This 'fake news' era cannot be reduced to only Donald J. Trump, the 45th president of the United States, who has been singularly responsible for its popularity and possible institutionalisation. As a new World Bank initiative to recalculate the last four years of global growth-rates indicates, the resort to fake news has been around for a while, and widely so. What is so alarming is that the practitioners and disseminators of fake news happen to be the very persons and offices the public most trust: either democratically elected officials, as Trump, or a revered institution, like the monetary/development family the World Bank belongs to (and whose reverence began by bailing West European countries out of World War II chaos and destruction). In almost all cases the direct or indirect victim happens to be less well-off or the common citizen.
While the media is sabotaged with the Trump-related fake news reporting saga in one corner of Washington, DC, in another nearby corner of the US capital the International Bank for Reconstruction and Development (IBRD), as the World Bank is formally known, faced an embarrassing revelation of how the growth-rate given ideologically incompatible countries illustrates egregious miscalculation. Though a number of countries have faced (and complained about) this plight, the one triggering this recount was Chile: from a 25th ranking just a decade ago, it plunged to 55th last year.
Of course, those familiar with Chilean politics fully know that that decade witnessed two ideologically incompatible governments, but how this see-sawing domestic policy-making echoed in Washington's World Bank corridors rang with a 'I told you so' refrain, incredulity, and embarrassment. When welfare-enhancing Michelle Bachelet was in office (2006-2010), or is (from 2014-), Chile's ranking plummeted; yet when market-friendly Conservative Sebastián Piñera was in office (2010-2014), it did just the opposite. There may theoretically exist no co-relationship between domestic politics and World Bank rankings, or at least World Bank's Chief Economist, Paul Romer, who resigned last week (January 24), did not believe there is. Instead he ascribed the ranking irregularities to internal methodological changes: new metrics changed measurement outcomes. Although he confirmed a recalculation would be launched, we in the rest of the world cannot but add a grain of salt or two on his interpretation.
Bangladesh, for instance, increasingly finds itself at loggerheads with growth-rate measurements. What our government calculates and predicts often varies by almost as much as one-percentage point against the World Bank's forecasts or estimations (or those of other agencies in the World Bank family, such as the Asian Development Bank). Different methodologies stain the process, but why so remains the key puzzle. For a country borrowing and repaying World Bank (or ADB) loans, nothing can be more conducive to long-term sustainability of those borrowings/loans/ repayments than a streamlined methodology. After all, the audience of bank repayments dynamics happens to be larger than the fund suppliers and borrowers: private and public investors keen on lending/investing also keep their eyes and ears open for dynamics such as these, and a small erroneous signal can end up emitting large sound-bites all over the world, much to the detriment and reputation of the borrowers. Not alienating them is a holy borrowing precept. Streamlining methodologies can be, and often is, a straight-forward transparent function; but polluting it with ideological considerations weakens trust, invites substitution, and leaves both sides worse off.
Two related issues shed light upon why trust is on a losing streak and substitution is becoming a growth-industry: the World Bank (and its family institutions) serving capitalist growth; and the budding private-sector interest in loan transactions.
Ever since post-World War II European recovery was facilitated by the Bretton Woods institution (as the International Monetary Fund or IMF and IBRD were originally known from 1944 to 1971), they have become synonymous with the growth of capitalism. During the Cold War, that is, from 1947 to 1987, they were explicitly identified and treated as such, not just by the Soviet-dominated socialist bloc, but also the overlapping dependencia school of economic thought that influenced Latin Americans. Obviously, with the socialist bloc losing out in the Cold War by 1989 and the Latin import-substitution paradigm exhausting itself during the 1980s, the Washington Consensus and neo-liberalism emerged, almost by default, as the dominant capitalist vehicles, this time attracting more subscribers and buyers worldwide than the Bretton Woods institutions could. With the IMF and the World Bank championing both the Washington Consensus and neo-liberalism, the original bias against socialist or left-oriented political parties remains.
It is hurting transitional countries by forcing them into too rapid a transformation or threatening local traditions: undeveloped and less-developed countries find themselves thrown from traditional, agricultural, or semi-manufacturing backgrounds into full-fledged market transactions/practices without ample training or diluting phases simply by borrowing for modernisation purposes. Even the developed countries across West Europe, and the United States itself, sheltered behind farm protection, not just when agriculture dominated their economies a century ago, but even at their manufacturing peak towards the end of the 20th Century. The Uruguay Round stalemate of the General Agreement of Tariff and Trade (GATT) ventilated the damage done by this. Denying such lengthy transitional windows to less developed countries stymies their own growth, keeps them dependent and eventually subtracts from global growth by constraining both trade and investment.
Any neo-liberal or Washington Consensus institutions must bring into their methodologies other new workplace practices, not necessarily the market-friendly World Bank types. These range from such developed-country preferences as maternity-friendly policies, new-born-children-determined work adjustments, and even reduced work-hours, as well as developing-country practices using child-labour or gender-nuanced working cultures to give modernisation a congenial face.
Market-mentality cannot be all that drives 21st Century citizens and consumers, whether in developed country (DC) or least developed country (LDC) neighbourhoods; and certainly as monolithically as it currently does. A more appropriate trust-enhancing calibration is needed, in turn sloughing off the worn-out ideological fixation.
Delaying these reforms would accelerate the growth of the second concern: shift from institutionalised or agency-monitored development (borrowing, funding) to the private sector. To be sure, not all private-sector agencies can claim to be private: China's development funding comes, for example, through public agencies. Yet, China is mentioned because, in Bangladesh, as increasingly in many other countries across Africa, Asia, and Latin America, it is stepping up to provide an alternative form of borrowing and local problem-alleviation that the World Bank once monopolised. Our Padma Bridge crisis illustrates how the World Bank trajectory can easily be subordinated to a Chinese initiative with fewer strings and methodological manipulation (albeit with increasingly higher interest rates).
Messing around with Chile's rankings, then, should be seen as the tip of a monumental iceberg. Not only methodological reforms in Washington, but a far more softened capitalist approach may seduce today's bustling 'emerging' countries. Otherwise, even the more expensive Chinese alternative could win the tussle in the rest of this century since the borrowing countries may be willing to pay the high price of Chinese borrowings given the even more gargantuan developmental demands they face and the lower ideological juggling or alternative financial sources available.
Either way, global development should not be trapped in a second-best capsule since that recklessly violates a fundamental neo-liberal and Washington Consensus principle: transparency. 'Fake news' dominance under transparent guidelines becomes one of the biggest puzzles the 21st Century must resolve if neo-liberalism and the Washington Consensus are to survive.
Dr. Imtiaz A. Hussain is Professor & Head of the newly-built Department of Global Studies & Governance at Independent University, Bangladesh.
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