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May 14, 2007



One thing remains true - if it were a private corporation, he'd be gone. Shareholders wouldn't countenance a boss who - for whatever reason* - causes chronic and widespread worker revolt. On the other hand, staff opposition is less meaningful if those in revolt are mostly so because they don't think they can be fired for it, so it's possible that the alienation wasn't ultimately that disruptive.

*I am not thinking here of those hired to overhaul a moribund company, who will inevitably make a lot of staff very unhappy. Perhaps one could regard Wolfowitz as one of these but I don't really see why.

Nathan Smith

Nato contradicts me without answering my argument. If a private-sector World Bank somehow got into its current situation, in which a trivial personnel dispute associated with the president was handicapping the whole company, they *might* fire the president. It would depend on (a) how much value-added they thought he had, and (b) what kind of precedent it would set. They might keep him if they thought he was far better than any other candidate, so that it was worth weathering a storm for his sake. They might also keep him to avoid setting a precedent for bad treatment of executives which would deter other talented executives from accepting the post.

But it's an empty hypothetical, because there's no way that a private-sector firm would treat an executive in such a niggardly and ham-handed way. Executive pay packages regularly range into the millions and tens of millions of dollars per year, and even if somehow it were deemed necessary to resolve a "conflict of interest" due to a previous relationship with a staff member-- it would not be necessary anyway; private-sector firms are simply too rational to raise a fuss over such things-- a private-sector company (one on the scale of the World Bank, of course) wouldn't hesitate for a second in agreeing to something as minuscule as a $60,000 pay raise for that staffer. Still less would they reopen the case more than a year after it had been initially agreed to see if it had been done properly.

Of course, Paul Wolfowitz might well have been fired without the "scandal" in a private company for his failure to inspire loyalty in the staff. Either way the "scandal" would make no difference.

It's appropriate that a public-sector bureaucracy be less generous with its pay packages and the like, and more stringent in its regulation of "conflicts of interest," than a private firm. This is part of the fact that the whole accountability structure is different. One thinks more about "justice" and less about profit. It's totally inappopriate for Mallaby to throw in the private-sector standard against Wolfowitz, without pointing out either (a) that this standard is inapplicable here and for good reason, or (b) that things would not have reached such a pass in the private sector because nothing Wolfowitz did would be regarded as remotely "scandalous" there.

It probably wouldn't even be regarded as scandalous in the World Bank if Kofi Annan, rather than Paul Wolfowitz, were World Bank president.


I think it's right to point out that there's a double-standard involved here, but just because crony-ism elsewhere wouldn't necessarily get scrutinized and punished doesn't mean we should let Wolfowitz off the hook here. Though what he did may in fact be very common, that in no way makes it excusable. I sort of felt the same way about the Clinton scandal. I didn't really care that Clinton was a philanderer, but the fact that he perjured himself in a federal court demanded some sort of reckoning. In both of these cases, the offense is rather common and often times over-looked. The reason they are focused on, though, has nothing to do with the offense itself but rather the public perception of the offender. It's like calling the cops on your neighbor for being loud because you don't like his political views; his being loud is not really what you care about, and is merely a pretext for getting him in trouble. I really hate that attitude and strategy. If you're going to call the cops for noise pollution on one neighbor, then you better do it for all neighbors for all violations.


"Nato contradicts me without answering my argument."

"Of course, Paul Wolfowitz might well have been fired without the "scandal" in a private company for his failure to inspire loyalty in the staff."

As the latter was, in fact, my point, I'm not sure in which way my comment contradicts Nathan.

Nathan Smith

Well, if Nato's point was that Wolfowitz would have been fired for not inspiring loyalty in the staff, then the real point should be that in a private firm he would never have been hired in the first place, since the incompatibility between Wolfowitz and the staff was perfectly predictable before he was hired. Relations between Wolfowitz and the staff were probably no worse than one would have predicted; if anything, better, until the incident of course, and even that mostly because it created excitement.

The only way a private firm would have hired Wolfowitz is if the board did regard the company as in need of an overhaul by a somewhat hostile management.

To Tom's remark: One may certainly view Wolfowitz's behavior as a form of cronyism that, though rarely punished, is a bad thing and it would be nice if it were punished more often. That's not my view, though. It seems to me a $60,000 pay raise to compensate someone for the disruption of a career through no fault of their own is perfectly appropriate. Given the possibility that she would have sued the World Bank, and given that the situation was more or less unprecedented, I think that it was a price worth paying to avoid trouble. If a private firm did this, I don't think its shareholders would have any grounds for complaint.

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