most probably were the main cause of why they had to emigrate in the first place; and to the rate of that heart-drain by which they might start to forget their homeland and how to slow it down.

Now, while analyzing all these issues, let us please never forget that all these remittances are of a very private nature; no different from any money a son could send his mother in a developed country; and so we need all to be extremely respectful of that.

Let us not waste this opportunity to make a very significant reform at the World Bank

On the web of World Bank (WB) we can read an interview with Suzanne Rich Folsom, the Director of the World Bank's Department of Institutional Integrity (INT), on the theme of fraud and corruption. When questioned “What sanctions are imposed on those misusing WB’s funds?, she answers “when we find that a supplier has engaged in corruption in a project, we take actions to debar them – which means to make sure they can’t get any more contracts for a while. We also publicly debar – we list their names on our website. ‘Naming and shaming’ is a huge deterrent.” This sounds of course reasonable, especially considering that INT is not a court that could send anyone to jail.

Unfortunately, immediately thereafter, Folsom also has to say the following: “We’re often asked why we don’t publicly name WB staffs that are terminated for fraud and corruption as well. The WB’s rules don’t allow such disclosures…”, and this, no matter how you look at it, is of course something completely unacceptable and represents a truly ugly wart on the public face of what in so many respects is the best managed of all our international organizations.

Perhaps these days, when the World Bank’s President’s and a former staff names are publicly mentioned everywhere as having done something not correct, this could be the best opportunity ever for getting rid of whatever crazy disclosure rule stops the World Bank from living as it preaches,

Four Years and Counting in Iraq: Regarding "Lessons of War"

Regarding "Lessons of War"

The Post should be commended for not describing the extremely difficult way forward in simplistic terms. Having said that, the editorial should have given more attention to the role of oil, not because of its obvious energy significance but because it is an obstacle to good governance in Iraq.

The editorial said, "We may have underestimated the impoverishment brought about by misrule and sanctions and the brutalization born of totalitarian cruelty." But the sentence should have continued: ". . . that thrives especially well in countries cursed by large amounts of oil revenue flowing to a central government, eliminating any chance for a sustainable democracy."

Coming from Venezuela, where oil revenue is centralized, I know that loyalties to country, tribe and sect are all irrelevant compared with the unnatural loyalty that can be purchased by those in control of a checkbook fattened by oil. If the United States wants to achieve anything going forward, it had better find a way to distribute Iraq's oil revenue directly to the Iraqi people.

Per Kurowski

Bethesda

Published in Washington Post

PS. Here my minimum minimorum suggestion on when exiting Iraq

World Bank and IMF Collaboration, the February 2007 Report

When I read the “Rome Declaration on Harmonization” February 2003, were the word harmonization was mentioned 19 times in 8 pages, I loudly protested since I felt that it sounded a lot like killing of the debates around many difficult development issues, agreeing on strategies in some smoke-free rooms in Washington, instead of bringing out all the inherent conflicts of risks and having them openly discussed in all the different capitals of the world, and hopefully among its citizens too. I cried out loud. “If ownership is to mean anything you must at least allow them to own the debate.”

Thankfully after many discussions (not with me though) the World Bank and the IMF have now in February come out with their “Report of the External Review Committee on Bank-Fund Collaboration” and thankfully harmonization is almost gone and the emphasis is almost completely on collaboration, which of course is a totally different issue.

Now in this Report of 58 ages the word “harmonization” appears only twice, and in the same paragraph, as follows:

5. Collaboration on fiscal issues: • There needs to be improved integration and harmonization of work on fiscal issues. As noted in the joint 2003 staff review of Bank–Fund Collaboration on Public Expenditure Issues, the key to an effective partnership on public finance management is not found in a formal division of roles, but in the harmonization of recommendations.

I have no qualms at all with that, although when they in the next paragraph state, In terms of ‘fiscal space’, there should be no suggestion that there is a trade-off between short-term stability and long-term growth. These are complementary, not competing, objectives, e.o.q, I would have included the caveat that this is true as long as you avoided too much short-term stability, since staying in bed, does not correlate much either with development.

We must build more McPrisons

We must build more McPrisons

Have you heard someone say that one country is 30% fairer than another? Of course not. Justice, situated on a continuum that goes from its total absence to Divine Justice, is very difficult to measure. Injustices are easier to identify and we all know that in most of our countries, prisons represent one of the worst.

To make the best possible use of scarce resources, it is important to be able to measure results and in this sense judicial reforms in many of our countries, sometimes financed with the help of multilateral entities, could advance faster by focusing on eliminating injustices. , for example by improving prison facilities, than by seeking justice by investing in courts.

In the first weeks of 2007 we have already been shocked with news about 16 prisoners killed in a fight in Venezuela and another 20 in El Salvador. Since the judges are very aware that the conditions in prisons are so shameful that they can even resemble those of a Nazi extermination camp, we sometimes wonder if the judges themselves should not be sued before the International Court of Justice. , for his crimes against humanity.

When we then observe how so many people who come from Central America are returned by the United States to their countries of origin, due to having committed some criminal act, even knowing that those countries do not have the necessary resources to face that problem and even less achieve the social rehabilitation of the prisoner, it is clear that we find ourselves immersed in a criminally vicious circle.

To get out of this centrifuge-of-terror, the United States should then help the countries of Central America to build and operate better prisons. Such collaboration could be effected by some states keeping prisoners in a prison in Central America, rather than in California, Virginia, or Maryland.

Today, in the U.S. There are about 2.2 million prisoners, many of whom are from Central America and each of them can cost their respective state between 30,000 to 20,000 dollars annually, depending on whether the prisons are public or are being operated by private companies. The above shows the immense win-win potential that exists in a proposal that, at the same time as managing to introduce modern prisons in Central America, makes it easier for the states of this country to achieve their fiscal balances.

The aforementioned prisons, which would be operated by specialized companies on the basis of strict quality certifications, such as ISO 9000 and supervised by independent organizations, could, once the investment has been amortized with the income from providing services to the United States, be transferred to the United States. governments of Central America.

In the same way that McDonald's-type franchises managed to transfer better service standards to many developing countries, McCárceles would help improve prison systems, educating specialized personnel and establishing points of comparison that stimulate the much-needed sense of the shame.

Translated by Goggle from an article in El Tiempo Latino of the Washington Post

It all originated here https://perkurowski.blogspot.com/2009/09/mcprison.html

Should not Higher Education be more of a joint venture?

Hearing so many young professionals in the USA describing their problems with debts they incurred while studying, I guess that soon some of them could be suing their Alma Maters for misrepresentation or plain failure in delivering the services offered.

Perhaps the incentive structure of the education system needs to be revised so that at least some of the higher education providers offer to collect a part of their fees through a profit participation scheme, like for instance by receiving a small percentage of the student’s future earned gross income that is above the level that the student could have been estimated to earn without further education, during his first 20 years of work.

How are then the universities going to pay for their professors now? Easy, that is what the financial markets are for. These participations in the future of our youngsters could be securitized and sold in the markets, perhaps even as a good investment for a professor’s retirement fund… of course, that is if the professor delivers on his promises.

For a university to show a willingness to invest in their own students, because they are sure of what they are giving them, might be a better marketing tool than outright grants and “we invest our money in your future” is my slogan. Also, for students, the question of what university offers to invests the most present dollars against the smallest percentage of their expected future earnings... should rank among the first when selecting an Alma Mater into which to invest their own future. 

PS. Dialoguing in 2023 with ChatGPT on this issue.

http://www.nasfaa.org/publications/2007/ghr5passed101807.html

Estudiantes ¡Alerta¡ Published March, 2007, El Universal, Caracas

PS. A tweet August 2018: “Instead of taking on debt, perhaps students should go for crowdfunding their study costs, offering to pay a percentage of their incomes during their first 15 after graduation years… perhaps even insurance companies would (should) like to invest in their future”... in a follow up tweet: Would the IRS be willing to certificate the incomes of these students for the investors?
If they did so, surely would the investors want their professors to have some, a lot, of skin in the game too?

PS. Many investments offer must be accompanied by warnings. Have you ever heard a University say: "Warning, the final financial compensations for the education you obtain with us, might not suffice to repay the debts you take on in order to study with us”?

PS. A tweet July 2019: "If anyone had sold investment plans with as little risk disclosure universities and professors do when selling investments in their education plans, and then the investments had soured, he would probably be trotting away to prison."

PS. A tweet July 2019: "Of those entire student debts some are suggesting should be condoned at taxpayers’ expense, how much should those colleges, universities and professors, who got all the money from those loans, have to absorb?"

PS. Nonetheless those who need to keep the by far larger stake in their future earnings, perhaps at least 75%, are the students. You would never ever want to share out so much that it creates incentives for them walking away from it all, one way or another.

PS. We need student debt service data, like default rates, for each university, so as to allow the market to help correct some education failures.