How the World Bank Destroys Wealth

Listen to a true story of life in India in 1992 (as reported in The Washington Post)[i].

In Chopta, India, high on a mountain ridge in the Himalayas, women work with scythes in the heat on meager plots of wheat while the menfolk lounge nearby gossiping and smoking. Scattered among the villagers lie the plastic-wrapped, dead remnants of an experiment in Third World poverty alleviation and environmental management: thousands upon thousands of trees and seedlings supplied to Chopta and other poor mountain villages in a $30 million reforestation program funded by the World Bank and managed by the government of India.

For centuries these villagers have survived barely by farming small terraced plots of wheat and rice. In their struggle against poverty, they slash trees and strip topsoil as they have always done. They have steadily destroyed their portion of the once-bountiful forests of the Himalayas.

India’s forests are shrinking at the rate of about 300 square miles per year because the poor people cut trees down to burn wood for fuel or sell it for profit.

The 5.6 million people that live in this part of India are desperately poor. The energetic people have already left for what they hope is a better life in New Dehli and other cities. As one woman said, “What is there in these villages? Useless. Finished.”

The main purpose of the World Bank project was to encourage villagers to stay where they are and farm the land as they have always done but with new environmentally sound “appropriate technologies”. These are solar lights, biogas stoves that burn cow dung, and hundreds of thousands of apple and walnut trees that would allow villagers to earn extra cash. The planners sought to help the villagers achieve a more idyllic version of 9th century life, rather than pushing them toward the industrialized 20th century.

The World Bank approach “is the answer because it is a holistic approach” said one of the designers, “You cannot bring modern industry. Your development strategy has to take into account the fragility of the ecology.” The planners sought to discourage migration to the cities, because, in the cities these people “are exploited”. The problem with the plan, however, is that most of the able-bodied males have left the village in search of a better life. “Their objective is to keep us here”, said a villager, “but everyone wants to get out.”

Many of the trees were dumped on valley roads by delivery trucks and were half dead by the time they were planted. Many others died because project supervisors found it difficult to climb the mountain to check on them. Neither of the two solar lights delivered worked. The biogas stove did not function.

The women say they are not interested in the apples and nut crops because many of the men have migrated and they have no one to carry the crops on days-long round trips to markets.  Workers say that the women resist the cash crops because they fear the men will waste the cash on alcohol, whereas now the women control the grain that they produce.

“They’re right,” said a woman leader. “We haven’t cooperated with them. But how can we? The biogas stoves and the smokeless chimneys — none of them worked. The trees died. If they had gotten one thing right, maybe we might have worked with them.”

“The World Bank forestry project has been a total failure,” said an Indian government official. “The problem is the centralized management. You don’t have management that takes into account social needs, local needs.”

However, the trees being destroyed around Chopta already belong to the villagers. They own the land and no one contests their legal right to cut the forests. They are cutting the trees down, burning and selling them to generate a small surplus from farming and using that profit to send their children out of the village and on to better lives.

“I’ve never heard of this global warming idea”, said a migrant factory worker. “How many more trees do you want? Look, I want money. I want jobs. From the point of view of this area, I know one thing: We don’t need any more trees.”

Instead of encouraging local entrepreneurs, the World Bank is trying to do the saving and investing for these Indian villagers, using “appropriate technologies”. None of the Bank officials in Washington, D.C. are burning cow dung in their back yards, or planting thousands of walnut trees. But it seemed sensible to them to take the savings of taxpayers in countries around the world and invest them in these schemes in India.

What the Indian villagers are trying to do is to save enough for a fundamental investment: money to leave Chopta forever, and move to a city. This is not unusual. It has happened all over the world for hundreds of years. Centrally managed, “appropriate technology” projects from the World Bank just waste trillions of dollars from developed countries without doing anyone in less developed countries any good, except for the executives in charge of managing these projects.

[i] Steve Coll, “A plan to save the globe dies in a village” Washington Post 24 May 1992 A1

About Arthur Middleton Hughes

Arthur is currently Vice President of The Database Marketing Institute based in Fort Lauderdale, FL. Arthur is the author of 11 books, the latest of which is Strategic Database Marketing 4th Edition (McGraw-Hill 2012). A BA graduate of Princeton with an MPA in Economics and Public Affairs, Arthur taught economics at he University of Maryland for 32 years. He is an Austrian Economist.
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