Cognitive Diss

I return to my betes noir: the World Bank and its overpaid minions.

All who have struggled to buy a reasonable meal in pleasant surrounding in Mumbai, with even a bottle of the local plonk, were always surprised by the WB's PPP studies which claimed the rupee was worth 5.0x its nominal exchange rate, rather than the .5x that prices at swish restaurants in Bombay seemed to suggest. Reasonable real estate with 24 hour running water suggested a more penurious .1x.

We consoled ourselves with the fact that this was a result of the Mumbai/Bombay divide. Things were obviously much cheaper in deepest darkest rural India. The only problem? The definition, in a village bereft of electricity and running water, of a reasonable meal in pleasant surroundings is rather different than in either Mumbai or Bombay. And the local plonk could kill you, not just your taste buds.

The new figures show that PPP is actually about 2.5x, very very close to The Economist Big Mac Index - score one for simplicity. In fact, the introduction uses the Big Mac Index to explain PPP though nowhere in its turbid reading does the WB admit to its overstatement of many years nor does it admit to the essential accuracy of the Mac Index.

The question is why did the WB not twig on to this earlier? After all a great many of its functionaries are economic refugees from the very countries they purport to study. I have seen many of them dining from time to time at various Bombay nose bleed price establishments.

Could it be that sitting pretty in H Street on tax free salaries, having taken advantage of an education subsidized by the lack of primary education, health care for the poor etc., they feel a spot of cognitive dissonance? Which can be easily solved by making the poor bastards they left behind into not so poor bastards.

If you really want the twaddle use the link below.

http://siteresources.worldbank.org/ICPINT/Resources/ICPreportprelim.pdf