Calling Bad Business Good

Calling Bad Business Good
(written in plain English by Mark Engler)

The World Bank should get a failing grade for its rankings of countries
that violate workers' rights.

This election season many voters are asking a critical question: What is
the appropriate role for the United States in world affairs? By punishing
those legislators who voted for war in Iraq, many citizens are rejecting
the idea of the United States as a military overlord, asserting that a
different set of values should guide our foreign policy.

The same type of questioning should also be applied to our economic
affairs. Those who look at the values we are promoting for the global
economy will find some disturbing trends. Rather than helping create a
globalization that protects workers' rights, encourages sustainable
development, and prizes democratic self-determination, our country too
often promotes policies that undermine the values most Americans want to
uphold.

An important example of this emerged recently at the World Bank, where the
United States holds a decisive share of votes and where an American sits as
president. Last month the Bank issued a report entitled Doing Business
2007: How to Reform. The annual report ranks 175 countries in terms of the
ease of doing business within their borders. It evaluates nations based on
10 categories related to taxation, licensing, financial and trade
regulation, legal infrastructure, and labor.

All of this looks fine on the surface. But unfortunately, the things that
lead a nation to success in the rankings are not always what working
families in this country would regard as good business practices.

On October 13, a group of prominent Democratic senators sent a letter to
World Bank President Paul Wolfowitz charging that the report encourages
countries to violate internationally recognized labor standards. Signed by
Richard Durbin of Illinois, Joseph Biden of Delaware, Byron Dorgan of North
Dakota, Christopher Dodd of Connecticut, Paul Sarbanes of Maryland, and
Daniel Akaka of Hawaii, the letter decries the report's favorable ranking
of countries that lack minimum wages, fail to regulate overtime, and
condone union busting.

Rewarding lax or non-existent labor standards, the senators write,
contradicts ILO (International Labor Organization) policy, which encourages
countries to establish a minimum wage and regulate hours of work and to
pass and enforce laws protecting freedom of association and collective
bargaining.

The senators point out that the State Department officially uses respect
for ILO principles as a factor in gauging a country's commitment to human
rights. Nevertheless, the World Bank report gives high marks to countries
that disregard these standards.

Durbin and his colleagues note that Saudi Arabia, a country that denies
freedom of assembly and does not permit workers to organize, receives the
best possible score from the Bank on indices measuring difficulty of hiring
and difficult of firing employees. The report also praises the country of
Georgia for recent reforms that reduce the number of hours counted as
overtime and decrease the amount that companies must contribute to the
social security system.

Perhaps most telling in terms of the debate around international
development is the country that stands at the top of the rankings:
Singapore. The same month that the World Bank unveiled Doing Business, this
country was being blasted in the international press for its repressive
policies. In mid-September, the World Bank and International Monetary Fund
held their ministerial meetings in Singapore. Wishing to prevent democratic
protests, the government denied critics the right to hold a counter-summit
or to march publicly. It also banned several dozen high profile
non-governmental organization representatives from the island
altogethereven though these activists had been accredited by the Bank to
attend the meetings. An embarrassed Wolfowitz dubbed the move
authoritarian. And yet his institution simultaneously lauded Singapore as
an ideal place to do business.

The senators' letter to the Bank expresses concern that the report will
have harmful real-world consequences. Investors use the publication to
decide where to invest and governments use it as a guide to attracting
investment, making it very influential. The World Bank itself argues that
its data inspires countries to reform.

That might be true. But reform to what end? The mission of the World Bank
is to alleviate poverty, write the senators. We fail to see how praising
countries for failing to guarantee a minimum wage and overtime pay lifts
people out of poverty.

The Doing Business report is part of a wider phenomenon. In the name of
promoting reform and good governance, bodies like the World Bank actually
enforce a highly controversial and ideologically loaded set of economic
mandatespolicies that regularly place corporate profits above the public
good. That a Bush administration attack dog now heads the Bank is not
coincidental. The United States promotes the same type of suspect ideology
in its own development policy.

President Bush's new Millennium Challenge Account, for example, was
designed to make foreign aid rewards based on measurable and transparent
criteria. But many of these criteria are rooted in the same flawed ideology
as the World Bank report. The Millennium Challenge Account uses materials
from the arch-conservative Heritage Foundation to judge whether a country
has opened its markets aggressively enough, and it penalizes countries that
decline to pursue the type of deregulation that fueled the Asian financial
crisis of the late 1990s.

Americans who believe in real democracy don't want the United States to be
an economic overlord any more than they want it to be a military one.
Fortunately, it is possible to promote a different type of globalization.
The United Kingdom recently took a good first step. During the Singapore
meetings, the British government announced that it would withhold
approximately $93 million worth of payments to the World Bank to protest
the institution's practice of making poor countries undertake onerous, and
often anti-worker, economic reforms as a condition of receiving loans for
development.

With the United States in control of the World Bank, it has the power to go
beyond protest. Adopting a foreign policy that truly reflects democratic
values, it can demand the Bank make workers' rights a central part of how
it thinks about doing business.

[Mark Engler, a writer based in New York City, is an analyst with Foreign
Policy In Focus. He can be reached via the web site
http://democracyuprising.com. Research assistance for this article provided
by Jason Rowe. This article appeared on TomPaine.com at:
http://www.tompaine.com/articles/2006/10/30/calling_bad_business_good.php.]


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