I am aware that I have mentioned the IMF's latest quarterly report in a number of posts over the last day or so. I think there are two reasons. One was the fact that being in DC, and in meetings at which they were present, made them somewhat more present in my thinking than usual.
But that obvious influence is not all of it, by any means. Nor am I seeking to justify working with them and the World Bank, because I have always been willing to work with partners who are seeking to advance common agendas, even when by no means all issues are agreed in common. Instead the reason for this attention, based on reflection as I find myself mid-Atlantic again, is the fact that I see very clear change in both those institutions.
I have been accused in the last day or so of having a relentlessly optimistic world view. I had not greatly thought about that, if I am honest, but I suspect it is true. I always believe that however grim things are (and I have been there) things can and will get better. I suspect this spills over into my view on economic wellbeing for the world.
I have no love for the supposedly rational but intensely antagonistic and self-serving logic of neoliberal economic and political thinking. Its impact on billions of people on this planet has been deeply harmful, not least because it has delivered to them the deeply untrue message that because they have commanded little in the way of income they have lived lives of little worth. I profoundly resent that wholly unfounded logic, but it is the case that by promoting the Washington Consensus both the Bank and Fund helped delivered that message around the world, and expected governments to act as if it were true.
I make no pretence that the institutions in question have purged themselves of all residues of that past. I suspect that's not true as yet. But I meet people who work for both organisations, look them in the eye, share meals with them, and do not believe that's what they think. Instead I see people whose concern for creating a fairer, better, more equal world is very real.
And as the IMF Fiscal Monitor showed they're willing to argue against inequality now. What is more they are willing to say that it is the job of government to correct market imperfections. In the process they are also saying that more spending on socially driven programmes is necessary. In addition they are saying that the cost of doing so must be borne by the best off.
At the same time they are calling out the failure of the banking system, and its failure to find a socially useful purpose.
And whilst they have done so without sufficient differentiation between differing types of debt, they have called it out for the problem, and risk, that it is.
What I also noticed this week was that the strongest nodding head when I discussed how tax gap methodology needs to be extended not just to support the admin task of recovering tax owing but to facilitate the decision to be taken on what should, and should not, be taxed in the first place if the social goals of tax are to be fulfilled came from the Bank.
I suspect it was the Bank and Fund teams who also best understood my explanation that tax does really not fund spending but is instead a macro tool to both regulate the economy and deliver social goals.
My optimism could make me guilty of wishful thinking. I am aware of that. I try very hard not to fall into that trap. I don't think I am here. I think that these institutions are really changing.
And as a commentator on the blog has said, this change may, just may, be the surest sign that neoliberalism really is dying. Of course a cynic could say the thinly veiled attack by the Fund on Trump's tax plans is just an old elite fighting back. It could be. But I think it's something else. They are instead saying that to rely on the dogma of Laffer, for which the Fund quite correctly says there is very limited empirical support, is just wrong and that no government should experiment and take that unfounded risk when that risk is, in this case, to both domestic and international financial stability.
There's been no mea culpa for the past from these institutions. Nor am I expecting one. It takes courage enough for their actions to indicate what now seem to be very different concerns from those they once had. And I am willing to take heart from that courage. If the world is to become a better place then we need all the fellow travellers we can find who share sufficient of our world view to be on a broadly similar journey. I now think many in the Bank and Fund are in that place. So I am willing to walk with them without recrimination. We all have a blemished past. It's what we do now that matters.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
I hope you’re right about both these institutions Richard, but until we see sustained changes in policy I will continue to think that countries should follow the course that Evo Morales has taken in Bolvia.
https://www.telesurtv.net/english/news/Morales-Declares-Total-Independence-from-World-Bank-and-IMF–20170722-0020.html
Is this the same Bolivia that only has a top rate of income tax of 25% for investment income and 12% for labour income? And cgt 12% to? and 1% estate tax? So they have done away with what some on the left would say is neo liberalism (never found a comprehensive defination of it) with lower tax as well? Yet it would seem the left some on the left act in order to do away with neo liberalsim you have to have much higher tax rates. I rather suspect if genuine waste was slashed (opposed to what tories call waste) you could have the lower tax rates and well funded schools/fill the blank.
I confess I found your logic hard to follow
My logic is clear so much money must be wasted and if it was not you could have the lower tax rates for most people whether it be a worker small business, or farmer/small landlord/shop keeper etc and still have money for what is sometimes called frontline where it is appreciated/utilized better. For example I read a SNP supporter whom when she was a nurse in england there was no less than 9 managers for her ward of 14 nurses. Strikes me would be hiring the nurses instead of quite so many manages and thats 1 example. Given the tax take/burden is highest in 30 years % to GDP and aparently borrowing £50 billion yet services are said to be crumbling I just wonder given these things can be so bad. Yet I wonder how other countries can cope with lower taxes and services can be running generally speaking ok.
Sam
I’m sorry this is nonsense of the level that the Mail and Taxpayers’ Alliance deliver.
First, the managers the NHS really does not need are probably unseen to the nurse and due to the wholly unnecessary fake market
And what are the managers that can be seen doing? Dealing with bed blocking because there is not enough spent on social services. And then managing the nursing bank becUse there has been a pay cap. And so on.
Sorry, but the evidence is that when Tories say they’ll cut spending they really can’t find what to cut.
Sorry, but keep to facts please
Sam,
“the left”, “the left,”the left” (3 times in short paragraph?)
“I have never found a comprehensive defination of it”
Relax Richard,
Engagement with these institutions offers more potential than being aloof. I don’t think that anyone will equate you with the Washington Consensus. The thought of that, if anything, is quite funny.
The Washington Consensus, Marco?
“I have never found a comprehensive defination of it”
Not that I’ve looked very far 🙂
http://www.taxresearch.org.uk/Blog/2010/03/29/the-failure-of-the-washington-consensus/
I can’t for the life of me remember if I found this report link here on another thread (please forgive me if I did), but there is an interesting assessment of the movement within the IMF since 2008 and how managerial changes and hiring policy have effected it.
http://www.relooney.com/NS3040/000_New_947.pdf
Abstract :
Since 2008 the IMF has become more open to the use of discretionary fiscal stimulus packages to deal with recessions, while changing its doctrine on the timing and content of fiscal consolidation. Rather than constitute a paradigm shift, these changes amounted only to a careful recalibration of its pre-crisis fiscal orthodoxy. The paper traces this evolution of the Fund’s doctrine to staff politics, more diverse thinking in mainstream economics and a careful framing of the message through the use of mainstream macroeconomic models. The findings contribute to the emerging debate on the internal sources of intellectual and policy change in international economic organizations.
– and later
The chapter argues that a new managing director whose “Keynesian” beliefs about fiscal policy were known before the Lehman crisis hired sympathetic interlocutors in the top management of Research Department (RED) and Fiscal Affairs Department (FAD) . Against the background of growing intellectual diversity in academic macroeconomics, these high-ranking bureaucrats and researchers changed the Fund’s fiscal policy doctrine by using their pulpits and their power to hire staff with supporting views and to cite the work of the new hires in the official reports of these departments. To ensure the internal and external legitimacy of the revised doctrine, the staff research used to support the claims made in WEOs and GFMs was framed in the languages and calculative devices of mainstream macroeconomic models.
That’s an interesting view
And it’s author is joining City soon so I will get to know him better
I’m hoping that change is a little more ‘RED’ than ‘FAD’.
Firstly I am sceptical about the ability of institutions that have supported and nurtured neo-liberal doctrine who are beginning to (or appearing to) question those doctrines.
I always thought that a sceptic was some one who was prepared to give something a chance but whom expected a higher level of proof or evidence in order to accept change had taken place. That is me.
A cynic would just dismiss any notions of change and remain entrenched in their views. That is not me.
I trust you enough Richard to trust your judgement. After all, you are the bloke doing the work. You’ve seen the whites of their eyes so to speak smelled the air, seen the sweat on their brows.
But my experience is rooted in being a consumer of and operator in the economic world neo-liberalism in this country has produced.
I work in a sector trying to build new homes even though the Tories have reduced our income to invest; of people who are going to have Universal Credit rammed down their throats next year even though it does not work; of more threatened redundancies for my colleagues next year and no doubt a few more suicides and many more safe keeping referrals amongst our tenants too.
My scepticism is justified but not aimed at you. It is aimed at the institutions you speak of.
If they are changing I just wish they would bloody hurry up. The Tories maybe in a mess but to hell with them. It’s the rest of us who need relief from this wicked, wicked Government and the neo-lib vomit that it espouses.
As I said there is no mea culpa
And of course I’d like things to change faster
But I sense change
And I live in hope
I think we have two halves of a glass PSR. I am hoping there is a pint between us. Make mine an Adnams right now
On cynicism…
PSR,
There are a number of popular definitions of cynicism. Mostly they are themselves inherently cynical.
My favorite is from Ambrose Bierce.
A cynic is a person whose faulty vision allows him (sic) to see things as they really are not as they ought to be.
Caitlin Moran has a nice one too, but I can’t locate it. Which is unfortunate because I seem to remember that it has a positive twist; as do many of her observations on ‘life the universe and everything’ A very inspiring woman. (I think she might balk at the soubriquet ‘lady’ but I would regard it as a title she has more right to than many who would claim it)
I hope your reading of positive attitude changes is reflective of some genuine thinking going on. I have to say I’m somewhat cheered by the general tenor of your experiences.
It’s good to have reports from close to the top table. (I had some feedback, first hand from Catalunya the other day and it offers a different perspective. Certainly form the MSM coverage.)
You are sensing a change in the atmosphere and that’s the sort of thing you would not get if you weren’t burning kerosene. You can read all the reports in the world but there’s different stuff between the lines of official language when you know who has written it and understand better what are their constraints. And at that top table level key personalities can have global repercussions. These guys and gals are not robots (yet).
It could be months before changes of mindset and emphasis begin to appear even in IMF reports let alone before a gormless MSM picks up on it. In the meantime it’s reassuring to say the least that these big boys are not asleep at the wheel.
Post Brexit, of course you’ll be able to get your Adnams on draught or bottled in DC. , Calcutta, Bombay, Salisbury-Rhodesia, Tanganyika, …..you name it. (If you can remember far enough back and used to collect stamps)
Ask Boris. It’s true. If necessary he’ll take it over there himself in a bendy bus. That’s a solid gold Tory promise.
So spending on HS2 is a good spend? Or renewing trident is a good spend? The former is supported by Corbyn/Mcdonnel from what I can tell and the later at least personally is against. Spending so much on foreign aid to help the poor overseas simultaneously implementing policies that harm the poor here. Spending on aircraft carriers with no planes. Prosecuting people who should not be and consequent putting them in prison for x period (such as a photographer took a photo of one of the victoms of grenfell and was subsequently prosercuted and in prison for 3 months,given the police talk about cuts stoping them doing their job if they have the resources to after that person I wonder). These managers did next to nothing according to the nurse
Respectfully, repeating yourself is not an argument
You are getting close to being boring
Sam,
What I’m hearing from you is almost like a scream of …what?…frustration. All this really bad stuff going on and we get barrages of it hurled at us constantly from media wiseacres who either flatly report it as it lands, or they tut and say nothing more than ‘Ooh! Isn’t it dreadful ? Somebody should do something about that’.
You are not alone.
There’s millions of us out here thinking something very similar. We may each focus on different specific examples, but we all severally conclude that: We have lunatics running the asylum and the sane ones amongst us are taking antidepressants so we can live with it.
The ones who feel totally outnumbered and outgunned, and think it somehow their own fault, resort to drugs, (both prescription and illegal – (though how a plant can be illegal is a mystery to me), alcohol, obsessive self harm (in which category I include smoking tobacco – mea culpa), and in extremis suicide.
Some instead of beating themselves up, beat up on society at large, by hurting other people and willfully and ‘mindlessly’ damaging property.
I have ditched my TV and I don’t read the drivel in the mainstream press. It gets a lot of ‘noise’ out of my head and I am generally feeling better for it. It has taken a number of years to achieve this more comfortable mindset.
It doesn’t make the world a significantly better place but I can cope with it better.
It sounds daft, but I think paracetamol helps me because I believe it helps to control the mental pain. Something does and I have begun to feel like a functional human being again.
It’s good to feel I have reclaimed my life. I’ve wasted an awful lot of it in a black and dismal state weighed down by things that are not my fault, that I can’t do anything about and if I’m honest I don’t care about. I am now free to do the things I do care about and which I can have some control or influence over.
Caitlin Moran (whose writings I have recently found to be inspiring) describes the world as a patchwork quilt. Nobody will ever see the whole pattern, but we can each add to it our own little patch. I think that’s a really powerful insight.
My bit has got flowers on at the moment. I have rediscovered gardening as joy. I know…but It takes all sorts…
For different reasons I’ve visited and met people at the World Bank (also IMF), firstly in my consulting days and then with an NGO. Working and studying in the development world, the universal view was that the bank was an unmitigated evil but after spending time with people there, their concerns were not that different to the folk I know in NGOs, and they were somewhat less ideolological.
Since then, when searching for material on economic development, enterprise and job creation and similar, they have been the best source of rigorous research and analysis
Like Richard, I’m more inclined to take them at face value, recognising that they have (mostly but not entirely) moved on from past positions and might actually be a strong ally.
Richard I am sure that the people that you meet in such institutions as the IMF and World Bank are very well educated, smart and moral.
They however, are only the hired hands. They are front of house selling a good image and doing very good PR. They do not make policy. As hired hands they do as they are told. The Word Bank and IMF according to Professor Michael Hudson are instruments of the State Department. If Professor Hudson is correct it is the State Department and it’s network of influences that need reforming – good luck with that one.
And who is the State Department?
And who said Michael Hudson is right?
And how does any organisation work but with hired hands
Sorry – bit I have never bought the ‘masters of the universe pull all the levers’ theory
Richard, I don’t mean to ‘rain on your parade’. Keep up your good work with all the organisations you inter-act with. My remarks were merely cautionary. If ever you wonder why progress is slower than you would like, there may be an explanation.
You asked ‘Who is the State Department? That would be the US State Department. You also asked, ‘Who said Michael Hudson was right’?
Michael Hudson was present with Henry Kissinger at a meeting with the Saudi authorities when OPEC announced its intention in the 1970’s to quadruple the price of oil. Kissinger’s reply was you can charge as much as you want but you must agree that oil can only be traded in dollars. If ever you decide otherwise it will be regarded as an act of war. This is known (after the economist H K Liu who coined the term) as Dollar Hegemony.
Every country must have oil. Dollar Hegemony is the process whereby countries must export real wealth to the US in return for dollars (bits of paper) which only the US can issue. This places the US in a unique position via a via the rest of the globe. I regard as quaint the question to whom does UK’s oil belong Scotland or England? It belongs to neither. Neither England nor Scotland can print dollars. Sterling is as a result, a derivative currency of the dollar.
Both Iraq under Saddam Hussain and Libya under Gadhafi ignored this limitation on their freedom to act. They paid a heavy price.
I mention this story only because you also asked, ‘Who said Michael Hudson was right’? As an economist Professor Hudson has throughout his career worked very closely to the ‘levers of power’. Just as I regard you as the ‘go to man’ on matters of tax justice, I similarly regard Michael Hudson as one of the ‘go to men’ on the geo-politics of Finance Capitalism. Whether he is right or not that is something you must decide for yourself.
Lastly you are correct all organisations need hired hands. However, they are very careful about who can decide policy. It is never the hired hand.
I think Michael Hudson a very obviously good guy, on our side
But, I just think we need to have a little concern about too much conspiracy theory
Try as I might, and the closer I get to power (and I have been reasonably close) I see the power of ideas but not some deep, dark, mysterious network of people
I leave that for the films my sons like
In the real world there is a conspiracy of wealth, of course, but it’s still about ideas and not actual control, I believe
I’ve certainly noticed a change in tone when the IMF speak in public, and dared to be optimistic that they were changing.
However I was really disappointed to read in the New Internationalist last month that structural adjustment is alive and well. The article is behind a paywall, but I’m sure they won’t mind me sharing the following from an article on Mongolia.
“… the mortgage programme that transformed many Mongolians’ lives contributed to a real-estate bubble; prices in the capital jumped by as much as 20%. Now the construction and real-estate sectors are in trouble, as are the banks that lent to them. Consequently, earlier this year, Mongolia’s government successfully sought a loan from the IMF. But, to meet IMF conditions, spending on healthcare, education and child benefits have been cut.”
Sound familiar….?
I accept the process is not.complete