World-Class Scapegoating.

ITEM: The World Bank's Web site stresses: "The 'bottom line' for the World Bank is its development effectiveness." This year's Annual Review of Development Effectiveness, concludes the World Bank, "confirms that the Bank's development performance has improved significantly over the past five years."

CORRECTION: World Bank economist William Easterly disagrees. Easterly, whose recent book The Elusive Quest for Growth has been widely praised, summarized his findings in the Financial Times for July 4th: "Contrary to conventional wisdom, aid to the developing world has been a big disappointment." The one trillion dollars, he said, "spent on aid since the 1960s, with the efforts of advisers, foreign aid givers, the International Monetary Fund and the World Bank, have all failed to attain the desired results." As a result of his criticisms in the media, Easterly is being subjected to disciplinary action.

A World Bank spokesman acknowledged to the Wall Street Journal that staff members usually don't get media clearances, with other officials stating (anonymously) that they couldn't recall any other disciplinary action ever taken over such a supposed infraction. Michael Finger, a former World Bank economist, has remarked that the logic of the world body apparently is: "We're going to draw and quarter Bill Easterly so that the others will stay in line."

The scapegoating comes when even internationalist allies of the bank have been highly critical of the Clinton-appointed president of the institution, James Wolfensohn. A former World Bank director, Jessica Einhorn, wrote in Foreign Affairs that Wolfensohn has been jumping from one development fad to another. Similarly, Stephen Fidler commented in Foreign Policy that, since June of 1995, Wolfensohn "has presided over what many close to the bank view as a tragic deterioration of the world's premier development institution, which they describe as rudderless and lacking strategic vision.

Another World Bank report in 1998 concluded that foreign aid has proven "an unmitigated failure." Even the aid agencies, said the bank's report, "saw themselves as being primarily in the business of dishing out money, so it is not surprising that much [assistance] went into poorly-managed economies -- with little result."

As criticism arose, the World Bank has come up with refinements such as conditional loans -- tools ostensibly designed to change the policies of recipient governments. During the 1980s and 1990s, Easterly said in his Financial Times piece, the International Monetary Fund and World Bank made 958 conditional loans. During 'the past decade alone these institutions gave 10 or more conditional loans each to 36 poor countries." However, with a few exceptions, "government mismanagement usually continued in these countries. The growth rate of income per person of the typical member of this group during the past two decades was zero."

Easterly's comments, despite World Bank protestations, were right on target. Sometimes, he said, money would be given even when the actions of recipients guaranteed no growth. Many times, he observed, the recipients would promise the multilateral agencies "that this time they would reform, like alcoholics promising never to drink again." The world body isn't perturbed because the account was untrue. The problem is that the truth hurts, especially when widely disseminated.

Larger Tax Harvests Ahead

ITEM: "A majority of Iowa farmers surveyed believe there should be some type of government safety net for them," reported Iowa's Ames Tribune for November 7th. "About 84 percent ... said the government should give them funding support, and 40 percent thought there should be an increase in direct income support." The National Agriculture, Food and Public Policy Preference Survey revealed similar figures nationwide.

Sen. Tom Harkin (D-Iowa), chairman of the Senate Agriculture Committee, was said to be working on "balanced legislation" on farming. According to the Tribune, his plan includes "increasing loan rates for most commodities, setting a floor on those rates and continuing fixed direct payments and creating a counter-cyclical income system." CORRECTION: We were formerly assured that the 1996 Freedom to Farm Act would wean farmers from subsidies. Reacting to low commodity prices and drought, Congress has repeatedly intervened with "emergency" farm aid bills.

During the 1930s, farmers made up 25 percent of the U.S. population, and the average farm income was about half the average in the country. Now, however, the farm population is about 2 percent of the country, though average farm household income ($52,350) is above the average income in the country at large. Nevertheless, almost three-quarters of farm aid goes to less than 20 percent of farms, according to the National Center for Policy Analysis.

Harkin's "counter-cyclical" payments, supposedly a protection from low prices and yields, will "merely perpetuate inefficient farming practices," writes John Frydenlund of the Heritage Foundation, and are quite "similar to the cost target price/deficiency payments that were eliminated in 1996."

Yet, the Department of Agriculture reports that farm income for this year should reach new heights, some $3 billion above last year. Of late, points out Frydenlund, the "average net worth or equity of U.S. farmers [has] increased steadily, and today is nearly three times that of average Americans." Making agriculture even more dependent on the government, however, will hold back farmers in the long run and impose greater financial burdens.

WILLIAM P. HOAR