Nobel economist says IMF is destroying poor nations it was set up to help
This month, when the G-8 leaders meet deep in the Canadian woods to discuss global economic growth, it will be far from civilization and far from any protesters. To much of the world, it will look as if they're hiding. Because lately, they have a lot to hide from.
Since the infamous World Trade Organization meeting in Seattle, nearly every gathering of leaders from the industrialized world has been thronged with angry young men and women scaling fences, blocking roads, and demonstrating against "globalization."
Now, with the publication of "Globalization and Its Discontents," by Joseph Stiglitz, those protesters and others in the developing world have acquired a formidable ally.
Stiglitz is no rock-throwing nihilist. The Columbia University professor, who won the Nobel Prize in economics last year, was chief economist at the World Bank from 1997 to 2000 and served on President Clinton's Council of Economic Advisors. In other words, what the anti-Starbucks anarchist can't tell you, Stiglitz can.
"Globalization" is a fairly damning read, particularly of the International Monetary Fund and its policies, as Stiglitz trots out failure after failure in painful detail and also explains how and why these policies failed. At the core is what Stiglitz feels is a betrayal of the IMF's original mission.
Stiglitz is a Keynesian at heart (as is anyone who ever voted for a stimulus package), and it is the ideas of John Maynard Keynes that were the foundation of the IMF. Keynes saw that a depression is caused by a drop in overall demand. When this happens, he said, the government should stimulate the economy, with either spending or tax cuts.
The IMF was founded on this assumption: Markets don't always work well. The Fund's raison d'être was to ensure that countries were able to get their economies going when they slowed.
But in the 1980s a new breed of international bureaucrat emerged: the market fundamentalist. Under Reagan and Thatcher, the new creed of the IMF and World Bank became the sanctity of markets. That is, markets always work perfectly.