On Incentives

"Never penalize those who work for us for mistakes or reward them for being right about markets. It will go to their heads, is counterproductive and, in any event, material compensation will not correlate with their ability to predict the future next time."

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Notes On the Occasion of the 60th Anniversary of The World Bank

Over the millennia, those who have accomplished great works have written about their immortality and place in history. Some were sure of their place.  Ovid, some 2000 years ago, ended his “Metamorphoses” with these words: “I shall have mention on men’s lips, and, if the prophecies of bards have any truth, through all the ages shall I live in fame.” The last Latin word was “vivam”—I shall live.

At the opening night performance of Rigoletto, Verdi predicted that by the next morning La Donne e Mobile would be on everyone’s lips throughout Italy and would remain so.

Others were not so sure of their place.

James Joyce wrote in his notebook “Today, the 16th of June, 1924, 20 years after. Will anybody remember this date?” The date that he was referring to was June 16, 1904, the day of Bloom’s travels through Dublin. Joyce was not sure that anyone would remember his Ulysses.

Lincoln too, “The world will little note, nor long remember what we say here, but it can never forget what they did here.” He was wrong. Few remember what was done. It was the words that lasted.

There is no Helen of Troy without Homer. She is 3,000 years old. Did Homer realize what he gave us?

We here, unhappily, should have no such ambivalence. We will not likely be remembered by name. But—like those writers and painters and thinkers before you—your work will have had an enormous and beneficial effect in the future, on the lives of hundreds of millions of humanity who do not know you:

  • Less infant mortality
  • Cleaner water
  • Hope for a better life
  • A feeling of being productive
  • Food, light, mobility, education
  • An awareness of the possibility of beauty and fairness
  • Less violence, less terror.

Tens of millions, because of what you have done, will sing Verdi’s Và Pensiero from Nabucco – a song of hope and freedom.

Some will say, “no way.” It was not what you did. It was other factors that contributed to a better life—a combination of luck and circumstance.  Not so. Your advice and wisdom have made a difference and will continue to make one—the same way that 300 Greeks made a difference as their works, their ideas—one way or another—were carried forward, even through centuries of darkness.

We—in this room—know that coups, assassinations, violence, sickness, depression, lethargy, anarchy and clashes of civilizations are enhanced by the widening gap between rich and poor and by poverty. We also know, however, that, in the short term, if things get better, instant communication will lead to higher expectations and, therefore, yet more hatred and anger. But, certainly, over time, as the dispossessed see change, see a better life and the prospect for participation in society for themselves and their children, history shows us less violence and less of the antithetical behaviors borne of disillusionment, disenchantment, disenfranchisement. The truth is the economic, political and cultural growth which you have spent your lives working on, one way or another, will significantly lesson and has lessened those behaviors. If not hope for the future, what else can possibly work?

It has been said that the war on poverty is too amorphous a concept, too diffuse, too abstract to be successful—unlike, say, the war on terrorism. But it is the same war. And, is there much doubt about which is the contributory cause and which the probable effect?

It will continue to be said that we made mistakes, errors of co-mission and omission. But we know that those mistakes, those failures in execution, misguided ideas and concepts, were born of the frailty of our capacity.  They were not born from meanness of spirit, megalomania, a desire to harm, or a wish to control, or to further our own personal interest, that of our country, or narrow political and partisan agendas. It is why throughout civil war in Lebanon, the freezing of assets in Iran, or coups in Latin America, those countries met their obligations to the Bank and we to them.  Those countries and many others, despite revolutions, often bloody and violent, often involving massive, political and economic change, despite mistakes, recognized that the advice you offered was, in truth, simply intended to improve the life of their citizenry—irrespective of who was in power or geo-political considerations.

That sense of independence is why you lent to Vietnam before it was fashionable; it is why you supported loans to farmers in poor countries despite the pressures from the agricultural blocs of powerful shareholders; it is why you opened up a window to China and why you will do the same in Iraq.

My team at the Bank included those from Iran, Iraq, Greece, Turkey, Israel, Egypt. They worked with each other and loved each other. That is multiplied a thousand-fold at the Bank. It gives the lie to those who argue that the gulfs and antagonisms are too great to address.

We, of course, have been fortunate. The Bank has so many mothers and fathers who have claims—who own the Bank—each with their own, often conflicting, parochial agendas. You instinctively, almost subliminally, recognized from the very beginning the potential resulting paralysis from that circumstance; you filled the gap by exercising independence and the freedom to do what you perceived was the right thing: cleaner water; less infant mortality; education for little girls; electricity; jobs; calories; health. Most important, you offered hope..

I have doubts Jim Wolfensohn will be remembered in history books a hundred years from now; nor will Bob McNamara for what he did at the Bank nor will those who served before or between them be remembered. They and we will not be remembered by name in Korea or Spain or China but what they and you started and have stayed with will have an effect—just like Ovid and Verdi and Joyce. The only difference is that their and your names won’t be attached. But the world of our children and theirs and of our friends’ children and theirs will be immeasurably better off. There will be less violence and anger and lethargy. And you did it. Vivam.