Global Policy Forum

By David Ignatius

Washington - Joseph Stiglitz is chief economist at the World Bank. In a town that prizes discretion and cautious consensus, he has recently emerged as the economist's version of a bull in a china shop. Ever since he joined the World Bank two years ago after a stint as chairman of the Clinton administration's Council of Economic Advisers, Mr. Stiglitz has been telling the truth about economics as he sees it, and denouncing the mistakes of fellow policymakers. In the process, he has been giving a lot of important people heartburn, including his boss, World Bank President James Wolfensohn, and the U.S. Treasury Secretary Lawrence Summers.

Take, for example, his trip to China last July. The visit came just after China's central bank governor had suggested that Beijing might consider devaluing the yuan. Financial markets were jittery, and so were finance ministers from Bangkok to Washington. So what did the World Bank's roving economist have to say? According to the headline in the July 26 Financial Times, he said a devaluation ''could be good for China's economy'' by helping to alleviate the problem of deflation. Like most of his comments, this one had some intellectual justification. There is a growing body of opinion that the Chinese should modestly devalue to encourage growth.

In Washington, officials were livid. Tim Geithner, Treasury's top international economics official, asked the World Bank to issue a statement repudiating Mr. Stiglitz's comment. The bank drafted a careful release explaining that it was not officially advising the Chinese to devalue, but Treasury wanted a more explicit disavowal of Mr. Stiglitz's comments. Mr. Wolfensohn then talked directly with Mr. Summers, arguing that it would be wrong to denounce Mr. Stiglitz simply on the basis of a news report that might have misinterpreted what he said. The two agreed to let the matter rest. Then came Mr. Stiglitz's broadside on Russia. An Aug. 8 article on ''Who Lost Russia?'' in The New York Times quoted him attacking Mr. Summers and officials at the World Bank and the IMF who had favored rapid privatization. ''Those who put privatization above all else were clearly wrong,'' he said. Without strong legal institutions, he suggested, the Russian version of instant capitalism quickly turned corrupt as the new capitalists ''took their money out.''

This time Mr. Wolfensohn publicly repudiated his chief economist. Asked at a press conference last month about Mr. Stiglitz's views on Russia, the World Bank president tartly rebutted the Russia critique: ''To stand back later and say, 'If you'd done it my way everything would have been different,' is a little generous to yourself.'' He called his chief economist ''idiosyncratic'' and ''usually interesting.'' Michel Camdessus, managing director of the IMF, chimed in the same day. The IMF had been peeved at Mr. Stiglitz ever since he attacked it in December 1998, contending in a report that its austerity policies had made the Asian financial crisis far worse than necessary. A Washington Post story at the time called his comments ''exceptionally scathing."

Now Mr. Camdessus had a bankerly sort of revenge. Asked about Mr. Stiglitz on Sept. 24, the Frenchman made reference to Mr. Wolfensohn's criticism and observed: ''There is a saying in my country which goes ... 'Never shoot at the ambulance.' I see that my friend Mr. Stiglitz has problems with his boss. I will not add to his problems.''

Washington policymakers rarely speak their minds in ways that will offend people. It is regarded as bad manners and disruptive to the policy process. I don't agree with all of Mr. Stiglitz's critiques, but I applaud his willingness to break the code. Washington needs more debate, not less. Indeed, I had hoped that Mr. Stiglitz might detonate a few more bombs for this column. But his handlers say he has decided to adopt a ''lower profile'' and is refusing interview requests.

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