The Wolfowitz hit reveals an organization run for the benefit of its employees, and the only fix for such a monster is privatization.
The World Bank Group:
The World Bank Group is a group of five international organizations responsible for providing finance and advice to countries for the purposes of economic development and eliminating poverty.
It’s successfully eliminated poverty in its employee base (my emphasis):
…the Bank faces an existential financial problem because of the combined effect of its declining relevance and attractiveness as a funding source for many middle-income countries like China, India, Mexico and Russia, and an annual administrative budget exceeding $1 billion.
It’s a positive development that many countries no longer are dependent on Bank lending, but the income consequences to the Bank need to be addressed because the administrative budget is a serious burden on the world’s poor and donor taxpayers.
The most important cost drivers are staff salaries and headcount, and it is here where some of the most pernicious effects of the staff association’s union characteristics are felt.
Over the years, the Bank’s legal department has constructed a complex set of rules and procedures governing employment practices, particularly terminations, designed to avoid a court of law somewhere imposing something more onerous in the name of “due process.”
The unfortunate result is a system of such Dickensian complexity that virtually all bank managers have concluded that no one can be fired…
Other unfortunate results are an unreasonably low mandatory retirement age of 60 and the retention of an army of consultants nearly as large as the Bank’s regular workforce. Many consultants are former Bank staff.
The permanent nature of Bank employment also complicates needed reform of its whistleblower policies, which are frequently abused as another tool of entrenchment.
So it’s a bloated nationalized industry, and it’s hardly surprising it sees nothing wrong in feeding money to corrupt governments.
Wolfowitz came in with a mission to clean this up, and as a result of the internal opposition he’ll now be crippled or fired. With that precedent nobody competent will step into his shoes.
All of which presents the US and UK with a perfect justification for pulling out when the next world financial crisis hits. That should be soon.