NOVANEWS
John Glaser
Over at Econlog, Arnold Kling directs us to this interesting and much needed articlearguing that the IMF has “outlived its purpose.” Excerpt:
Now, before Tunisia and Egypt even have new governments in place, the IMF has jumped to offer them loans for vast infrastructure projects in the desert—as if the fund didn’t know that young Arabs there want ways to start businesses and have careers, not temporary construction jobs.
The Greek debacle and the North African drama raise existential questions about the IMF. Responsible governments have no business borrowing vast sums from abroad, rather than from domestic sources. That’s what tinpot regimes do. And lending even more to borrowers who can’t pay what they already owe? That’s what loan sharks and mafiosi do.
The IMF’s business model sabotages properly functioning capitalism, victimizing ordinary people while benefiting the elites. Do we need international agencies to enable irresponsible–verging on immoral–borrowing and lending? Instead of dreaming up too-clever-by-half schemes to stumble through crises after they happen, why not just stop imprudent banks from accommodating foreign borrowing by feckless governments?
Now, before Tunisia and Egypt even have new governments in place, the IMF has jumped to offer them loans for vast infrastructure projects in the desert—as if the fund didn’t know that young Arabs there want ways to start businesses and have careers, not temporary construction jobs.
The Greek debacle and the North African drama raise existential questions about the IMF. Responsible governments have no business borrowing vast sums from abroad, rather than from domestic sources. That’s what tinpot regimes do. And lending even more to borrowers who can’t pay what they already owe? That’s what loan sharks and mafiosi do.
The IMF’s business model sabotages properly functioning capitalism, victimizing ordinary people while benefiting the elites. Do we need international agencies to enable irresponsible–verging on immoral–borrowing and lending? Instead of dreaming up too-clever-by-half schemes to stumble through crises after they happen, why not just stop imprudent banks from accommodating foreign borrowing by feckless governments?
The piece is good in its entirety, so do read it.
One of the many reasons IMF/World Bank policies tend to exacerbate the problems that countries experiencing this Arab Spring face and have faced is because they help legitimate the state officials of Arab tyrannies (so long as the U.S. legitimates them too) by (1) implementing doomed Keynesian booster-programs and (2) orchestrating top-down policies that these tyrants then use to their advantage. I blogged a bit about this back in May, but here is Austin Mackell at the Guardian in the same month:
The new loans being negotiated for Egypt and Tunisia will lock both countries into long-term economic strategies even before the first post-revolution elections have been held. Given the IMF’s history, we should expect these to have devastating consequences on the Egyptian and Tunisian people.
[The IMF] would rather make backroom deals with Mubarak-appointed finance minister, Samir Radwan, and the generals currently running Egypt who are themselves members of an the economic elite that sees its privilege threatened by the approach of democracy.
Mackell discredits himself by citing the economically illiterate Naomi Klein later in the piece, but it is important to note the overlap here. Those opposed to the Western imperialism that has in many ways held back the entire region should rightly oppose the economic technocrats attempting to pull the levers from their outfits at the IMF and World Bank. And those who understand that economies free from the white-knuckled grip of these dictatorships (again, many propped up by the U.S.) would empower and improve the lives of these populations should oppose what these international economic agencies do, which is falsely branded as imposing free market policies.
