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Obama

Who Should Lead the World Bank

by Charles Krakoff on March 31, 2012

in Development,Economic Reform

Jagdish Bhagwati, a Professor at Columbia University and a leading development economist,  wrote the following letter in yesterday’s Financial Times about President Obama’s designation of Jim Yong Kim to succeed Robert Zoellick as President of the World Bank. He is absolutely right. Dr. Kim is not the right person to lead the Bank, especially in a time of global economic transition, and especially when such an eminently qualified candidate as Ngozi Okonjo-Iweala, currently Nigeria’s Finance Minister and a former World Bank Managing Director, is available. Professor Bhagwati writes:

“Sir, In your editorial “The right leader for the World Bank” (March 28) you say that Ngozi Okonjo-Iweala is a hugely preferable candidate to succeed Robert Zoellick, but you nonetheless surrender to Barack Obama’s faux pas in choosing Jim Yong Kim, a healthcare expert, as “inevitable”. Whatever happened to the notion that this time around, we would opt for the “best” candidate? But more can be said.

“First, Dr Kim is no more an American than many of us: he was born abroad and is reported to have come here at the age of five. Besides, Americans do not entertain discrimination against foreign-born “intellectual guestworkers”. Dr Okonjo-Iweala has studied with great distinction at Harvard and MIT in economics, has lived in the US for many years, and (I speak from personal experience) she can outwit and outsmart almost any policy economist I know.

“Second, how can President Obama bypass an independent-minded African in favour of yet another agreeable Korean – Ban Ki-moon is another one – and keep a straight face?

“Third, an administration that prides itself on promoting women is sidelining the most gifted woman candidate for this important job. It makes a mockery of the claims that Mr Obama cares for women whereas Mitt Romney will not.

“Finally, and most important of all, the Obama administration mistakenly believes that “development” consists of healthcare, microfinance and other such projects, and not the big high-pay-off “macro-level” policies such as trade. The insidious notion that the former constitutes “development economics” and the latter does not is both wrong and glorifies the less important at the expense of the more important.

“The US government has already put an administrator with a background in health in charge of the United States Agency for International Development: Rajiv Shah. At the same time, it has destroyed Doha and encouraged the manufactures fetish and protectionism, which will cost developing countries far more than USAID’s micro projects will benefit them. Dr Okonjo-Iweala will do both “macro” and “micro” projects. But Dr Kim’s healthcare expertise comes with an uncritical embrace of the charges against “neoliberalism”, betraying susceptibility to the anti-reform, anti-growth rhetoric of the 1990s. Caveat emptor.”

No further comment needed.

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Déjà Vu All Over Again: Afghanistan Reprises the Indochina War

by Charles Krakoff on March 14, 2012

in Crisis,Politics,Uncategorized

If existing parallels between the U.S. experience in Indochina and our current entanglement in Afghanistan weren’t already enough, the Afghanistan war (Operation Enduring Freedom) now has its own version of the My Lai massacre. The only surprise is that nothing like the Sunday murder of 16 Afghan civilians by a U.S. Army Staff Sergeant had previously occurred in 10 years of fighting.

For all his campaign promises to close the Guantanamo Bay prison and end our military adventures in Iraq and Afghanistan, Barack Obama has pursued a course almost indistinguishable from that of George W. Bush. But of late, he has started to sound more like Richard Nixon. In a speech he gave yesterday in the Rose Garden, the President said, “So make no mistake, we have a strategy that will allow us to responsibly wind down this war.  We’re steadily transitioning to the Afghans who are moving into the lead, and that’s going to allow us to bring our troops home…And meanwhile, we will continue the work of devastating Al Qaeda’s leadership and denying them a safe haven…I am confident that we can continue the work of meeting our objectives, protecting our country and responsibly bringing this war to a close.” This sounds eerily like Nixon’s “peace with honor” and “Vietnamization of the war.”

It can’t be long before we are treated to images of American diplomats being helicoptered out of the U.S. Embassy in Kabul as the Taliban move into the city. In 1972 we brought our troops home from Vietnam, under the pretext that the Vietnamese – and the Cambodians as well – could now shoulder the responsibility for their own defense. It took another three years before the Khmer Rouge and the North Vietnamese Army seized Phnom Penh and Saigon, respectively during which corrupt governments in both countries, rather than trying to defend their people, engaged in an unseemly scramble to amass as much loot as they could before the party ended.

The Karzai government is easily the equal of Lon Nol’s Cambodian regime when it comes to incompetence and corruption, while the Afghan Army is, if anything, less capable than its historic Southeast Asian counterparts, and also infested with Taliban sympathizers. Once NATO forces withdraw, I suspect it will take far less than three years for the Taliban to take over. Tragically, that might be the best possible outcome, the worst being a return to all-out civil war between north and south.

It is time for us to leave. Now.

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Get MAD: What’s Wrong with Nuclear Containment?

by Charles Krakoff on March 3, 2012

in Crisis,Politics

In spite of our recent and ongoing misadventures in Iraq and Afghanistan, the United States seems to be stumbling towards war with Iran. President Obama has stated that a nuclear-armed Iran is unacceptable and that he is prepared to use force to prevent it. In part to prevent Israel from launching an immediate attack on Iran, he has offered assurances that we will act, if necessary, once all other options are exhausted. It would be hard for the President to back down from such pronouncements once it becomes clear that Iran is moving forward with its nuclear program, since it would reveal his strong language as so much empty bluster. [click to continue…]

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When a Spending Cut is Really a Tax Rise, and Other Logic-Defying Mysteries

by Charles Krakoff on July 29, 2011

in Crisis and Recovery,Economics,Growth,High Crimes and Misdemeanors,Politics,The Markets,United States

Marco Rubio, the Tea Party-leaning freshman Senator from Florida, recently said something remarkably intelligent, if self-evident, which appears to elude most Washington policy makers. “We don’t need more taxes,” he said, “We need more taxpayers.”

This is axiomatic for anyone trying to reform tax systems and increase government revenue, which I have done in a number of countries in Africa and Asia. In most of these countries, as well as in places like Greece and Italy, most people (and companies) do not pay taxes, at least not officially. Tax administrations are both inefficient and corrupt; if you’re lucky you will never attract the attention of the taxman, and if you’re not, a bribe – possibly significant, but almost certainly less than your true tax liability – will do the trick. And when garbage piles up in the streets and public money vanishes into the pockets of corrupt politicians and bureaucrats, it is natural for citizens to decide government is not worth whatever taxes they are supposed to pay.  In most of these countries, it is foreign individuals and corporations, who lack the proper connections, who are not steeped in the arcane rules of the game, and who try to obey the law, who shoulder much of the tax burden. The cell phone company, the brewery, and the oil and mining companies – and their foreign employees – are easy and highly visible targets, and governments never tire of trying to change the rules, imposing new taxes or demanding a share of the company.

The United States, of course, is not Nigeria or Greece. As hard as it may be to follow the letter of the law when the tax code runs to 10,000 pages, most people and companies try their best, exploiting whatever advantages they and their accountants can find, but rarely committing any deliberate infractions, cash payments to the guys who help carry your furniture up to the second floor apartment notwithstanding. The IRS is too effective, and the penalties too great, for most of us to chance it. And, at least until now, most Americans have thought that paying taxes is one’s duty as a citizen. [click to continue…]

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President Obama’s Tax Reform Proposal: Good Policy, Brilliant Politics

by Charles Krakoff on December 10, 2010

in Competitiveness,Economic Reform,Economics,Politics

In a move bold and radical by the standards of Washington political gridlock, President Obama yesterday called for comprehensive tax reform. In so doing, he has given Congressional Republicans the rope with which they may choose to hang themselves.

Everyone from Paul Krugman to Rush Limbaugh can agree that the U.S. tax code – weighing in at around 10,000 pages it is the third longest in the world, after India’s and Britain’s – is a mess, shot through with loopholes, incentives, and exemptions: $1 trillion worth each year, according to the President’s bipartisan deficit reduction commission, which released its preliminary findings a couple of weeks ago. The gist of the President’s remarks is that the tax code could be simplified by removing these loopholes, broadening the tax base, and lowering both corporate and personal income tax rates. [click to continue…]

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