It’s a topsy-turvy world. “Anarchists” protest cuts in government spending, while “socialists” live in the lap of luxury, including $3,000-a-night Manhattan hotel suites, working, in at least one celebrated case, to impose corporatist-flavored “neoliberalism” on the troubled countries of the world.
The sex scandal involving the just-departed International Monetary Fund director Dominique Strauss-Kahn is of course no reason to abolish the agency – but then we didn’t need another reason. The agency, centerpiece of J. M. Keynes’s postwar inflationary Bretton Woodsbrainchild, should never have been created in the first place, since it was another calculated step toward global government-controlled money. Its re-creation after its original mandate – maintaining the system of dollar- based fixed exchanges rates – became obsolete 40 years ago is a textbook case of bureaucratic mission creep, but its existence is no more justified by the new mission – a 9-1-1 for profligate, debt-ridden governments — than it was by the old one.
The IMF has 187 member governments, which together this year have provided $340 billion in to the agency. Each country is assigned a contribution quota and a vote count weighted roughly according to its quota. The U.S. government’s financial quota is over 17 percent of the total, almost three times that of the second largest contributor, Japan. It controls 16.74 percent of the votes, with Japan, at 6.01, next in line. Treasury Secretary Timothy Geithner is the U.S. member of the board of governors, with Federal Reserve Chairman Ben Bernanke as alternate governor. This should be enough to establish that the IMF’s agenda is not free markets.
Funded by Force
All IMF money comes from the taxpayers and central bank printing presses. So there’s one charge one against it: It’s financed through compulsion. That should our shape our expectations about the agency.
What does the IMF do? In The White Man’s Burden, former World Bank economist William Easterly calls the IMF “the West’s most powerful agency for dealing with many poor countries.” No cause for optimism there. Here’s how it describes its mission:
- Surveillance: “oversees the international monetary system and monitors the financial and economic policies of its members”;
- Technical assistance: “assist[s] mainly low- and middle-income countries in effectively managing their economies”; and
- Lending: “provides loans to countries that have trouble meeting their international payments and cannot otherwise find sufficient financing on affordable terms.”
Regarding the first, the IMF has been notoriously bad at foreseeing crises. But that should not be surprising. Why would bureaucrats living rather well off the taxpayers, with no personal capital at risk, be expected to be competent at spotting economic trouble? Did any official agency of the U.S. government foresee the housing bubble and its explosion? Bureaucrats can’t know what they need to know because the crucial knowledge is particular to time and place – and most of the time unarticulated.
Read the entire Article here: End the IMF | The Freeman | Ideas On Liberty.