David Malpass, a Bad Choice for the World Bank
Published in Le Monde
(France) on 16 February 2019
by Le Monde (link to original)
(France) on 16 February 2019
by Le Monde (link to original)
Translated from
by Haley Frevert.
Edited by Denile Doyle.
There are doubts about the White House’s official candidate to head the leading anti-poverty financial institution.
When you want to kill your dog, you accuse him of having rabies. When you want to weaken multilateralism, you appoint one of its critics to the head of the World Bank. Donald Trump’s nomination of David Malpass as the White House’s official candidate for the presidency of the world’s leading anti-poverty financial institution sounds like a provocation, as his profile, his past statements and his economic vision seem contradictory to the job.
For 73 years, the United States, as the largest shareholder of the institution, has had the tacit privilege of choosing the World Bank president. The Europeans have always accepted this nomination mechanism, knowing that they benefit reciprocally from the presidency of the International Monetary Fund. This dated division is being challenged more and more by developing countries. Because of their weight in the growing global economy, they want to take part in the governance of international institutions. But it is unlikely that any of them will have the audacity and the means to propose an alternate candidate by March 14 to occupy the vacant seat left by Jim Yong Kim.
Little Foresight
Yet, there are doubts about Malpass: the past, the present and the future. In the past, the former Bear Stearns chief economist did not show much foresight. In an opinion piece published in the summer of 2007, he urged people not to panic about the housing bubble, though it bankrupted the investment bank a few months later.
He had another error in judgment when, in 2010, he estimated that the Federal Reserve’s cash injections to save the world economy would cause unbearable inflation. As early as 2011, he called for a vigorous rise in American interest rates to increase the dollar at any expense. Not only did prices remain reasonable, but the Fed’s intervention permitted the American economy to experience one of its longest periods of growth, from which Trump is still benefiting.
For Greater Liberalization of the Economy
Then, the present. Malpass is one of the proponents of the White House’s current creed, “America First.” He has propagated statements against multilateralism, which, in his eyes, encroaches on national sovereignty and harms the power of the United States. He presents as his principal feat of arms the fact that he played a decisive role in the recent capital increase of the World Bank. Without mentioning that the Washington’s support was a quid pro quo that served America’s interests above all. While Trump was seeking a diplomatic success with Pyongyang, he obtained the promise that the World Bank would help finance the reconstruction of North Korea.
Lastly, the future. In an op-ed published on Feb. 7 in the Financial Times, the ex-advisor to Ronald Reagan, and then to George H. W. Bush, called for the increased liberalization of the economy, advocating fewer taxes and fewer regulations. It’s doubtful that this ready-made ideology works everywhere, regardless of the level of development. Moreover, will climate change, which will be at the heart of the fight against poverty in the next few years, be the priority of the representative of an administration that is not worried about it in its own country?
When you want to kill your dog, you accuse him of having rabies. When you want to weaken multilateralism, you appoint one of its critics to the head of the World Bank. Donald Trump’s nomination of David Malpass as the White House’s official candidate for the presidency of the world’s leading anti-poverty financial institution sounds like a provocation, as his profile, his past statements and his economic vision seem contradictory to the job.
For 73 years, the United States, as the largest shareholder of the institution, has had the tacit privilege of choosing the World Bank president. The Europeans have always accepted this nomination mechanism, knowing that they benefit reciprocally from the presidency of the International Monetary Fund. This dated division is being challenged more and more by developing countries. Because of their weight in the growing global economy, they want to take part in the governance of international institutions. But it is unlikely that any of them will have the audacity and the means to propose an alternate candidate by March 14 to occupy the vacant seat left by Jim Yong Kim.
Little Foresight
Yet, there are doubts about Malpass: the past, the present and the future. In the past, the former Bear Stearns chief economist did not show much foresight. In an opinion piece published in the summer of 2007, he urged people not to panic about the housing bubble, though it bankrupted the investment bank a few months later.
He had another error in judgment when, in 2010, he estimated that the Federal Reserve’s cash injections to save the world economy would cause unbearable inflation. As early as 2011, he called for a vigorous rise in American interest rates to increase the dollar at any expense. Not only did prices remain reasonable, but the Fed’s intervention permitted the American economy to experience one of its longest periods of growth, from which Trump is still benefiting.
For Greater Liberalization of the Economy
Then, the present. Malpass is one of the proponents of the White House’s current creed, “America First.” He has propagated statements against multilateralism, which, in his eyes, encroaches on national sovereignty and harms the power of the United States. He presents as his principal feat of arms the fact that he played a decisive role in the recent capital increase of the World Bank. Without mentioning that the Washington’s support was a quid pro quo that served America’s interests above all. While Trump was seeking a diplomatic success with Pyongyang, he obtained the promise that the World Bank would help finance the reconstruction of North Korea.
Lastly, the future. In an op-ed published on Feb. 7 in the Financial Times, the ex-advisor to Ronald Reagan, and then to George H. W. Bush, called for the increased liberalization of the economy, advocating fewer taxes and fewer regulations. It’s doubtful that this ready-made ideology works everywhere, regardless of the level of development. Moreover, will climate change, which will be at the heart of the fight against poverty in the next few years, be the priority of the representative of an administration that is not worried about it in its own country?
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