Structural adjustment

SIR – “Right cause, wrong battle” (April 12th) contends that the push by Jim Kim, the president of the World Bank, to tackle discrimination against gays will make it harder for the bank to achieve its goals. Yet ending discrimination is crucial for effective development.

The World Bank has delayed a $90m loan to Uganda while it reviews how the government’s draconian anti-gay law might affect health projects. This is responsible management, as Uganda’s law criminalises the “promotion of homosexuality” and directly threatens public-health efforts. A recent police raid on the Makerere University Walter Reed Project, a health clinic and medical research facility, illustrates just how real this threat is. The raid led to the arrest of an employee, allegedly for conducting “unethical research” and “recruiting homosexuals.”

Mr Kim has emphasised that discrimination is bad for economies as well as for people and societies. The World Bank has found that homophobia negatively affects labour output and exacerbates health disparities.

Jessica Evans
Senior advocate
Human Rights Watch
Washington, DC

SIR – You were spot-on. But the whimsical and capricious behaviour from recent presidents of the World Bank has a lot to do with the appointment process and the singular lack of a structured effort to establish goals and assess outcomes. Accountability is not a word often heard in the World Bank’s boardroom.

This is because of the legacy of a full-time resident board. The 25 executive directors and their advisers see their role as guarding their countries’ parochial interests, rather than a broader institutional one. Governance should be delegated to a non-resident board of senior officials that could meet, say, every quarter to approve policies and set objectives for the president, who would be accountable to them. We would then see very different behaviour from the World Bank’s president.

Gautam Kaji
Former managing director
World Bank
McLean, Virginia

* SIR – Despite your arguments, the World Bank is right to focus on the plight of gay people, especially as Uganda’s nasty example may be followed by other governments. Gays in the 78 countries that criminalise same-sex relationships suffer disproportionately from domestic violence, educational exclusion and discrimination.

Cutting aid risks further demonising them, hurting the poorest and undermining the battle against HIV. But aid could, for example, usefully be targeted towards helping gay people and other minorities articulate their rights. Deciding how best to deploy some of our overseas aid in programmes in order to change the climate of opinion in Uganda and elsewhere would be a positive and practical response to a terrible cruelty.

Stephen Wall
Former foreign-policy adviser to John Major and Tony Blair
London

* SIR – The World Bank cannot turn a blind eye to human-rights violations in countries that criminalise homosexuality. It is a powerful global body wielding the most powerful weapon there is: money. It is morally obliged to address the issue of gay rights in Africa, and Uganda specifically. This is not an “arrogant imposition of ‘Western values’”, as the Ugandan president would have it, but rather a defence of freedom. Human rights are universal, they don’t just apply to the West.

Arguing that “there are other issues that confine freedom as well” simply does not justify the abominable law Uganda has enforced.

I expected The Economist to realise that rights can never be overridden by technocracy.

Carl Magnus Magnusson
Stockholm

SIR – The notion that American and European values should hold no sway in how the World Bank directs its spending, when most of the money it distributes comes from American and European taxpayers, is absurd. You think it should stick to technocratic matters, but for decades it has addressed social exclusion, such as the rights of the Roma in Europe. Is that not political? What is the difference between that and tackling the dreadful discrimination against gays?

The bank should impose a little more “Western values”—which are really universal rights—when dealing with Uganda, Zimbabwe, Sudan, Nigeria…(I could go on but the list is depressingly long).

Mary McLean
Chicago

You can read a letter from the activists who attended the World Bank meeting on gay rights here

The benefits from college

SIR – You correctly noted that the return from investing in a college education can vary greatly based on the subject studied and the institution attended (“Is college worth it?”, April 5th). However, the article relied on estimates of the return on investment published by PayScale, a survey that is subject not only to multiple data issues, such as small non-random samples and misreporting of earnings, but serious methodological shortcomings as well.

To take one example, the notion of working through college is not considered. This results in a bias against schools that have a relatively high proportion of non-traditional students. The rankings also do not consider the cost of living in the region in which most of a school’s graduates work.

Rather than overstate the value of higher education, PayScale substantially understates the return on investment. It reports an unweighted average return of 6.5% after considering financial aid. Correcting for the errors made by PayScale puts the return at 11%. A separate analysis from December 2013 places the return at 13%, only slightly lower than in the past.

Kent Hill
Dennis Hoffman
Tom Rex
Arizona State University
Tempe, Arizona

* SIR – The troubling trend unmentioned in your article is the inability of students to know how much an education actually costs. Increases in financial aid, which are not uniformly distributed among students, have decreased transparency and made it more difficult for students to know whether the return they can expect on their tuition investment is greater or less than that of the person sitting on either side of them. The absence of price transparency frustrates rational consumption decisions.

Jonathan Darrow
Research fellow
Harvard Medical School
Cambridge, Massachusetts

* SIR – The economic value-added of an education at a school like Harvard or Yale should be measured by comparing the earnings of its graduates with those who were admitted to Harvard or Yale, but attendeda less-exclusive and lower-priced state university. This would control for a lot of the academic advantages that Harvard and Yale admits already have over other college-bound students, let alone high school graduates not attending college.

The non-economic value of most college degrees should also be taken into account: a love of knowledge, a deeper understanding of the world around us, or in other cases, four to six years of alcohol-fuelled party time with your peers, completely insulated from parental oversight and only occasionally interrupted by classes.

Daniel Seiver
Professor of economics
Miami University

Germany and Europe

SIR – Charlemagne criticised Germany’s position in the ongoing European integration process as “legal pettifogging [that] has hampered rational policy” (April 12th). This does not hold up against closer scrutiny. Germany was not the only country to voice legal concerns about the commission’s proposals for a banking union. In fact, the original proposal did not find the necessary majority in the council of the European Union.

Germany and its European partners focused on setting the right economic incentives: strong supervision across Europe and the protection of taxpayer money via bail-ins. These will be essential for breaking the loop between sovereigns and banks and minimising moral hazard.

Furthermore, Europe has been developing extensive safety nets, backed by German (and other) taxpayers and the German (and other) parliaments. This is rightly linked to strict conditions and sound principles that hardly anyone would question with regard to IMF programmes.

Levin Holle
Lawyer
Ludger Schuknecht
Economist
German Ministry of Finance
Berlin

Ukrainian energy

SIR – You argued that energy subsidies “lead Ukrainians to burn gas so wastefully” (“Conscious uncoupling”, April 5th). However, an average Ukrainian uses much less energy than a German or a Swede. The problem with Ukraine’s energy comes not from wastefulness but from structural factors. Ukrainian industry is dominated by products such as hot-rolled and unfinished iron, which consume a lot of energy for every dollar of GDP-value added. As a result Ukraine uses more energy per unit of GDP than all but a handful of countries.

Also, its industries are extremely sensitive to energy prices and cannot simply be closed down. Decreasing energy intensity in Ukraine would take much more than withdrawing subsidies and reducing wasteful energy. It would require a restructuring of the whole industrial sector.

Jessica Jewell
Research scholar
International Institute for Applied Systems Analysis
Laxenburg, Austria

Mocha, to go

SIR – One important side-effect of smaller office space in London (“Pressed suits”, April 5th) is that it is now impossible to visit a Starbucks anywhere in the city without being surrounded by sales meetings, job interviews and project updates. It’s tough trying to enjoy a cappuccino when you are bombarded by projects going down in flames or job applicants striking out.

Paul Friedman
Vancouver

Price toll

SIR – In the April 12th issue, you explained that when the supply of heroin is restricted, the price “shoots up” (“Ten billion wasted”). In future, may we expect to read about prices exploding in the armaments industry, inflation in prices for pneumatic tyres and, in the case of condoms, an unexpected failure of prices to firm up?

Mark Hayden
Brussels

* Letters appear online only