The faux scandal at the World Bank has stirred up interest and debate about its operations. Discussing two recent columns about its operations, Professor Anderson makes a very compelling argument that it should focus on grant-makingto the poor, pare back its staff and its cushy remuneration, and stop acting like a bank:The problem of the Bank qua bank is that it seeks to intermediate private capital markets (with a subsidy), to try and do precisely what Mallaby suggests private capital markets cannot do because capital markets cannot solve all of poverty's problems. The reformers would suggest that the subsidy in the case of the Bank's ordinary lending to middle income countries is not really enough to compete with the functioning of the private markets; the Bank's lending really is a fifth wheel, and it should give that up in favor of activities for which it is not merely a fifth wheel. (snip)In the case of the poorest countries, however, lack of capital is genuinely an issue. So is...(Read Full Post)