Sunday, 4 July 2010
GLOBALIZATION AND ITS DISCONTENTS by Joseph E Stiglitz
This book could also be called WHY I FUCKING HATE THE IMF by Joseph E Stiglitz. This guy but really hates the IMF. He goes through various economic crises – the East Asian one of the 90s, and the end of Communisum in Eastern Europe being the main ones, and castigates the Fund's mindset, policies and practices. In short, there's nothing he doesn't fucking hate about the IMF.
Basically, the Fund was set up to ensure that if any country got into deep economic trouble, there would be a body that existed to help it out. In the Great Depression of the 1930s, it was found that government spending helped resuscitate the economy. I guess that's kind of Economics 101. The Fund was supposed to help countries stay stable, and when they weren't, help them out.
According to Stiglitz, the IMF was run by fundamentalist free market thinkers. Thus, their definition of what was best for a country was always less government, no matter what the circumstances. This worked well when the Fund dealt with some South American countries, which had massive governments and bloated budgets, but not so well in many other countries, especially when their economies were having a downturn. They'd insist on less government, and less government spending, which tended to make everything worse. They'd also try and prop up the exchange rate through billions in loans (which the residents of say, Indonesia, had to pay back in the end). However, they'd somehow only manage to prop it up for long enough for foreign banks and local fat cats to get their money out and then the whole place would fall apart, with the poorest hardest hit.
So anyway, the problem I have is that I don't much about economics, and he doesn't present the opposite view, so I've no idea how right he is. I have to say, it sounds pretty right to me. One thing he points out is that most of the people who run the IMF are from a very small group – finance ministers and bankers, who all tend to have very similar ideas about what is best. Apparently it's common to go from the IMF right to a major global bank and back again. I mean, even if you're not a monster or whatever, it's clear whose interests you'll be serving. Certainly not the starving village guy in Indonesia. And despite the IMF being a public institution, there's not much accountability to any public, or much public debate. Thus, while a guy in a village in Indonesia is paying, for sure, he doesn't have a say.