[stop-imf] IMF and World Bank Got the Economics Wrong (fwd)

[Robert Weissman]

From: Mark Weisbrot <weisbrot@cepr.net>
To: weisbrot-columns@egroups.com
Subject: [weisbrot-columns] IMF and World Bank Got the Economics Wrong 

This was broadcast today on All Things Considered.  If anyone wants to 
reprint it, please let me know.
________________________________________________________________

         What do House Majority Leader Dick Armey, the Rainforest Action
Network, and the AFL-CIO have in common? They all want to curb the
power of the International Monetary Fund.

         There are plenty of good political reasons to go after the Fund, and
its multinational junior partner, the Word Bank. They are bleeding Africa
dry, forcing some of the poorest, most devastated countries in the world to
spend more on debt service than on health care or education. They help
finance projects that are environmentally destructive and have displaced
millions from their homes.

         What is less well known is that these institutions have also got 
their
economics wrong. And if doctors can bury their mistakes, so can
economists. In less than three years the IMF has helped bring about
economic disasters on three continents.

         First was the Asian financial crisis, which began in the summer of
1997. The Fund helped cause the crisis by convincing countries like South
Korea, Indonesia, and Thailand to open their financial systems to massive
foreign borrowing. When this hot money gushed out of the region just as
fast as it had poured in, the IMF worsened the crisis with its long-practiced
medieval medicine: bleed the patient until it gets better.

         When the "Asian flu" spread to Russia the next year, the IMF
wasted billions trying to support an overvalued Russian currency. The ruble
collapsed within a few months.

         The contagion then spread to Brazil, and the Fund made the same
mistake. They saddled Brazil with tens of billions of dollars of debt, and
fifty percent interest rates-- only to have the overvalued currency collapse
two months later.

         Three strikes and you're out? Not for these guys.

         The long-term record of the IMF and the World Bank is even
worse. Russia lost 40% of its income within five years of adopting the
IMF's program in 1992. That's worse than our own Great Depression. The
number of people in poverty soared from 2 million to 60 million in just a
few years.

         In Latin America, twenty years of these institutions' supervision
have produced income growth, per person, that is less than a tenth of its
previous rate. In Africa, income per person has actually fallen 20% over the
last two decades.

         Meanwhile, here in the US, there is a growing awareness that the
IMF and World Bank's promotion of a global "race to the bottom" has hurt
American employees, too. In spite of a record-long economic expansion,
the median wage remains at its level of 26 years ago. No wonder the 14
million member AFL-CIO has joined the call for a march and rally against
the IMF and the World Bank in Washington, D.C., on April 16.

         These demonstrations will do for the IMF-- the most powerful
financial institution in the world-- what last year's protests in Seattle did
for the WTO: subject it to public scrutiny for the first time.

And not a moment too soon.

Mark Weisbrot is co-director of the Center for Economic and Policy
Research in Washington, DC.




Name: Mark Weisbrot
E-mail: <weisbrot@cepr.net>
Co-Director
Center for Economic and Policy Research
1015 18th Street NW, Suite 200
Washington, DC 20036
Phone (202) 822-1180 x228
Fax (202) 822-1199
(202) 333-6141 (home)
www.cepr.net