WSJ editorial on World Bank salaries

The Wall Street Journal editorial page, open link here, notes that nearly 1,400 employees at the World Bank make more than Condi Rice. Not to mention that it is tax free for non-US employees, plus school and housing allowances and such goodies.

While it is true, as the Journal points out, that Bank employees are far from under a vow of poverty while presumably battling poverty, I myself am not unduly upset by the salaries. Yes, they are high by market standards. Yes, you could get at least as a good a quality of service at much lower wages; the actual quality of the Bank's work depends not merely upon the paper credentials of its staff and how happy they are with their compensation, but with the visionary esprit of the organization and its sense of vocation: it seems to have been a long time since the Bank had any sense of vocation, if ever.

On the other hand, I chair the board of a modestly sized nonprofit venture fund organization, and while our salaries are much, much, much, much, much, much, much lower than the World Bank's, ideally I would like to raise them to levels at least within eyeshot of the Bank's. (And if I could go to the US government for $7 billion or so, and to the Europeans for gazillions, too, I could.) As a nonprofit director, I want to be able to keep the people the organization needs over the long term, and that means that you seek to enable them to live a more or less upper middle class professional lifestyle - send kids to college, buy home, fund retirement. Upper middle class professionalism is not a vow of poverty and never was.

No, the real issue for me is that ordinarily the tradeoff is between tenure and salary. By professional lawyer standards, I don't get paid a huge amount as a law professor. Clearly I could make a lot more in practice, even in the nonprofit world - it's not revealing any secrets that I made more as a law firm associate than I do as a professor, and made more as general counsel to a large charity than I do as a professor. What I do have as a professor, besides a better lifestyle, is tenure. I'm pretty good at what I do, and I'd like to think my dean agrees with that, but the reality is that part of the tradeoff is a tenured sinecure that replaces salary. At the World Bank, however, you get them both - salary and tenure. That's a big problem - and a bigger and bigger problem the higher the salary and the fact that World Bank people are typically not really placeable, after very many years, anywhere outside the multilateral institutions. (The same, by the way, is true of law professors; I'm not being mean, it's just a fact of many professionals.) It's a mistake to hand out both tenure and salary.

I have long been a supporter in the nonprofit and government worlds, including the multilateral organization world, of complete disclosure of all compensation arrangements. I think foundations and charities and nonprofits should post all compensation arrangements, contracts, salaries, for each compensated person, to the web as part of their annual filings. Same for government agencies and international organizations. That transparency in organizations which deal in the public trust would go a long way. I suppose, in the real world, the best one could hope for is a going-foward rule, along with pressure on the existing staff voluntarily to do what Ban Ki Moon rather admirably did (and Annan did not - nor, for that matter, that supposed paragon of virtue, Ad Melkert, who according to Inner City Press has still not submitted his own financial disclosure forms at UNDP, quite apart from his own ethics-in-hiring issues at UNDP) and disclose his financial statements publicly.

So I think the World Bank staff who have made an issue of Riza getting paid more than Rice have done themselves and the Bank no favors. The Journal gets it right:

Mr. Wolfowitz was directed by the bank's ethics committee to find a new job for Ms. Riza, a longtime bank staffer, when he became president in 2005, despite his requests to be recused from the matter. The committee suggested an "in situ promotion" to the next paygrade or an "ad hoc salary increase" as part of a "settlement of claims." The offer was intended to be generous, given that Ms. Riza--who already had been shortlisted for promotion--was being forced out of the bank, possibly for good, for a conflict she did not create and to a job she had not sought.

Ms. Riza was eventually given an external assignment at the State Department with a salary (paid by the bank) of $193,000, up from the $133,000 she had previously made at the bank. To Mr. Wolfowitz's critics, this was improper and excessive, especially given that Condoleezza Rice makes about $10,000 less. But this is highly selective outrage given normal procedure at the bank.

Of its roughly 10,000 employees, no fewer than 1,396 have salaries higher than the U.S. Secretary of State; clearly "fighting poverty" does not mean taking a vow of poverty at "multilateral" institutions. At the time of Ms. Riza's departure from the bank, she was a Grade "G" (senior professional) employee; the typical salary in that grade hovers around the $124,000 mark. For the next level, Grade "H"--the level to which Ms. Riza was due to be promoted--salaries average in the $170,000 range, with an upper band of $232,360. No fewer than 17% of bank employees are in this happy bracket.

Even sweeter, all of this is tax-free to non-Americans. U.S. employees have to pay U.S. tax but have their income taxes reimbursed by the bank. As with any public bureaucracy, these jobs are also impossible to lose for anything other than gross incompetence or venality. Some of Mr. Wolfowitz's accusers--notably, former general counsel Roberto Danino--are angry precisely because he upset their lifetime sinecure by demanding higher performance.

These details are common knowledge within the bank itself, so it's only fair that they be made public to the American taxpayers who finance this comfortable poverty-fighting lifestyle. Alison Cave, the head of the bank staff association leading the campaign against Mr. Wolfowitz, ought to be the first to make her salary and performance reviews public--in the name of restoring the bank's "credibility," to borrow one of her favorite words.