Is Paul Romer nothing but a neo-colonial Washington Consensus libertarian?

22 Jul, 2016 at 17:42 | Posted in Economics | 2 Comments

On Monday the World Bank made it official that Paul Romer will be the new chief economist. This nomination can be seen as a big step back toward the infamous Washington Consensus, which World Bank and IMF seemed to have left behind. This is true, even though Paul Romer has learned quite well to hide the market fundamentalist and anti-democratic nature of his pet idea – charter cities – behind a veil of compassionate wording …

the_libertarian_plot_sticker-r61d02bbe203143f79e2ea3e1d5bd79ba_v9i40_8byvr_512Since about 2009 he has been promoting so-called charter cities as a model for development … His proposal amounts to declaring enlightened colonialism to be the best (or even only) way toward development of poor countries, and a good substitute to development aid …

Romer has in mind a version of the Hong Kong case, without the coercion. His cities are supposed to be extreme forms of free enterprise zones which some developing countries, including China, have been experimenting with for quite a while. The idea of the latter is to attract foreign investors by exempting them from certain regulations, duties etc. His charters cities go further. They build on the wholesale abrogation of all laws of the respective country. For countries with dysfunctional public institutions he suggested that they lease out the regions, where these charter cities are to be build, long-term to a consortium of enlightend industrial countries, which would do the management. What the British extracted at gunpoint from China, developing countries are expected to give voluntarily today. A World Bank manager commented on the idea in 2010 on the blog of the World Bank by quoting a magazine article, which called it “not only neo-medieval, but also neo-colonial”.

The libertarian spirit of the idea of the man who will be the World Bank’s chief economist from September reminds of the Washington Consensus that ruled into the 1990s. This is a name for the ideological position, enforced by World Bank and IMF, that the best and only way to development is the scrapping of government regulation and giving companies a maximum of freedom to go about their business.

Norbert Häring


  1. Fall of Rome

  2. The appointment of Paul Romer is a huge and disturbing step back. The IMF and the World Bank in particular were starting to question the fundamental foundations of neo-classical economics and to understand that a multidisciplinary approach and real hands on field work is really what is needed to understand poverty and the growth/stagnation of nations. Romer is a die hard believer in abstraction and his own growth model which tells us absolutely nothing about what we really need to know. He represents all the very worst excesses of MIT/Chicago economics engineering. At a time of massive movements of populations, the rise of religious fundamentalism and extraordinary political turbulence which are not unrelated to global poverty inequality, marginalisation and institutional dysfunction, this is not the time to appoint people like Romer.

    Unfortunately more of this sort of stuff:

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