IMF-ing the world!
"The recovery is underway, but unemployment in most countries is still too high,” remarked Dominique Strauss-Kahn, International Monetary Fund Managing Director
This worry over jobs comes as Greek labor unions announce fresh protests over IMF policies they accuse of making their country’s economic and jobs situation worse: austerity measures, public spending cuts, tax rises, and privatization. They’re all part of the IMF doctrine for debt crisis management it’s now imposed on Greece. It’s a policy that has been forced on many developing nations over decades.
“I think most Western policy makers think it’s tough love,” Gerald Epstein, Economics Professor at the University of Massachusetts, said of the IMF mindset on these neo-liberal policies.
Tough love marked by reliance on the free market and not the role of the state, which critics like Epstein say hurts these countries and contributed to the financial meltdown, this as IMF and World Bank leaders brace for another.
“We are one shock away from a full-grown crisis,” Robert Zoellick, World Bank President said. “The financial crisis taught us that prevention is better than cure. We cannot afford to forget that lesson.”
But a group of thinkers believe the curriculum is all wrong. At the very place decades ago the IMF was signed into being by world leaders , a different group of economic and policy leaders gathered together who believe the institution is outdated and needs to be rethought altogether
They are calling for a shift away from Western dominance and thinking in the organizations.
“We’ve really been looking at this through our problems our lenses and most of our countries have not been subject to IMF programs,” Epstein asserted.
But even as some of those countries, who have, such as Brazil, call for a greater say in the IMF as part of the BRICS block of emerging countries, some don’t see any real change in the works.
“I expect the next president of the World Bank will be an American and the next managing director of the IMF will be a European,” predicted Simon Johnson, former chief economist of the IMF. “And that’s the same pattern we’ve had since those institutions were established.”
This is despite the limitations of the framework to global economic effectiveness.
“That’s a major limitation and weakness in their governance but again it’s not going to change anytime soon,” Johnson added.
A warning over what could be in the pipeline as the IMF talks austerity with Portugal to secure its debt crisis loan lifeline and an economically-strapped Egypt talks about getting billions in soft loans from the bank.
As the old adage goes, “the more things change the more they stay the same,” reiterated Johnson.