From 2003: IMF Admits Policies Don’t Work

I also found this little piece in Lobster 45 for Summer 2003, reporting on a piece in the Independent for the 20th March that year. According to the Indie, the IMF had just published a report concluding that their policies mostly didn’t work. Instead of helping countries with failing economies, the IMF actually made the situation much worse. The article stated

In a paper that will be seized on by IMF critics across the political spectrum, leading officials reveal they can find little evidence of the their own success. Countries that follow IMF suggestions often suffer a ‘collapse in growth rates and significant financial crises’, with open currency markets merely serving to ‘amplify the effects of various shocks.’ Kenneth Rogoff, the IMF chief economist who is one of the report’s authors, called the findings ‘sobering’.

A recent study by the United Nations reported that the 47 poorest countries in the world – the biggest recipients of loans from the IMF and the World Bank – are poorer now than they were when the IMF was founded in 1944. The report says that ‘financial integration’ has often led to an ‘increased vulnerability in crises’ because foreign speculators pull out as soon as trouble emerges.

‘Mea Maxima Culpa?’, p. 25.

The IMF’s policies generally seem to consist of recommending the countries receiving their loans to privatise their economies, savagely cut back on any welfare expenditure, and rationalise the remaining industry, leading to massive unemployment. They also force the countries to open up to private investors from the rest of the world. In the case of at least one Central American country, this consisted of a stipulation to sell their state industries to American companies. Ramsay thus commented that

On the other hand might we not say that the report demonstrates in spades that the IMF’s policies are working splendidly? For is the American-dominated financial system not intended to enable America in particular and the ‘the West’ in general to bleed the Third World dry?

This piece demonstrates that the free trade policies of international financial capitalism really don’t work, except in the respect that they’re intended to make the lenders of the Developed World richer.

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7 Responses to “From 2003: IMF Admits Policies Don’t Work”

  1. Mike Sivier Says:

    Reblogged this on Vox Political.

  2. amnesiaclinic Says:

    Really, really sad that they are still allowed to get away with this. We saw it happening in the third world and then they came for us. Shocking when put together with the WTO and the World Bank. In the background is the Bank of International Settlements. What a toxic cocktail.

    • beastrabban Says:

      I’ve got a feeling that in many respects the IMF, WTO and the World Bank are simply a continuation of the policies of the Western powers dating from the late 19th century. Like when Britain and France used the bankruptcies of Persia and Egypt to force through important trade concessions, and finally took over the government of the latter nation. Now as capital has become internationalised, the same process is being used by the banks within Europe itself – like Greece and Italy, whose governments’ policies are more or less determined by the EU banks.

  3. aboriginalpress Says:

    Reblogged this on .

  4. hstorm Says:

    Reblogged this on TheCritique Archives and commented:
    Quietly, the IMF has conceded more than once that the Neoliberalism programs it fervently promotes don’t even work.

  5. The Swans New Party Says:

    Come to Greece to see how IMF admit yet again their policies do not work, as they expressed surprise that Greece’s economy imploded.

    Most of the young with a new university degree are leaving at the same huge rate of emigration as after the Second World War.

    There is no basic tax allowance. There is a huge tax hidden inside the electric bill that is now to be added to the huge property taxes that have destroyed any income for the poorest people, who inherited a flat from a couple of generations and was there one source of secure income by rental.

    So many taxes are levied on the unemployed and low waged as well as the squeezed middle, that small to medium businesses are almost extinct.

    One difference between Athens and London, is that like in the rest of Europe, the food banks are not a cruel joke like in England, but a daily cooked hot meal and hot drink from a canteen staffed by local government catering staff. This feeds the working poor and pensioners in the main, which is the same majority of people being hit by welfare reform in the UK.

    Taxes on buying and selling homes long ago destroyed the real estate industry in Greece.

    Each bail-out has meant less and less money left in state pension and works pension funds, to pay off French and German banks.

    The tax burden is getting heavier and heavier on those with nil income or casual employment. What little welfare state there was in Greece, has pretty well ceased.

    Each time the dread Troika (IMF and Europe) come to Greece, yet another tranche of taxation crushes people and any hope of economic recovery to business and jobs.

    There is little social medicine left, with Greeks going to asylum seeker centres to get their baby vaccinated. With low wages or nil income the social insurance system means Greeks have no access to medicine or treatment, however life-threatening.

    Before now countries like Austria have organised charitable gathering of basics to give hospitals any bandages or aspirin in Greece.

    Doing Austerity in a recession is against economic good sense and not what government is for. You spend in a recession as money needs to exist to make jobs and business possible.

    Greece did not cause its own crushing debt. French and German companies got money for major works from French and German banks and then when the recession hit just left Greece with the debt.

    Just before the Euro gave 1000 per cent inflation from the Drachma, on the day it first started, Greece had paid off national debt altogether.

    The Tories have spent in 4 years, what Labour spent in last 13 years, with what they have in common is the huge waste of admin of welfare reform just to make things worse for millions of people in the UK and a greater burden on cash-strapped councils and the NHS.

    We see parallels in our current political class turning the UK into a Greece with the failed theories of Austerity and Welfare Reform (merely a re-run of the New Poor Law that forbade feeding the starving and killed them in Workhouses).

    What is to come to the old, is nil income forever in old age with the Pension Bill and worse yet to come with the Flat Rate Pension in 2016.
    See you lose most or all of your state pension:
    https://you.38degrees.org.uk/petitions/state-pension-at-60-now

    • amnesiaclinic Says:

      Yes, the pension is now a benefit and due to be privatised and then disappear. There will be a minister appointed after 2015 to get the 70’s back into work. There will be no state pension as everyone working will be expected to get a private one as soon as they start working.
      Unless we stop it!
      Now!

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