The IMF Has Always Been A Rapist.
Dominique Strauss-Kahn, former managing director of the International Monetary Fund is being accused of rape. But, forget about that. A lot has already been written about that of late. What’s interesting is that this outfit he used to run has always been known as a rapist of developing nations. Fitting, isn’t it?
The IMF, which is completely under the control of European bureaucrats, has always been deceptively posturing itself as an organization that tries to reduce poverty in the world by giving out loans to developing countries –which, unfortunately, very often have extremely questionable conditionalities attached. And this often results in those poorer countries being left under the iron fist of lender nations. For the most part, the IMF has succeeded in doing the opposite of what its intended purpose is; that is, the economic performance targets that are established as a precondition for IMF loans with the resultant policy changes has left borrowing countries poorer than they otherwise would have been.
In a letter to the Washington Post, Donald Boudreaux suggests that we should get rid of the IMF:
“Rather than deliberate over which world-class bureaucrat will be the next head of the IMF, why not simply abolish that misfit outfit?
The IMF’s original purpose was to help cash-strapped governments maintain their currencies’ fixed exchange rates as directed by the 1944 Bretton Wood system. But that system gasped its dying breath in the summer of 1971, when – with Pres. Nixon’s closing of Uncle Sam’s gold window – all pretense of an international system of fixed exchange rates was abandoned.
Undeterred by the total disappearance of its purpose, the IMF – flush with continuing streams of subsidies,especially from American taxpayers – morphed into a “development” agency. The quotation marks around “development” are no mistake. There’s no evidence that the IMF’s efforts as a development agency have had any positive effects, unless by “positive effects” you include creating among many poor countries a culture of dependency upon foreign “aid,” along with propping up authoritarian regimes.*
As my great teacher Leland Yeager observed, “self-important international bureaucracies have institutional incentives to invent new functions for themselves, to expand, and to keep client countries dependent on their aid.”
Isn’t it time to close the window on funding for the IMF?”
It seems that the IMF is to developing countries what wall-street was recently to main-street. And, Dominique Strauss-Kahn representing the IMF and then ending up as its own metaphor, is nothing short of sublime.