A New President for the World Bank

March 6, 2019

The World Bank is one of the world’s most international and influential institutions. By offering developmental assistance (loans, expert advice and training) to low-income - and occasionally middle income - nations, it has the ability to shape a developing nation’s economy and thus, its future. Since its foundation in 1944, the United States, as part of an agreement with the various nations of Europe, gets to choose the World Bank's president. To make up for this privilege, America’s close allies, the various prestigious governments of Europe, get to deliberate on who to choose as the head of the International Monetary Fund. Many would argue this is an archaic system left behind from a bygone era of American exceptionalism. That’s probably true, as the United States and Europe are no longer the sole economic and military superpowers of the free and prominent world. However, that doesn’t change the fact that this agreement is how the leaders of two of the most important global financial institutions are chosen. This brings us to the issue at hand: the latest nominee for the presidency of the World Bank - David Malpass.

 

 

Mr Malpass received his B. A. in physics from Colorado College and then went on to earn his MBA at the University of Denver. Then he proceeded to study international economics at Georgetown University’s School of Foreign Service. His first foray into the world of big politics came when he worked on and helped design the 1986 tax cuts with the Reagan administration. This experience made him a natural fit for any new committees that where being formed at the time - precisely why he served as the Republican staff director on Congress's Joint Economic committee (1989-1990). By the 2000s he had quite a hefty name in Congress, causing him to become a prominent member of Congress’s Blue Ribbon budget panel (2002-2003). After Obama was elected, the need for Republican economic advisors dried up in Washington, so in 2008 Mr Malpass founded Encima Global. A firm which provides institutional investors with analyses of global political and economic trends for investors. Mr Malpass is a consistent contributor to Forbes magazine, his op-ed pieces are also frequently found in the Wall Street Journal. In May of 2016, his career in the world of applied political economics took off once more. He was initially brought on as a senior economics advisor in the Trump administration and in August of 2017 became Under Secretary of the Treasury for International Affairs.

 

However Mr Malpass hasn’t come to be the center stage, without his fair share of criticism however. Many have pointed to him as an example of how partisan politics can be mixed quite dangerously with economics. Numerous academics such as Bruce Bartlett (a former Reagan advisor) have criticised his previous economic forecasts, in particular, his predictions leading up to the 2008 financial crisis. As he had written an article in which he explained how the housing and debt markets of 2007 really weren’t that big and how they should cause little concern for Americans. Which was ultimately wrong. His views on international financial institutions and their links to China have also caused many to be sceptical of him.

 

“Housing and debt markets are not that big a part of the U.S. economy, or of job creation...the housing- and debt-market corrections will probably add to the length of the U.S. economic expansion.” - David Malpass, The Wall Street Journal.

 

Even once his criticisms have been accounted for and even if you tend to agree with them, it can be said he is a qualified, albeit odd nominee for the role of president of the World Bank. He has dutifully served  under three administrations (Reagan, George H. W. and the Trump administration). Recently, Mr Malpass as the Secretary of the Treasury for International Affairs helped create and pass a surprising agreement through Congress, this agreement would increase the lending capacity of the World Bank. An agreement which is all the more surprising once his very public opinions on various global bureaucracies become known. Malpass has been an extremely active critique of the various global financial institutions of the world - such as the World Bank, the International Monetary Fund and the World Trade Organisation - it is his view that these organizations put their own success before that of the nations that they supposedly endeavour to help. He has also been quite vocal about the proximity of the World Bank to China, concerned that the bank may be endorsing China’s geopolitical ambitions by supporting Chinese infrastructure projects, such as the Belt and Road Initiative and the String of Pearls Initiative - which are meant to facilitate trade through less economically developed nations, by means of massive Chinese expenditure on infrastructure in sovereign and foreign territory.

 

Despite his various misgivings about the World Bank, nations around the world can feel reassured at his nomination, since the Trump administration has chosen somebody who is both professional and highly qualified as the next leader for this powerful and influential institution. Mr Malpass has proposed a number of well-received reforms that the World Bank could realistically endeavour to accomplish - these reforms mainly pertain to better measurements of the results of various programs and to greater transparency. Reforms that are uncontroversial and conventional, reforms that no one has objected to. Perhaps this a sign that he’s willing to be a little less critical of China if he were selected? However, it is almost certain that he will grow to despise this bureaucratic position, a position that he has criticized for so long - after all, he has felt tied down and restrained by organisations and bureaucracies before.

 

“When Congress legislates in haste, it often causes more problems than it solves. But Congress rarely reconsiders its mistakes.” - David Malpass.

 

 

Regardless of your views of the Trump administration, Mr Malpass is a seriously qualified candidate, albeit a  typical one from the States. Yet, typical and traditional aren't necessarily bad features, especially in a world which bewildered us in new ways, everyday. Perhaps his conventional approach is just what the World Bank needs? Will his supposed political bias become more tangible once he assumes office? His actions could simply send China into a dizzying fury? Could his conventional reforms actually make the World Bank more efficient and dedicated? It all depends on whether he sticks with what he has suggested so far or petrifies the world by continuing to fret over a rising China.

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