Sarah Palin for the World Bank?

In respect of the candidacy of Hillary Clinton to be president of the World Bank, let us just say that it’s a terrible idea. This is not a quarrel with Mrs. Clinton per se; had we been endorsing in the Democratic primary for president in 2008, we’d have put in a word for her, even if by our lights Barack Obama has a more presidential personality. It happens, though, that we’ve followed the World Bank for decades, and the key feature of the whole World Bank system is the conditionality it imposes on its lending. Its presidency is a pulpit in which a tribune of free markets, sound money, limited taxation, and growth could help the banks’ shareholders and borrowers. Whatever it is that Mrs. Clinton is for, these are not the causes that come to mind.

Sarah Palin would make a more credible president of the World Bank than Mrs. Clinton. Laugh not. We understand that no one (leastwise, President Obama) is going to nominate her and she wouldn’t take the job, anyhow. But she’s a radical, pro-growth politician. She understands natural resources policy, she is a leader on energy policy, she knows fishing down to the ground (so to speak), and she came up through a fight against corruption. She is prepared to lead on sound money, as her demarche against the quantitative easing of the Federal Reserve — made before the other politicians woke up to the issue — shows. And feature the rock-star receptions she got in such places as Hong Kong and India. Sarah Palin is exactly the kind of spark-plug one would need at the World Bank — if one needed the World Bank at all.

But do American taxpayers really need to set up on the scale of the World Bank a government-capitalized pulpit for free market, pro-growth policies? We wouldn’t put another nickel into it. What really needs to be done about the World Bank is to examine the question of whether there’s any logic at all to any of the institutions conceived at Bretton Woods. The longer we’ve covered this beat, the more plain it becomes that the clear-eyed vision of the treaties that emerged in the closing hours of World War II was that of Henry Hazlitt, whose editorials for the New York Times warning of an inflation trap will be read for generations. As he predicted, the gold-exchange standard that the Bretton Woods system set up among governments collapsed.

So what is the logic of any of the institutions left standing? This is the question left hanging by the outgoing president of the Bank, Robert Zoellick. What we will remember his tenure at the World Bank for is that he used it to call for a restoration of a role for gold in the international monetary system. He did this in November, 2010, in an op-ed article in the London Financial Times on the eve of the failed G20 summit at Seoul. He called for a cooperative monetary system that would employ gold as an international reference point. “Although textbooks may view gold as the old money,” he wrote, “markets are using gold as an alternative monetary asset today.” For this, he was roundly mocked the next day in the very newspaper that published his proposal.

Mr. Zoellick himself is lucky to be leaving the World Bank, and it can be hoped that whoever emerges from the Republican pack will bring him into the coming campaign. Particularly if it turns to the question of monetary policy. Mr. Zoellick isn’t an advocate of returning to Bretton Woods. Nor is he a gold standard man per se. He was asked about it point blank by Newsweek a year ago. He did respond by pointing out that gold is “already being viewed as an alternative monetary asset because holders of money perceive uncertain prospects in all countries and currencies other than China, and the renminbi is not free for exchange and investment. The antidote is for major economies to pursue sustainable, pro-growth policies based on structural reforms, open trade, and sound money.” If we’re going to have a World Bank, its ideal next president would be someone committed to that direction.