Ismail Lagardien: Justice not priority at bank

I almost missed the story. Clearing out some old copies of the Financial Times Weekend (still the best read on any Sunday) I flipped through some of the pages, just to make sure I had not missed anything.

Then I saw it. In a small box (6.5cm by 7cm on page 2 of the January 27-28 2018 edition), was a report: “World Bank chief economist [Paul] Romer leaves after disputes with staff”.

I smiled. I smiled because I recognised the conditions that led to his departure.

Since I worked in the office of the chief economist, Joe Stiglitz, 17 years ago, I have kept abreast with the institutional culture of the World Bank.

I am familiar with the institution’s intellectual and methodological shortcomings, and with the bank’s communications challenges – notably the inaccessibility and lack of practical relevance of what some of the orthodox researchers publish.

The most recent of crises in the global political economy drew attention, also, to the problems that macroeconomics faced, as a discipline.

These were all issues that Romer tried to address and which, as the Financial Times reported, “the internal justice bureau” of the bank prevented. The following passage stood out of the report:

“Outspoken chief economist Paul Romer is leaving the World Bank ‘effective immediately’ after just 15 months on the job, the bank’s president told staff . . . Mr Romer . . . had been engaged in a running battle with staff economists at the bank almost since his arrival in 2016.

“Areas of dispute have included everything from Mr Romer’s diktats on grammar and brevity in reports to serious questions about methodology . . . Mr Romer has rallied against what he said was the use of ‘obviously fabricated data’, ‘shameless self-promotion by colleagues’ and an ‘internal justice bureau’ that prevents change.”

Based on my understanding of the way that the bank works, and how divisible justice becomes when it is placed behind a façade of intellectual posturing and frippery, I was not surprised by Romer’s departure.

For one, his battles with orthodoxy placed him on a collision course with “tenured” economists and researchers, who were neither willing nor able to accept that the world had changed and that the challenges of the 21st century were enormous – and demanding intellectual transformation.

We should be clear, Romer is not radical nor is he anti-capitalist or even part of the real world economics or the post-crash economics group with which I associate myself.

One does not need to belong to a group to see the validity of his arguments.

Paul Romer

The following was the opening passage (the abstract) of his now famous essay, The problem with macroeconomics, which he delivered at Stern School of Business New York University on September 14 2016:

“For more than three decades, macroeconomics has gone backwards. The treatment of identification now is no more credible than in the early 1970s, but escapes challenge because it is so much more opaque.

“Macroeconomic theorists dismiss mere facts by feigning an obtuse ignorance about such simple assertions as ‘tight monetary policy can cause a recession’.”

My response would have been that they use wilful obscurantism and hide whatever logic or sense they have behind thickets of algebra, but this is not about my views.

At the bank, Romer challenged research staff to open up their work to new ideas, concepts and methods.

He also asked them to write in ways that were easily understood by people who were not formally trained in economics.

He was unsuccessful, not because of his ideas, but because a core group of staff moved against him, sought to push him out of the bank and the leadership of the institution – rather than see the long-term value of his work and the changes that were under way – lost their spine, and sought to protect their own images and positions of privilege.

These were the folk who made up what was described in the Financial Times as “the internal justice bureau”.

This “bureau” and the people whose privileges it protects were also concerned about Romer’s use of language.

They objected to his identifying specific problems and specific persons in direct language.

In his response to this, Romer replied: “One suggestion is that it would have been better if I had written one of those passive-voice ‘mistakes were made’ documents that firms issue after a PR disaster . . . I hope we can agree that if we go too far in the direction of passive-voice science we are not going to be happy about ending up with anonymous-sewer-science”.

The inevitable outcome, Romer wrote, would be what he described as “the lies and intimidation of sewer-science in the wild”.

When I reflect on these events and the discussions around this, I come back to the understanding that it is difficult to convince people of change or to think differently, if their livelihood depends on holding to their old ideas.

I also return to an admission by a senior World Bank staff member from an extremely poor country several years ago, who was asked how he could be part of policy-making that was unjust.

He admitted that he worked at the bank for the salary. It seemed quite clear that he was not there for justice.

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