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By David Adler and Yanis Varoufakis
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Jim Yong Kim was once a fierce critic of the Washington consensus. In his book Dying for Growth, published in 2000, Kim railed against the World Bank’s free marketeering, the costs of which “have been borne by the poor, the infirm and the vulnerable in poor countries that accepted the experts’ designs”.
Yet as president, Kim turbocharged the bank’s commitment to private profits against the public interest. “Maximizing finance for development” (MFD), the strategy he adopted in 2015, transformed the World Bank from a direct investor in developing countries to a mere facilitator of private finance. The bank’s core activity would not be lending to governments, but to “de-risk projects, sectors and entire countries”, in effect socializing the risks on behalf of the private investors and privatizing any gains.
From this perspective, it makes perfect sense that Mr Kim resigned early to take up a post at … a private equity firm.
His decision must, however, be our cue to review the role of the World Bank and the IMF today, and perhaps to revisit Keynes’s prescient idea circa 1944.
The world today needs, as much as it did in 1944, a massive international investment program. Back then, humanity needed reconstruction after a lethal world war. Today, the planet is crying out for a green transition that will cost at least $8tn annually.
Where will the money come from? Surely not from the stressed budgets of our states.
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