World-renowned economist James Galbraith criticized the spottiness of the World Bank’s data on the effects of globalization Monday, saying the need for a global financial system to stabilize the world economy is increasing, but the bank and International Monetary Fund are not organizations
capable of fulfilling this need.
About 100 people attended the speech in the EMU Fir Room, which was sponsored by the Wayne Morse Center for Law and Politics. Galbraith is considered a prominent authority on economic issues, having drafted economic plans for the U.S Congress,
given economic advice to foreign
countries, and written articles for
academic journals and newspapers about a broad range of issues.
Galbraith addressed a question he said is on about the same intellectual level of “is the sky blue?”: whether inequality has risen across the world over the past few decades.
He said the answer is an obvious “yes,” but the approaches economists around the world have taken when formulating an answer often overlook important aspects of the issue and simplify the reasons for increases in
inequality, ignoring important trends in globalization.
The World Bank is a leading
supplier of information regarding the international political economy, but Galbraith said his data on the same subject is “not nearly as spotty as the World Bank data.”
The World Bank and the International Monetary Fund were created in the 1940s. The World Bank makes loans and guarantees credit to member countries while the IMF supplies money to help countries overcome short-term financial difficulties, according to the Global Exchange Web site.
Galbraith said the World Bank’s information does not reveal the same global inequality rankings compared to his information, which he said is a more accurate portrayal of the global economy’s current state.
Galbraith said economists too often rely on the erroneous assumption that countries choose their own development paths and have a say in the evolution of their equality, something he said is “fundamentally misleading.”
He said an examination of the rise and fall of equality around the world when using quality data reveals an obvious correlation between
world events and the state of the global economy.
“There are waves of events which affect regimes,” Galbraith said. “This isn’t rocket science.”
Galbraith pointed to the fact that there is “no stabilizing anchor” in the international system as being a “predominant, compelling factor” in the increase of inequality around the globe.
Galbraith said countries in need of financial assistance are being forced to fight for that assistance at the expense of other needy countries, a problem that could be alleviated with the existence of a global monetary fund.
But Galbraith said accomplishing such a task may not be something the World Bank can do.
“I don’t think it can be done by an organization which has been dominated by creditors … as the World Bank is,” Galbraith said, eliciting a round of applause from audience members.
During a question and answer session, Galbraith discussed current U.S. foreign policy and criticized Vice President Dick Cheney for failing to understand the long-term implications of the United States financing security for the entire world.
Galbraith said Cheney seems to be subscribing to the theory that controlling the world’s assets will lead to control of the world. He also suggested
another possible reason why the Bush administration is trying to control the world’s assets: “The other possibility is they don’t know what they’re doing.”

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