Welcome Instapundit readers. Thanks Glenn! And speaking of international bureaucracies, readers may want to read this post about the Greek bailout.
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Regular readers know that I’m not a big fan of the international bureaucracies. I don’t like the International Monetary Fund because it encourages bad policy by bailing out nations such as Greece. I don’t like the Organization for Economic Cooperation and Development because it promotes bigger government with its anti-tax competition campaign. And I don’t like the United Nations because it is a wasteful and corrupt bureaucracy, though at least it is ineffective so we don’t have to worry too much about the bad ideas it generates (such as global taxes – see here, here, and here).
If I had to pick my “least despised” international bureaucracy, it would be the World Bank. Yes, it engages in lots of counterproductive income transfers, and yes, it has a long track record of wasting money with foreign aid boondoggles. But unlike other international bureaucracies, at least the World Bank doesn’t try to act like some sort of global economic policymaker.
Moreover, it occasionally is a force for good. The World Bank for years has been actively involved in helping nations develop and implement private Social Security systems. And the bureaucracy’s “Doing Business Index” and “Governance Indicators” help promote market-friendly reforms by publicizing which nations have bloated and inefficient public sectors.
And since I’m feeling temporarily warm and fuzzy about the World Bank, I should acknowledge that their researchers sometimes produce good research. I’m particularly impressed by a new study showing that economic freedom is the key to prosperity. The abstract of the paper summarizes the results.
Reviewing the economic performance—good and bad—of more than 100 countries over the past 30 years, this paper finds new empirical evidence supporting the idea that economic freedom and civil and political liberties are the root causes of why some countries achieve and sustain better economic outcomes. For instance, a one unit change in the initial level of economic freedom between two countries (on a scale of 1 to 10) is associated with an almost 1 percentage point differential in their average long-run economic growth rates. In the case of civil and political liberties, the long-term effect is also positive and significant with a differential of 0.3 percentage point. In addition to the initial conditions, the expansion of freedom conditions over time (economic, civil, and political) also positively influences long-run economic growth. In contrast, no evidence was found that the initial level of entitlement rights or their change over time had any significant effects on long-term per capita income, except for a negative effect in some specifications of the model. These results tend to support earlier findings that beyond core functions of government responsibility—including the protection of liberty itself—the expansion of the state to provide for various entitlements, including so-called economic, social, and cultural rights, may not make people richer in the long run and may even make them poorer.
Let’s apply these finding to the United States. Under Bush and Obama, the United States has suffered an expansion in the burden of government and a loss of economic freedom. This means our economy will grow at a slower rate, our incomes will not climb as fast, and our future will be less prosperous. There are real consequences to bad policy.
[…] In fairness, the WB has produced some good work on government spending, dependency, financial regulation, and free […]
[…] Second, this is additional confirmation of my gut feeling that the World Bank is the best (least worst?) of the international bureaucracies. Yes, they waste money and are capable of producing bad research, but the organization’s culture seems to be focused on what changes are needed to help poor countries. And that often results in solid research (for other examples, see here, here, here, here, and here). […]
[…] Second, this is additional confirmation of my gut feeling that the World Bank is the best (least worst?) of the international bureaucracies. Yes, they waste money and are capable of producing bad research, but the organization’s culture seems to be focused on what changes are needed to help poor countries. And that often results in solid research (for other examples, see here, here, here, here, and here). […]
[…] How free markets produce better outcomes. […]
[…] such as government spending, Social Security reform, tax complexity, financial regulation, and economic liberty. And the rankings in Doing Business are a very helpful way of measuring and comparing regulatory […]
[…] puts me in a strange position, because although I have written that the World Bank is my “least despised international bureaucracy,” I never thought I would dedicate an entire column to defending its […]
[…] this is a good thing, a practice that should be applauded rather than condemned. Indeed, the World Bank highlights the importance of easy company formation in their important “Doing Business” […]
[…] this is a good thing, a practice that should be applauded rather than condemned. Indeed, the World Bank highlights the importance of easy company formation in their important “Doing Business” […]
[…] between freedom and dependency seems easy: who but morons and weaklings would choose dependency after considering it? The answer […]
[…] Even World Bank Research Shows Economic Liberty Is Better than Government Dependency at International Liberty, yesterday: Reviewing the economic performance—good and bad—of more […]
Not so fast Dan….
http://af.reuters.com/article/energyOilNews/idAFLDE75407H20110605?sp=true
[quote]BONN, Germany, June 5 (Reuters) – The World Bank will suggest a global levy on jet and shipping fuel in recommendations to G20 governments later this year on raising climate finance, a senior official said on Sunday.[/quote]
Oh well…
[…] MITCHELL: Even World Bank Research Shows Economic Liberty Is Better than Government Dependency. “There are real consequences to bad […]
I’m currently reading “The Secret Knowledge,” by David Mamet. If you know anything about Mamet, he’s a long-time liberal playwright who had a revelation a few years ago. Part of his revelation is economic–he has realized that productivity increases when people are free to enjoy the benefits of their own work, whereas when people are expected to work for the sake of others, their productivity decreases. The man studied literature and drama at Goddard College. If he could figure that out, is it any wonder that the economists are finally getting it, too?
Even a stop clock is right twice a day. So now lets see if we can get American politicians to have as good a track record as a stopped clock.