I believe that the United States should withdraw its financial support from the World Bank and International Monetary Fund. The two international financial institutions have outlived their usefulness and harmed global economic development.

The World Bank has failed to stimulate economic growth in the developing world. China and India are emerging from poverty because of domestic reforms, not World Bank lending. Chile and South Korea have developed for similar reasons. In Africa, however, the Bank has given tens of billions of dollars to regimes with terrible economic policies. Some of the money was stolen and wasted. Much of it was used to avoid or to postpone necessary economic reforms, and to suppress dissent and retard the evolution of democratic government. No wonder that parts of Africa are poorer today than they were in 1960. I believe that the only path to lift people out of poverty is through domestic reforms and free trade.

The IMF has also benefited corrupt and inept regimes that have engaged in gross macroeconomic mismanagement. Under free market conditions, economically incompetent governments would be forced to seek loans in capital markets. Private lenders would lend to governments at rates reflecting the risk involved. Higher interest rates would then make governments more cautions when borrowing and spending. The IMF, however, lends money at subsidized rates. That encourages irresponsible behavior among governments and private lenders – both of whom expect to be bailed out. The IMF thus increases global financial instability and exacerbates the scale of eventual economic adjustments.