Neoliberalism: Oversold | IMF – Yes, that IMF.

An article that would be hilarious if the contradictions were not so obvious and crazy making.

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This would be uplifting if it did not come from the organization that continues to pursue these policies regardless of the mountains of data that have shown this since the late 1800s.

My favourite part is when they claim that the IMF is leading the way to challenge the neoliberal orthodoxy:

“These findings suggest a need for a more nuanced view of what the neoliberal agenda is likely to be able to achieve. The IMF, which oversees the international monetary system, has been at the forefront of this reconsideration.­”

I always find it amazing that elite economists can so wilfully ignore an entire stream of economic thought that has been critical of their program from the start. A stream of thought that has been proved correct over and over again throughout history.

What the authors fail to realize is who they are working for. We know who the IMF works for and it is the least surprising thing that the program is leading to an increase in inequality. After all, that’s the whole point of their program.

The choice quote:

“Moreover, since both openness and austerity are associated with increasing income inequality, this distributional effect sets up an adverse feedback loop. The increase in inequality engendered by financial openness and austerity might itself undercut growth, the very thing that the neoliberal agenda is intent on boosting. There is now strong evidence that inequality can significantly lower both the level and the durability of growth (Ostry, Berg, and Tsangarides, 2014).­

The evidence of the economic damage from inequality suggests that policymakers should be more open to redistribution than they are. Of course, apart from redistribution, policies could be designed to mitigate some of the impacts in advance—for instance, through increased spending on education and training, which expands equality of opportunity (so-called predistribution policies). And fiscal consolidation strategies—when they are needed—could be designed to minimize the adverse impact on low-income groups. But in some cases, the untoward distributional consequences will have to be remedied after they occur by using taxes and government spending to redistribute income. Fortunately, the fear that such policies will themselves necessarily hurt growth is unfounded (Ostry, 2014).­”