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globalization
If DOGE Wants a Worthy Target, It Should Look at the World Bank and IMF
These are two of the most questionable and controversial institutions directly or indirectly funded with U.S. taxpayers’ money.
Feb 25, 2025
I think that Elon Musk and his Department of Government Efficiency, or DOGE, have been misinformed. I don’t disagree with their shutting down USAID, but I think it’s rather small fry. There are much, much bigger fish to fry if you want to really save U.S. government money that is being wasted in programs that are mischievously justified as aid to the poor people of the world.
Elon, hear me out: if you walk northwest from your headquarters at the Eisenhower Executive Building along Pennsylvania Avenue, you’ll come after one long block upon two ugly buildings squatting beside each other. One is the World Bank. The other is the International Monetary Fund (IMF). You can actually just walk in and demand to look at their books since they are extensions of the U.S. government. And you would have a very good reason to do so, since these are two of the most questionable and controversial institutions directly or indirectly funded with U.S. taxpayers’ money.
The IMF and the World Bank are monuments to misguided economic thinking and policies that have brought much misery to the peoples of the Global South.
Let me start with the World Bank, which is located at 1818 H St NW. This institution has so-called development projects throughout the Global South, otherwise known as developing countries. This agency says that its mission is to end poverty in the developing world. To fulfill this goal, its lending has risen from nearly $55 billion in 2015 to $117.5 billion in 2024. Yet, despite this massive increase, the bank admits that global poverty reduction “has slowed to a near standstill, with 2020-2030 set to be a lost decade.” Some 3.5 billion people, or 44% of the globe, remain poor, after decades of massive World Bank lending. And a major part of the reason is that World Bank programs have created poverty instead of alleviating it.
Living in Luxury While “Fighting Poverty”
To manage its operations, the Bank’s full-time staff rose from nearly 12,000 in 2015 to over 13,000 in 2023. These figures are just the tip of the iceberg. If one includes all employees—permanent, non-permanent, contractual, part-time—throughout the world, the bank employs close to 41,000 people. The vast majority, 26,000, or 63%, work out of the World Bank headquarters in Washington, D.C., and only 3,200 are located in Africa, where most people in extreme poverty live.
The Bank’s economists and top administrators are among the highest paid financial functionaries in the world, which explains the reason why the bank is a major cause of the brain drain from developing countries: a great number of highly trained economists from developing countries prefer to work at the bank instead of their home countries, with some going straight from Ivy League or British graduate schools to Washington, D.C. Many within the bank and the International Monetary Fund complain about the “South Asian Mafia” that they claim controls employment opportunities for economists and higher-level staff in the two organizations.
The World Bank has come under fire for the billions it has spent supporting fossil-fuel projects throughout the Third World that have contributed to global warming and to mega-dam projects that have displaced millions. The bank, along with the fund, has also gained notoriety for imposing “structural adjustment” programs guided by the radical principles of the “Washington Consensus” that are designed to promote globalization but have, instead, increased poverty and deepened inequality. The reason World Bank projects and programs don’t work or create exactly the opposite of their intended goals is because they are based on questionable propositions built on little or no empirical evidence. An assessment made a few years ago by an all-star team of renowned economists led by Princeton’s Angus Deaton, a recipient of the Nobel Prize for Economics, was damning:
[The] panel had substantial criticisms of the way that the research was used to proselytize on behalf of bank policy, often without taking a balanced view, and without expressing appropriate skepticism. Internal research that is favorable to bank positions was given great prominence, and unfavorable research ignored. In these cases, we believe that there was a serious failure of checks and balances that should have separated advocacy and research. The panel endorses the right of the bank to strongly defend and advocate its own policies. But when the bank leadership selectively appeals to relatively new and untested research as hard evidence that these preferred policies work, it lends unwarranted confidence to the bank’s prescriptions. Placing fragile selected new research results on a pedestal invites later recrimination that undermines the credibility and usefulness of all bank research.
The bank’s refusal to acknowledge real-world refutations of its pro-globalization advocacy and its unbalanced, one-sided research led to justifiable rejection of its advice by the people who were suffering from the policies it was implementing, confessed Paul Collier, head of the Research Development Department of the Bank from 1998 to 2003:
The profession has been unprofessional, fearful that any criticism would strengthen populism, so that little work has been done on the downsides of these different processes [of globalization]. Yet the downsides were apparent to ordinary citizens, and the effect of economists appearing to dismiss them has resulted in widespread refusal of people to listen to “experts.” For my profession to reestablish credibility we must provide a more balanced analysis, in which the downsides are acknowledged and properly evaluated with a view to designing policy responses that address them. The profession may be better served by mea culpa than by further indignant defenses of globalization.
Despite the high rate of failure of its lending programs acknowledged in internal World Bank assessments, the World Bank administrative budget that supports the high salaries of its economists and other high-level staff just keeps growing. The World Bank (IBRD/IDA) administrative budget was approved at $3.5 billion for FY25, a sizable rise from the $3.1 billion authorized for FY 2024, with no convincing reason at all.
The IMF and the Art of Worsening Financial Crises
The International Monetary Fund, whose address is 700 19th St NW, is the World Bank’s sister agency. It has a full-time staff of 3,100, supported by a budget of $1.5 billion. The IMF’s economists are paid even higher than those at the World Bank, and they evoke more fear, hatred, and contempt than the Bank.
The IMF has an equally controversial history. It has a record of coming in to supposedly assist developing economies in crisis, only to make things worse. Its greatest debacle and scandal was its performance during the Asian Financial Crisis of 1997-98, when the so-called “tiger economies “of the East and Southeast Asia were destabilized by the massive inflows and outflows of foreign portfolio investment.
The fund was heavily criticized on three counts. First, it had encouraged the governments of the region to eliminate capital controls, thus provoking uncontrolled capital flows. Second, it assembled multi-billion dollar “rescue packages” that went to rescue not the people suffering from the crisis but to compensate the foreign financial speculators that had lost millions in dubious speculative ventures, thus encouraging “moral hazard,” or irresponsible investing. Third, its measures to stabilize the damaged economies intensified the crisis, since instead of encouraging government spending to counteract the collapse of private sector, it told the governments to radically cut spending, leading to a “procyclical” negative synergy that ended in deep recession.
So long as the IMF is there, the big international banks will assume that they will be bailed out for making irresponsible loans.
In just a few weeks, 1 million people in Thailand and 22 million in Indonesia fell below the poverty line. The only country that contained the crisis was Malaysia, which refused to follow the fund’s dictates and imposed capital and currency controls
So disastrous were the IMF’s interventions that George Schultz, President Ronald Reagan’s secretary of the Treasury, called for its abolition for encouraging moral hazard, and prominent economists like Jagdish Bhagwati and Jeffrey Sachs accused it of provoking global macroeconomic instability. Indeed, a rare conservative-liberal alliance in the U.S. Congress came within a hair’s breath of denying the IMF a $14.5 billion replenishment.
Eventually, the fund was forced to admit that the “thrust of fiscal policy… turned out to be substantially different… because the original assumptions for economic growth, capital flows, and exchange rates… were proved drastically wrong.” But things were never the same again. The IMF was so reviled for its performance that Asian governments developed IMF-phobia, swearing never again to ask the IMF for rescue even in the most dire circumstances. For instance, after paying off what Thailand owed the IMF, Prime Minister Thaksin Shinawatra declared the country “liberated” from the fund in 2004.
Instead of learning from its debacle during the Asian Financial Crisis, the IMF stumbled into another fiasco more than a decade later, during the Global Financial Crisis. It allowed itself to be hijacked by Germany, the European Commission, and the European Central Bank to provide billions of public money to rescue German financial institutions and investors that had engaged in an orgy of irresponsible lending to Greece to the tune of 25 billion euros. To get the so-called rescue funds, the Greek government, like the Asian governments previously, was forced to adopt severe austerity measures that drove unemployment up to 28% and condemned the Greek economy to permanent stagnation, only to turn the money it was ostensibly receiving over to the German banks.
Not surprisingly, so long as the IMF is there, the big international banks will assume that they will be bailed out for making irresponsible loans.
The U.S. and the Bretton Woods Twins: Fiction and Fact
There is a fiction that the IMF and World Bank are multilateral institutions that are owned by their many member governments. The reality is that the United States controls both institutions, with a 17.4% share of total quotas at the fund and 15.8% share of voting power at the bank. These shares give the U.S. government a veto power over any policy change. But the truth is that U.S. power is not limited to its being able to veto policy decisions it does not like. No country would dare oppose a move by the United States to radically cut the administrative budgets (by, say, 75% initially) and the number of personnel in the two organizations (to 600 personnel each, as in the case of USAID) if it wanted to do so. All it needs to do to get its way is to threaten to withhold its contributions to the two organizations. I can guarantee that immediately the interest rate at which the bank borrows in international capital markets would leap upward, paralyzing its lending operations.
The IMF and the World Bank are monuments to misguided economic thinking and policies that have brought much misery to the peoples of the Global South. They are institutions that no longer serve any purpose except to perpetuate and enlarge themselves. If Elon Musk and Donald Trump are really serious about radically downsizing bloated bureaucracies, they could not have better targets than the Bretton Woods twins.
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Trump, Biden, and the Crisis of the Neoliberal International Order
A hegemonic stalemate or a hegemonic vacuum opens up the path to a world where power could be more decentralized.
Jul 18, 2024
Whether we call it “polycrisis,” like Columbia University Professor Adam Tooze, or “the age of catastrophe,” like the distinguished Marxist Alex Callinicos, there is no doubt that we are living in a period where the very foundations of the contemporary world order are cracking. There is that enigmatic line Gramsci used to describe his era that is also appropriate for ours: “The old world is dying, and the new world struggles to be born: now is the time of monsters.”
This short essay will focus on a key dimension of the polycrisis: the unravelling of the global hegemony of the United States.
The downspin of the U.S. empire has had a number of causes, but key among them are military overextension, neoliberal globalization, and the crisis of the liberal political and ideological order. Let us discuss each in turn.
Overextension and Osama
Overextension refers to the gap between the ambitions of a hegemon and its capacity to achieve those ambitions. It is almost synonymous with the concept of overreach as used by the historian Paul Kennedy, the slight difference being that overextension as I use it is principally a military phenomenon. The struggling empire the United States is today is a far cry from the unipolar power it was a quarter of a century ago, in 2000. If we ask ourselves what led to this situation, it inevitably comes down to one individual: Osama bin Laden.
The aim of bin Laden’s attack on the Twin Towers on September 11, 2001 was precisely to provoke the overextension of the empire by forcing it to fight on several fronts in the Muslim world that would be inspired to revolt by his dramatic action. But instead of igniting revolt, Osama’s act ignited revulsion and disapproval among most Muslims. September 11 would have been a big failure had not George W. Bush seen it as an opportunity to use American power to reshape the world to reflect the Washington’s unipolar status. He took Osama’s bait and launched the United States into two unwinnable wars in Afghanistan and Iraq. The results have been devastating for America’s power and prestige.
During the June 7, 2024, debate between Donald Trump and Joe Biden, Trump referred to the defeat in Afghanistan as the worst humiliation ever inflicted on the United States. Now Trump, as we all know, is prone to exaggeration, but there was strong element of truth in his statement.
September 11 would have been a big failure had not George W. Bush seen it as an opportunity to use American power to reshape the world to reflect the Washington’s unipolar status.
According to CIA analyst Nelly Lahoud, “Though the 9/11 attacks turned out to be a Pyrrhic victory for al Qaeda, bin Laden still changed the world and continued to influence global politics of nearly a decade after.” If the United States is the confused and groping global power it is today—one that has been, moreover, reduced to a dog being wagged by the Zionist tail—that is to a not-insignificant degree due to bin Laden.
To acknowledge the significance of 9/11 is not, of course, to endorse it. Indeed, for most of us, the attack on civilians was morally repelling. But one must give the devil his due, as they say, that is, point out the objective, world-historic impact of the deed of an individual, be this person a saint or a villain.
Trading Places
Let us turn to the second major cause of the unravelling of the hegemonic U.S. status: neoliberal globalization. Thirty years ago, U.S. corporate capital, along with the Clinton administration, envisioned globalization, achieved through trade, investment, and financial liberalization, as the spearhead of its greater domination of the global economy. Wall Street and Washington were wrong. It was China that was the biggest beneficiary of globalization and the United States one of its main victims.
Investment liberalization meant billions of dollars worth of U.S. corporate capital flowed to China to take advantage of labor that could be paid at fraction of the wages paid labor in the United States in exchange for technology transfer, voluntary or forced, that helped China comprehensively develop its economy. Trade liberalization made China the manufacturer of the world supplying mainly the U.S. market with cheap products. Both investment and trade liberalization contributed to the deindustrialization of the U.S. and the loss of millions of manufacturing jobs, which declined from 17.3 million jobs in 2000 to around 13 million today. Compounding the deleterious effects of deindustrialization have been the financialization of the U.S. economy, that is, making the super-profitable financial sector the leading edge of the economy, and regressive taxation, which led to an extremely inequitable distribution of income and wealth.
China’s crises are crises of growth, compared to the U.S. crises, which are crises of decline.
China has traded places with the United States in the global economy. China is now the center of global capital accumulation or, in the popular image, the “locomotive of the world economy.” According to IMF calculations, China accounted for 28% of all growth worldwide from 2013 to 2018, which is more than twice the share of the United States. What must be underlined is that while the United States followed neoliberal policies of giving full play to market forces, China selectively liberalized, with the powerful Chinese state guiding the process, protecting strategic sectors from foreign control, and aggressively demanding advanced technology from Western corporations in exchange for cheap labor.
Although in dollar terms, the United States is still the biggest economy, by some other measures, like the World Bank’s Purchasing Power Parity (PPP), China is now the world’s largest. In the United States, 11.5% of people now live in poverty, whereas, according to the World Bank, only 2% of China’s population is poor.
Of course, China has faced challenges in its rise to the world’s economic summit, but development, as the economist Albert Hirschman point out, is a necessarily unbalanced process. China’s crises are crises of growth, compared to the U.S. crises, which are crises of decline.
From De Facto to Armed Civil War?
Military overextension and the effects of neoliberal economics have contributed not simply to political disaffection but to political turmoil in the United States, with one of the two major parties, the Republican Party, becoming the spearhead of far-right or fascist politics fueled by racism, anti-immigrant sentiment, fear, and decline in economic status among white people. Politics has become severely polarized, and some warn that there is now a state of de facto civil war. In short, the political and ideological regime of liberal democracy is now in grave danger, with many liberals and progressives warning that Trump’s Plan 2025 will amount to the establishment of a fascist dictatorship. They are not wrong.
Here is what Steve Bannon, the ideological chief of the U.S. far right, says,
The historical left is in full meltdown. They always focus on noise, never on signal. They don’t understand that the MAGA movement, as it gets momentum and builds, is moving much farther to the right than President Trump… We’re not reasonable. We’re unreasonable because we’re fighting for a republic. And we’re never going to be reasonable until we get what we achieve. We’re not looking to compromise. We’re looking to win.
A second Trump presidency is now a certainty, with the strong possibility that the de facto civil war could turn into an armed civil war. Indeed, the assassination attempt on Trump on July 13 may well be a major step towards the unrestrained violence depicted in Alex Garland’s Civil War.
Crisis of the Liberal International Order
Washington has been the guardian of the international order, and with the economic and political crisis of the United States, that order has also entered into a deep crisis. What are the key aspects of what has been characterized as the liberal international order? First, of all, global leadership of the United States and the West underpinned by U.S. military power. Second, a multilateral order that serves as a political canopy for Western capital, whose mainstays are the World Bank, the International Monetary Fund, and the World Trade Organization. Third, an ideology that promotes Western-style democracy as the only legitimate political regime.
This liberal order is now in trouble on two fronts: on the international front, it has lost legitimacy among the Global South, which sees the multilateral system as designed mainly to keep it down; internally, the liberal democracy that is its guiding ideology is under assault from the far right. If the far right comes to power in the United States and in key states in Europe—and it may come to power soon in France and soon after that, in Germany—the international order they would favor would probably continue to assert Western economic supremacy but adopt a much more unilateralist, protectionist approach of securing it instead of using the IMF-World Bank-WTO complex. Certainly, the far right will abandon the hypocritical appeal to liberal democracy as a model for the rest of the world.
Headed for War?
China says it is not out to displace the United States as global hegemon. To the U.S. elite, however, China is a revisionist power determined to dislodge it as the global hegemon. Especially in the Biden years, the United States has become more and more determined to use that dimension of hegemony where it enjoys absolute superiority over China, military power, to protect its status as number one.
This is why the danger of war between the United States and China is not to be underestimated, and this is the reason the Western Pacific is such a powder keg, far more than Ukraine. In Ukraine, the United States and China confront each other through proxies, Russia and NATO, while in the Pacific they confront each other directly.
The United States has scores of bases surrounding China from Japan to the Philippines, including the massive floating base that is the Seventh Fleet. The South China Sea is now filled with rival warships performing naval “exercises.” Among the latest visitors are vessels from France and Germany, U.S. allies that have been dragooned far from NATO’s traditional area of coverage to contain China. U.S. and Chinese warships have been known to play games of chicken—heading at each other and then swerving at the last minute. A miscalculation of a few feet could result in a collision, with unpredictable consequences. Fears that the South China Sea will be the next site of armed conflict are not alarmist.
In the absence of any rules of conflict resolution, the only thing preventing conflict is the balance of power. But balance-of-power regimes are prone to breakdown, often with catastrophic results—as was the case in 1914, when the collapse of the European balance of power led to World War I. With Washington aggressively marshaling Japan, South Korea, the Philippines, five carrier task forces of the U.S. Navy, NATO, and the newly created AUKUS (Australia, United Kingdom, United States) alliance into a confrontational stance against China, the chances of a rupture in the East Asian balance of power are becoming more and more likely—perhaps just a collision or away.
Hegemonic Transition or Hegemonic Stalemate?
So what does the future hold? Some say a hegemonic transition, whether peaceful or not is inevitable.
But let us pose another possibility. Perhaps, we should be looking not so much at a hegemonic transition but at the emergence of a hegemonic vacuum akin to but not exactly the same as that which followed the First World War, when the weakened Western European states had ceased to have the capacity of restore their pre-war global hegemony while the United States did not follow through on Woodrow Wilson’s push for Washington to assert hegemonic political and ideological leadership.
Within such a vacuum or stalemate, the U.S.-China relationship would continue to be critical, but with neither actor able to decisively manage trends, such as extreme weather events, growing protectionism, the decay of the multilateral system that the United States put in place during its apogee, the resurgence of progressive movements in Latin America, the rise of authoritarian states, the likely emergence of an alliance among them to displace a faltering liberal international order, and increasingly uncontrolled tensions between radical Islamist regimes in the Middle East and Israel.
Yes, the crisis of U.S. hegemony may lead to an even deeper crisis, but it may also lead to opportunity for us.
Both conservative and liberal policymakers paint this scenario to underline why the world needs a hegemon, with the former advocating a unilateral Goliath who does not hesitate to use threat and force to enforce order and the latter preferring a liberal Goliath who, to slightly revise Teddy Roosevelt’s famous saying, speaks sweetly but carries a big stick.
There are, however, those, and I am one of them, who view the current crisis of U.S. hegemony as offering not so much anarchy but opportunity. Although there are risks and great dangers involved, a hegemonic stalemate or a hegemonic vacuum opens up the path to a world where power could be more decentralized, where there could be greater freedom of political and economic maneuver for smaller, traditionally less privileged actors from the Global South playing the two superpowers against one another, where a truly multilateral order could be constructed through cooperation rather than be imposed through either unilateral or liberal hegemony.
Yes, the crisis of U.S. hegemony may lead to an even deeper crisis, but it may also lead to opportunity for us. To use Gramsci’s image that I began this essay with, we may be entering an age of monsters, but like Ulysses, we cannot avoid going through the dangerous passage between Scylla and Charybdis if we are to get to the promised safe harbor.
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Khanna: Rise of AI Must Center 'Dignity and Economic Security of Working Class'
"The Democratic Party cannot claim to be the party of the working class if we allow AI to erode the earnings and security of the working class."
Jan 04, 2024
Democratic Congressman Ro Khanna, whose California district includes Silicon Valley, warned Thursday that to avoid catastrophic impacts of the artificial intelligence revolution, lawmakers and regulators must learn from "how unfettered globalization hollowed out the working class" in the United States, leaving "shuttered factories and rural communities that never saw the promised jobs materialize."
"Like globalization, AI will undoubtedly bring benefits—tremendous benefits—to our economy, with higher productivity, personalized medicine and education, and more efficient energy use," the congressman wrote in a New York Times opinion piece.
"Generative AI has the potential to help those with fewer resources or experience quickly learn and develop new skills," he noted. "The real challenge, though, is how to center the dignity and economic security of working-class Americans during the changes to come. And unlike the Industrial Revolution, which spanned half a century at least, the AI revolution is unfolding at lightning speed."
"Our generational task is to ensure that AI is a tool for lessening the vast disparities of wealth and opportunity that plague us, not exacerbating them."
Khanna stressed that "today the Democratic Party is at a crossroads, as it was in the 1990s, when the dominant wing in the party argued for prioritizing private sector growth and letting the chips fall where they may," ignoring prescient criticism from former Democratic Sens. Paul Wellstone (Minn.) and Russ Feingold (Wis.), as well as Independent Sen. Bernie Sanders (Vt.), who then served in the House.
After failing to heed their warnings, he argued, "the Democratic Party cannot claim to be the party of the working class if we allow AI to erode the earnings and security of the working class. The party can be forgiven once for the mistake of abetting globalization to run amok, just not twice."
"Technologies—our technologies—are meant to complement and enhance human initiative, not subordinate or exploit it," he asserted. "We must push for workers to have a decision-making role in how and when to adopt technologies, and we must insist on workers' profiting from the implementation of these technologies. Our generational task is to ensure that AI is a tool for lessening the vast disparities of wealth and opportunity that plague us, not exacerbating them."
Underscoring the urgency of his message, Khanna pointed out that in September, "tech's biggest names trekked to Capitol Hill for a forum on artificial intelligence" that "was reminiscent of Davos conferences in the 1990s and early 2000s," and this year alone, tens of thousands of workers at hundreds of companies could be laid off and replaced with AI.
Already, AI is factoring into labor negotiations and legislative battles. After California legislators last year overwhelmingly approved Assembly Bill 316, which would have required a human driver on self-driving trucks weighing over 10,000 pounds that are transporting goods or passengers for at least five years, Democratic Gov. Gavin Newsom vetoed it.
"Tech companies argue that replacing human drivers with AI is feasible, will reduce labor costs, and will therefore make it cheaper to transport goods and services. They lobbied heavily against the bill," explained Khanna. "I supported A.B. 316 because drivers say it's currently an unnecessary risk to have large trucks on public roads without a human on board. This is especially true if there is extreme weather, hazardous conditions, or heavy cargo on board. No one understands the safety risks at play here better than the drivers themselves, and it's both foolish and insulting to suggest they would make up such concerns to keep jobs that do not add value."
"It's not just the AI concerns of truck drivers that are causing divides in the Democratic coalition," the congressman continued, highlighting that the monthslong strikes of unionized writers and actors in Hollywood last year ended with deals that include provisions about artificial intelligence.
The California Democrat—who joined striking writers on the picket line—wrote that "even though writers' jobs are very different from truck drivers' jobs, labor solidarity is one of the few countervailing forces that can blunt the dehumanization of work motivated by short-term profit maximization in a world where AI is capable of suddenly disrupting both blue- and white-collar work."
Khanna—author of the 2022 bookDignity in a Digital Age: Making Tech Work for All of Us—published the Times piece amid fears about how AI will impact everything from mass surveillance and misinformation to healthcare and war, not only in the United States but around the world.
His Thursday column won praise from progressives across the country. Lorena Gonzalez Fletcher, head of the California Labor Federation, said that his piece is "truly a must-read for any policymaker" while Katrina vanden Heuvel, The Nation's editorial director and publisher, called it an "important read and issue for now and in '28."
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