These are just two of the better-known applicants for the top job at the World Bank. There are probably dozens more from within the institution itself who are just as reactionary. The World Bank was formed with some pretty lofty intentions. It would actually be helpful if it fulfilled some of the founders' vision for it. But the World Bank lost the narrative sometime around the disastrous presidency of Robert Strange McNamera—another Harvard wünderkind—so maybe Summers or Sachs would be the "logical" choices.
Why Larry Summers lost the presidency of Harvard
March 11, 2012 Cathy O'Neil
Some people still think Larry Summers got fired from being the president of Harvard because of the ridiculous comments he made about women in math (see my post about this here) or because of the comments he made about Cornel West. Actually, the truth is something worse, and for which he should actually be in jail. It’s also something that makes Harvard look bad, so maybe that’s why it’s less known.
The subtitle of this post is: Why Larry Summers shouldn’t be made head of the World Bank.
I was inspired to write this by being disgusted at continued rumors that he could get yet another prestigious job. It’s like this guy can’t fail spectacularly enough! Let’s give him another chance!
Let’s set the record straight: Summers was directly involved with defrauding the U.S. Government (see below) and Russia. He admitted to not understand conflict of interest issues (see below). It is particularly appalling, knowing these things, that he would be considered for the World Bank head, which presumably requires nuanced understanding of such issues.
I’m using this article, entitled “How Harvard Lost Russia,” and written in 2006 in Institutional Insider (II), as a reference. More on that article and how it led to getting Summers fired below. And by the way, I’m not claiming this story is completely unkown: see this wikipedia article for a quick overview, for example, in addition to the II article. I just think it needs reviving at this crucial moment, before Summers gets more toys to play with.
So why did Summers lose his job at Harvard? It was because of his protecting a buddy, a fellow economist at Harvard named Andrei Shleifer.
Andrei Shleifer managed to get put in charge of helping Russia privatize stuff in the mid 1990′s. His mission was to make things more useful and transparent to the infant capitalist system.
Through his wife and friends, Shleifer instead orchestrated a boondoggle on Russia. He invested money through his wife and helped his friend Jonathan Hay and his lover and friends invest theirs, and set up the very first mutual fund as well as thwarting the efforts of other people to set up their own funds. All of these things were strictly against the conflict of interest policy they were working under.
Shleifer got in trouble, and the U.S Government sued and won against Harvard and Shleifer. From the article:
The judge determined that Shleifer and Hay were subject to the conflict-of-interest rules and had tried to circumvent them; that Shleifer engaged in apparent self-dealing; that Hay attempted to “launder” $400,000 through his father and girlfriend; that Hay knew the claims he caused to be submitted to AID were false; and that Shleifer and Hay conspired to defraud the U.S. government by submitting false claims.
On August 3, 2005, the parties announced a settlement under which Harvard was required to pay $26.5 million to the U.S. government, Shleifer $2 million and Hay between $1 million and $2 million, depending on his earnings over the next decade. Shleifer was barred from participating in any AID project for two years and Hay for five years. Shleifer and Zimmerman were required by terms of the settlement to take out a $2 million mortgage on their Newton house. None of the defendants acknowledged any liability under the settlement. (Forum Financial also settled its lawsuit against Harvard, Shleifer and Hay under undisclosed terms.
Summers and Shleifer
Summers was good friends with this criminal, and used his position to protect him. From the article:
Shleifer remained close to his friend and mentor Summers; they talked to and saw each other frequently and continued vacationing together in the summer on the Cape. Then it became known in early 2001 that Summers was on the short list of candidates to succeed Neil Rudenstine as the president of Harvard University. Shleifer and Zimmerman began campaigning for Summers to get the Harvard post, giving meet-and-greet parties for him at their home. Summers stayed with them when he visited Harvard.
I have been moaning about Jeffrey Sachs since the 1990s. I once wrote an essay where I used him as an example for why Harvard's reputation as an elite institution was being besmirched because of his performance. In a move that stunned me, Harvard came to roughly the same conclusion and invited him to seek employment elsewhere. This is why Sachs is at Columbia these days.In March 2001, Summers was named president of Harvard. Shleifer, who had been courted by New York University’s Stern School of Business, decided to stay put. more
He Could Be Worse Than McNamara!
Jeffrey Sachs’ Grab for the World Bank
by LAURA FLANDERS MARCH 20, 2012
There may be worse candidates for the presidency of the World Bank than Jeffrey Sachs (Larry Summers, also a candidate, comes to mind,) but Sachs is well worth raising an alarm about. He combines a new fangled profile as a progressive with policies that amount to full steam ahead for global growth. And he’s running as the candidate of “change” clearly hoping no one looks too closely at his record as an economic hit-man. In the US (if not in much of the rest of the world and certainly not CounterPunch) Sachs’s closeness with the singer/crusader Bono bestows a liberal glow. He directs the Earth Institute at Columbia University, advises the UN and the Congressional Progressive Caucus, and he’s winning endorsements from among others, Congressman John Conyers and economist Mark Weisbrot. He’ll attract predictable opposition from the Right who bristle at any mention of foreign aid, but although his media pals like to forget it now, Sachs was once evangelist number one for exactly the heavy-handed “fly-in-fly-out” development tactics that have made the world financial institutions so passionately hated. Last week, John Cavanaugh of the Institute for Policy Studies and American University development professor Robin Broad laid out a raft of concerns to which Sachs responded thus: “I would be the first-ever development practitioner and anti-poverty professional to be World Bank President, just what is needed given the bank’s mission of a “world free of poverty.”
In Europe’s post-Soviet “transition” years, Sachs’s professional poverty expertise was mostly in increasing it. Russia, following Sachs’s callous “shock therapy” prescription, sold off state companies, suspended public subsidies and drove employment and life expectancy into the ground, with brutal long-term consequences, exacting the most savage costs in terms of death and suffering since the Second World War and the results of the Sachs experiment in Poland, Estonia and Slovenia weren’t much better. While a handful of global gamblers got rich of the disaster, former World Bank economist David Ellerman, said of Sachs “Only the mixture of American triumphalism and the academic arrogance of neoclassical economics could produce such a lethal dose of gall.” If Sachs could double suicide rates in Russia as a cocky young Harvard advisor, it’s hard to imagine what he could to the world as World Bank President.
In recent years, Sachs has taken a few turns. He embraces debt forgiveness (some) and has some nasty things to say about world military spending in his book “the End of Poverty.” But the business of “poverty reduction” is a complex one. The World Bank’s calculations have been incisively discussed here by Adam Parsons. Suffice to say, there’s extreme poverty and there’s just getting by. In the same way when it comes to development, there’s total exclusion from the world economy — and there’s becoming a cog in it. Sachs’s vision of a “world free of poverty” has more cogs in more wheels, but it’s the same deadly machine driving the planet to the same nasty brink.
To cite one example. in his 2007 Reith lecture series “Bursting at the Seams” Sachs pushes new agricultural technology and commercial fertilizers to increase yields in low-life expectancy countries. “Africa can and must have a Green Revolution as India initiated nearly forty years ago.” He celebrates increased yields and dismisses concerns about environmental damage and rising debt, claiming that “Older techniques for replenishing soil nutrients, such as the rotation of farm lands, allowing the replenishment of nutrients on land left to fallow for 10 or 20 years, are no longer feasible.” To top things off, there’s a dose of “population control” in Sachs’s mix. “The evidence is overwhelming that it’s possible and necessary to have a rapid demographic transition on a voluntary basis to greatly reduce fertility rates in poor countries,” said Sachs. more