A run on the World Bank

From the Washington Times:

If you were a stockholder of a bank and its managers kept telling stockholders they would have to "write off" the loans they had made because the borrowers were in no position to repay them would you fire the management for incompetence? If you are a taxpayer, particularly an American taxpayer, you are a stockholder in such a bank -- the World Bank -- to be specific.

The World Bank was set up in 1944 (along with the International Monetary Fund) to assist with post-World War II reconstruction. Its mandate is to reduce world poverty and promote economic growth but, in fact, many of its activities have had precisely the opposite effect. ...

This week, Paul Wolfowitz took over the World Bank presidency from James Wolfensohn. And the World Bank has just set a 60-year record of failure. If Mr. Wolfowitz decides he would like to break the mold and become a successful World Bank president, first he will need to get the bank out of the "lending" business.

Most of the lending has only propped up government monopolies and underwritten government inefficiencies and corruption. (Many objective observers, including several former high-ranking Bank officials, believe it should be abolished but, unfortunately, neither the Bush administration, nor Congress nor officials in other rich nations have the guts to do so.)

Without a responsible rule of law that protects private property rights, incentives and free markets, there can be no sustained development. [more]