What Viktor Orbani thoughts to the International Monetary Fund? Do not be surprised if at the sound of the names of the representatives of the Hungarian Prime Minister IMF same hands clenched into fists. Because it by Orban laughed with them recently around the world.
First, in 2012. Effectively put them on the bank tax and pensions. IMF would then – in exchange for a withdrawal from the introduction of tribute and cut benefits – to give preferential loan to Budapest. Orban refused, and a year later repaid all borrowings from the IMF in 2008. When the country was on the verge of bankruptcy. He did it to pick up the Fund pretext to interfere in the economic policies of his country. He sent a note to the IMF, which reported that a representative of the institution in Budapest is no longer needed.
To say that since then the relations of Hungary and the IMF are cool, it’s nothing really do not tell. In February of this year in the long parliamentary speech, Orban said that the times of cooperation with the IMF is a time when Hungary had the neck “dog collar” and were by him “enslaved to debt.”
Is not too harsh words against this venerable institution?
no. A critique of the IMF, as well as criticism of the actions of working with him in tandem World Bank , has a surprisingly strong foundation. I Orban is not in it alone.
Children 44
Both institutions were meant to be human. Their history dates back to the famous conference of the American Bretton Woods in July 1944. More than 700 delegates from 44 countries (politicians, soldiers, economists) wondered how it would be with the global economy, when the war is over. Return to the state before 1939. All he seemed impossible and we had to develop something new. They won the ideas promoted by – and how! – United States and its representative, the bureaucrat Harry Dexter White. His abilities playing konferującego company has even John Maynard Keynes. Reportedly, the final recommendations of the conference signed because “he had to.” (Behind the scenes of the conference with passion Benn Steil describes in his book “Keynes and White Battle of Bretton Woods”). The Bretton Woods was decided that the Western world will implement post-war monetary system obliges each country to limit exchange rate fluctuations to the one percent range. The chief currency of international settlements was to be the US dollar linked to gold at $ 35. per ounce. It is a rigid connection with gold is considered to be one of the reasons for the short life of the system, which collapsed in 1973.
The fact that the system has ceased to exist does not mean that it ceased to exist, all institutions, which is created in 1944. they decided. According to the principle that once brought to life being bureaucratic strives for eternity, The International Monetary Fund and the World Bank have survived, cleverly changing the formula of its activities. – The IMF has been very flexible institution. Fast reformulated its mission of maintaining the stability of international currency exchange rates on lending money to countries that have balance of payments problems. Each successive crisis in the global economy provide fund pretext to formulate new principles of missionary – observes Ian Vasquez, an economist at think tank Cato Institute.
Today the official aims of the IMF are: foster global monetary cooperation, ensuring financial stability, strengthening of international trade, promoting employment growth and economic growth and reduction of poverty in the world . The latter assumption is also the main task of the World Bank. The objectives of the IMF and World Bank are intertwined, and institutions work together, which is all the easier because their headquarters are standing next to each other, two blocks from the White House. Incidentally, many opponents of this system is an eloquent symbol of imperial character of these institutions.
Of particular importance in the global economy, they gained after the collapse of the Soviet Union, when the post-Soviet republics have decided to enter the path of capitalism. Washington’s bureaucracy with doctorates in economics then reported to them with money and package developed yet in 1944. Good advice. These councils from the moment when, in 1990. John Williamson them grouped together in the 10 Commandments are called the Washington Consensus. In the first place the Ten Commandments is fiscal discipline, then it is rational public spending and low tax burden, financial liberalization, unified and competitive exchange rate, the liberalization of foreign trade, openness to foreign direct investment, privatization, elimination of bad law and protection of property rights. At a time when the country promised that the commandments begin to observe the fund and the bank uruchamiały credit lines.
villainous Nobel Prize winner
For many sounds as undermining state sovereignty, planned by the great financiers top-down introduction of neoliberalism aimed to open markets for large corporations. It supporting publicystycznie password, but populism is not enough to explain why the IMF and WB have so many enemies.
While the list of countries that will not have too many in common with saviors of the world from Washington, which is relatively short and somewhat exotic (located on it – apart from Hungary – including Bolivia and Egypt), is critical of the IMF and the world Bank speaks increasing number of prominent intellectuals. Serious criticism falls from Joseph Stiglitz, Nobel Prize winner in economics, in 1997-2000, he served as Chief Economist of the World Bank. Their objections presented in 2002. In the book “Globalization”, causing the first social scandal (he criticized many of his colleagues), and then a global discussion. Stiglitz accused the IMF dogmatic economic treatment recommendations, eg. The assumption that what is good for financial markets , is also good for people. According to Stiglitz, the fund has, however, lack a realistic assessment of the proposed economic solutions, which for this is the lack of self-criticism often harm where they apply them.
I just accused the fund that his actions not only They provoked, but on the exacerbated by the financial crisis in Asia . According to some economists, the Asian slump in 1997-1998 had its origins among others the excessive dependence of economies of Thailand, Indonesia, Malaysia and South Korea of financing the private sector short-term debt. This type of financing promoted just the IMF, which then already in the crisis failed to help in the conversion of these liabilities into long-term debt. In the event of a crisis in the Asian country to benefit himself he defied the advice of the IMF, was Malaysia. Which restricted the flow of private capital to prevent speculative attacks on its currency. Sam IMF said then that this temporary remedy worked.
Harvard economist Dani Rodrik after analyzing the impact promoted by the IMF and the World Bank of globalization on the development of poor countries noted that some of them grow faster, although it was less “globalized”. He concluded that structural change and economic growth occur in so many ways that no one can impose act according to the principle “one size fits all” (one for each size). The rules, which – as Rodrik points out – is not always confirmed empirically. Because if for granted you can be considered that “the policy of openness to foreign trade translates into increased income”? On the basis of economic literature, says Rodrik, it is impossible to anticipate this. Maybe in some cases it may be beneficial to increase spending or additional regulations? This does not rule.
quoted by the media criticism of the Washington institution falls most often from the mouth of leftist and interwencjonistycznie oriented economists who identify promoted by the policy of free market and capitalism . Surprisingly, however, enthusiasts actions of the IMF and WB lack of free-market economists. And they should be. Because gladly signed under theses Washington Consensus.
Another bottle for alcoholic
If it were that simple, sensible would be to simply reprint Stiglitz serialized. But it is not. And free-market undoubtedly economist Robert Murphy in his book “politically incorrect guide to the capitalism” indicates what the problem is.
While the economic left treats solutions promoted by the IMF and World Bank as too conservative and capitalist, it right believes that the free market is treated by them rather as a cliche in practice in terms of harnessing new members in the gears of the modern corrupt financial system. The failure of the IMF or the World Bank are not a good test of the effectiveness of free trade. They do not work in them radical jeffersoniści and packages imposed by governments in financial difficulty are not modeled on the work of Bastiat. For example, Argentina, to get help, she had to agree to raise taxes to reduce the budget deficit – says Murphy. For the record: Thomas Jefferson, one of the founding fathers of the United States, was a staunch defender of freedom and the right to sovereignty and Frenchman Frederic Bastiat was, in turn, an opponent of trade barriers and the radical enemy of high taxes.
is the assumption that the IMF and the World Bank do not promote a truly free market , is right? This is confirmed frankly, although perhaps by accident, we the representatives of both institutions. For example, in the person of the well-known economist Kenneth Rogoff. Having to account to work in the IMF Rogoff responded to the flowing of Stiglitz’s criticism fiery letter, in which he defends his employees. According to Rogoff extremely much they dedicate themselves to building growth in the developing world and the elimination of poverty, working with 80 hours per week . Economist, arguing against the Stiglitz admits that the IMF certainly believe in the theories of Keynes , but couched in modern nuanced way , and argues that IMF programs often allow to maintain deficits . permit even during the Asian crisis – writes Rogoff, referring to the complaint that the IMF forbade Asians use the budget surplus to ease the turmoil.
Word Keynes and a deficit in one sentence means rather than state intervention in the free market. Add to this that the IMF and World Bank support nationally controlled investments in education and health, and thus closer to the rather mild social democracy than postulated by free marketeers minimal state. Murphy et consortes are right. But his criticism of Washington’s financial bureaucrats go further.
They do not like the very essence of the IMF and World Bank: rescue of bankrupt governments . Because in their opinion – for the irresponsibility and stupidity should suffer. And these “grants” dropping all Member States of the IMF. Effect? Fixation of poverty. The IMF and the WB series fall for promises of bankrupts that you will improve as soon as sypnie them cash. Economists in Washington by critics behave like someone who gives alcoholic huge amount in exchange for a promise that the bottle stand, go to therapy and eventually become a decent citizen. Unfortunately, many beneficiaries of international aid guided by different philosophy: if the IMF gives money to countries in need of reform, let’s do so that we they still need.
Professor William Easterly of New York University in the provocatively titled book, “The Burden white man “as an example naiwniactwa Washington economists gives Mexico and recommended by these institutions privatization of banks in 1991. the problem was no longer the same program privatization , in which the buyer banks could benefit from loans contracted in the same banks, which bought. One of them paid as 75 percent. the purchase price – writes Easterly. As a consequence, the privatization of banks was carried out, it was how he manages. And it was done so tragically, that – in conjunction with a lame law and corruption – as early as 1994. Translated into a decline of the peso and the economic recession.
Similar failures, experts in Washington were among many – including former sromotniejsze, the “wilder” states wanted to help. Africa is one big study of this problem. For example, Zaire under President Mobutu Sese Seko received as many as 11 loans from the IMF although well known that Mobutu is a thief. As noted by Easterly, in the 70s. Zairscy soldiers broke into the house of the IMF representative, who refused granting further aid the corrupt dictator. Beaten up, raped his wife and daughters, and the headquarters of the IMF lent Zairowi on.
Easterly ridicules different ideas IMF to increase the effectiveness of the reform process and the correct use of the loans, especially the idea of control peer in the framework of which African countries have a look at each other hands. It is surprising why the donor lending introduce mechanisms that have never been used at home. Is the US government poddałby evaluated peer Canadians? – asks the economist.
Democracy? And for what?
In his critique of Easterly also moves the same aspect of the IMF and World Bank, which is often said left: lack of respect for democracy and sovereign political choices of the countries concerned. IMF and World Bank do not have a gram of respect for democracy the moment they start work. There is a contradiction between their plans and policies of democratic – says Easterly. I give you an example of Tanzania which to gain the favor of the fund, its deletion of the National Strategy for Poverty had to turn on Poverty Reduction Strategy developed by the IMF. Based on assumptions that are not support tanzańscy voters. Or an example of Haiti, where in the 90s forced privatization of state-owned enterprises under threat without the aid. Such an ultimatum directed opening to the local parliament, the then head of the IMF, Michel Camdessus. Easterly also notes that the IMF is extremely actively engaged in the reduction of budget deficits, even indicating what subsidies or programs close. Manual control with democratic procedures, to no little.
In this context, it is easier to understand why, for instance. Peruvian citizens are not particularly happy with the fact that their president Ollanta Humala willingly resorted for advice WB and IMF, attributing this economic development of the country.
Peru is a textbook example of how markets can lift people out of poverty. Humala does not understand that the success of his country started, before they came to power, and that, paradoxically, its roots lie in the failure of the government, which ordered the individuals to cope on their own. The law in Peru is so complex that does not work, and as a result everything slowly. Do you want to build a house? Find a piece of land and build. He wants to set up a restaurant or a school? Here you are. It’s not that Peruvians have not heard of licenses, taxes, licenses, patents. They heard, but they are for them to abstract concepts. Everything is for sale and is not properly barriers to entry. For the World Bank, the lack of any functioning regulation is a scandal for the citizens a chance – he writes living and learning business in Peru Simon Wilson in the article “World Bank threatens the Peruvian free markets.”
Wilson notes that the introduction of western standards simply would kill many of these small businesses , thanks to which Peru is booming, and employment would transfer to the statist corporations, where people would be taxed “at source”, and their taxes were created by different programs social. For a bank the word development means the application of specific measures on consumption and social spending, increased scope of state education and the implementation of the provisions on the minimum wage – noted economist, adding to the full view the situation as programs of the IMF and the World Bank now build enterprise Peru. The IMF lent eg. 120 million. located in the exclusive area of Lima clinic Delgado. Consultation with a specialist there costs $ 150. On the other hand, 164 million dollars. fell into the pockets of the richest Peruvian Carlos Pastor – the holding company has a not expand its financial arm. Oh, the fight against poverty.
Does this mean that you should eliminate the IMF and the World Bank? Do any of the listed unambiguous and negative – is that of the left, whether this law – to the end right? Well, before we answer this question’s decide other.
With the aid mechanism of the IMF and the World Bank made use Polish in transition after 1989. Already at the beginning in exchange for pushing the country towards capitalism, we received from the IMF loan in the amount of 720 million dollars. to stabilize the economy, and the World Bank gave us credit for the development of exports of industrial and agri-food. Poland still has in both institutions, credit lines and draws from both expert advice. The question is whether or not these loans and tips would be better now? Or worse?
No comments:
Post a Comment