Critics find confusion and inaccuracy in World Bank report

November 1, 2000

Free Market Foundation

In the World Bank’s new report on global poverty, the agency’s chief economist charges that “global capitalism is failing the world’s poor.” That, critics say, sets the tone for the rest of the report, which they charge is full of inaccuracies and reveals that the organisation hasn’t a clue as to how to help nations create wealth and prosperity.

Here is a small sampling of the report’s assumptions and conclusions that critics find so offensive:

To reach the conclusion that global capitalism is failing to pull the world’s poor out of poverty, the report adopts an elastic definition of poverty which includes “powerlessness, voicelessness, vulnerability and fear” – thus allowing the World Bank to ignore the fact that free markets are lifting living standards almost everywhere around the globe.

The Bank asserts that the world’s poor are getting poorer and are more vulnerable to disease – ignoring the fact that worldwide per capita living standards have more than doubled since 1960 and the world’s two most populous nations, China and India, have recorded stunning progress in living standards just in the last quarter-century.

Infant mortality rates in developing countries have been cut by more than half just since 1970 in most non-African Third World nations and life expectancies have soared even in the poorest countries like Bangladesh and India.

Private analysts say it is not a coincidence that Africa, the area of the world least connected to global capitalism, is still ravaged by economic backwardness and lack of health progress.

Analysts advise World Bank officials to consult the Heritage Foundation’s Freedom Index – and accept the fact that economic freedom and social prosperity go hand-in-hand.

Source: Stephen Moore (Cato Institute), World Bank Poverty Fog, Washington Times, September 27, 2000.

For text http://www.washtimes.com/commentary/commentary-2000927143926.htm

For more on Wealth and Poverty
http://www.ncpa.org/pd/economy/econ12.html

RSA Note:
Governments everywhere are causing their poor citizens untold grief by squandering resources and interfering in the process of wealth-production. The World Bank criticism is very badly misdirected and misinformed. Let us apply economist Walter Williams definition of capitalism, Voluntary exchange between individuals free of third party intervention, to the reports contention. We then soon realise that such freedom could never leave the poor powerlessness, voiceless, vulnerable and fearful? It is not capitalism but statism that is at the root of the problem.

Eustace Davie, director, FMF