The Ruling Elite really don't care what is best for the economy and society
Last week the new head of the International Monetary Fund (IMF), Kristalina Georgieva, dropped a truth bomb.
In a blog post on Tuesday, Kristalina Georgieva, managing director of the IMF, said inequality had become “one of the most complex and vexing challenges in the global economy” over the last decade...
Firstly, Georgieva suggested governments needed to rethink their policies and consider progressive taxation.
“Progressive taxation is a key component of effective fiscal policy,” she said. “At the top of the income distribution, our research shows that marginal tax rates can be raised without sacrificing economic growth.”
She also suggested that social spending policies had a part to play, noting that allocating funds to areas such as education, health care and pensions could help to reduce wealth inequality.
This isn't a bunch of socialists and hippies wanting to redistribute wealth. This is the IMF, the primary pusher of globalism, neoliberalism and trickle-down economics over the last 60+ years.
The IMF has always ignored inequality, told developing nations to woo the rich, not tax them, privatize and deregulate, and offer foreign investors “labor flexibility" (especially when it came to crushing unions).
So when the Citadel of Capitalism says a bit less capitalism is healthy and necessary, that's important.
Generally things never worked out for anyone but the wealthy when countries followed the IMF's neoliberal script.
Finally, belatedly, the IMF began admitting the harm that they've inflicted upon millions.
Back in 2011, for instance, two IMF economists marshalled evidence that directly challenged the conventional wisdom on inequality as an unavoidable consequence of economic progress...
In 2014, an IMF policy paper concluded that the recommendations the IMF drops on struggling nations ought to take inequality into account and work to blunt inequality’s “adverse effects.”
IMF researchers the next year revealed “an inverse relationship” between gains for the rich and economic growth. The higher the income share of the affluent in a society, they showed, the lower the growth rate, a finding based on an analysis of the economic experience of 159 nations between 1980 and 2012.
It's important to note here that these are all data driven studies, not opinions or theories, that prove over and over again that neoliberalism doesn't work. Period
So what did the IMF do with all of that data?
On the very same day that Georgieva posted her essay about taxing the rich, the IMF announced that they were finally leaving Greece after a decade.
It’s more indebted relative to its economic output than any other European Union member state: Its debt-to-GDP ratio stood at 180.2% at the end of the second quarter last year, compared with an EU total of 80.5%, and there is no significant downward trend.
Its per-capita GDP, adjusted for purchasing power parity, has stabilized at a little more than two-thirds of the average EU level, about the same as in Latvia or Romania. The high taxes forced on Greece by creditors have created an informal economy about as big, relative to GDP, as in these and other Eastern European countries...
The Greek banking system’s bad-loan ratio stood at 42.1% in September, the latest month for which data are available. In Romania, that ratio is below 5%.
Greece, in other words, isn’t just starting from a low base like the Eastern Europeans — it’s doing so while dragging around a ball and chain.
So all of those reports and all of that data didn't change IMF policy towards Greece, even while the working class of Greece was being crushed.
But surely Georgieva will change things, right?
Nope. No they won't.
Behind statements about inclusive growth and protecting the most vulnerable, are policies similar to the structural adjustments of the Washington consensus era. While the Argentina programme has already imploded, leaving behind soaring poverty and a collapsed economy, the IMF seems determined to push forward its agreement with Ecuador.
The IMF recently announced it plans to resume its programme in Ecuador after the country’s National Assembly passed a tax reform bill.
However, the IMF’s press release fails to mention that the bill contains several provisions that aim to weaken and essentially render Ecuador’s capital controls ineffective.
The IMF took this position on almost the same day as Georgieva's post.
The IMF has the data. They know what is the right thing to do for everyone involved.
They choose to pander to the wealthy ruling elites at the expense of the economy and society anyway. And that should tell you all that you need to know.
In effect, the Jubilee South Asia Pacific critique added, international financial institutions like the IMF have become “the emperor insisting he is wearing new clothes.” They give us “pronouncements of change and reform” while they “pursue the same neoliberal path that brought us to where we are now – in an inequality trap that stretches across generations, past and present.”
“The IMF has changed its rhetoric on inequality and social inclusiveness, but its operations continue to impose the same harmful policies of the past,” the International Trade Union Confederation’s Lara Merling summed up last year in Lagarde’s final months as the IMF’s top exec. “If the IMF is truly concerned about growth that benefits ‘the many,’ it needs to stop promoting policies that have time and time again hurt working people.”
This is proof that the ruling elites are sociopaths. They will continue to enforce policies that ultimately hurt everyone for no other reason than short-term greed. This is also an indictment of the capitalist system that it is unable to reform itself even when all the facts are known.