News Daily Spot: IMF criticism of neoliberalism surprises and irritates

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IMF criticism of neoliberalism surprises and irritates

A recent article in the International Monetary Fund (IMF) in which a critical view of neoliberal policies, especially fiscal austerity, driven by the institution in the past two decades has generated surprise and irritation in the economic sphere is held.

"Neoliberalism:? Touted excess" is the title reported in the June issue of the quarterly magazine of the institution and jointly written by Jonathan Ostry, Prakash Loungani and Davide Furceri, economists Research Department of the Fund document.

The authors directly point to the excessive zeal for the reduction of fiscal deficit at all costs, financial deregulation driven and little attention paid to the pressing problem of income inequality.

"Specifically in the case of fiscal consolidation," says the document, "the short-term costs of lower production and well-being as the highest unemployment have been minimized, and the convenience of the countries with ample fiscal space of just living high debt and allow debt ratios decline organically through growth are undervalued. "

Spending cuts and increased tax collection policies popularized under the term austerity, have been key elements advocated by the Fund as part of their economic prescriptions, and marked the design of recent bailout programs to Portugal or Greece and earlier in Indonesia or Argentina.

The IMF, an institution created in 1944 and the flagship of the orthodoxy of free market economy, not usually much given to recognize mistakes and to broach the thorny field of self-criticism.

"There are aspects of the neoliberal agenda that have not yielded the expected results," he emphasizes however on this occasion.

Ostry and his colleagues argue that "the benefits in terms of increased growth seem quite difficult to establish when a large group of countries look" and at the same time costs "in terms of growing inequality are prominent."

"An increase in inequality harms the level and sustainability of growth," they added.

As expected, the reactions in the economic sphere soon appeared.

"The IMF joins the criticism of neoliberalism. What the hell is going on ?, he said in his Twitter account Dani Rodrik, Professor of International Political Economy at Harvard University (USA) and known for its critical stance against the effects of the globalization.

Also, the Canadian activist Naomi Klein and author of "No Logo", which charge against consumer culture, said in the same social network with irony, since "the IMF admits that neoliberalism is a failure, now all billionaires has helped create will return your money, right? ".

However, one of the strongest comments came from the Financial Times (FT), which was taken so seriously that he decided to dedicate the article an editorial called "A mea culpa inappropriate neoliberalism".

"Trying to be modern, the IMF in its place seems out of context as a middle-aged man wearing a baseball cap backwards," says the FT, the "Bible" of the market economy, on the revisionism of the Fund.

For the business daily also with these arguments the institution led by Christine Lagarde "gives aid to oppressive regimes around the world who position themselves as crusaders against neoliberalism, subjugating its people with ineffective economic measures".

Disturbed by the commotion caused by an article that had not been given wide circulation, the Fund itself waylaid this week and tried to cut things down.

In an interview on the website of the institution, its chief economist, Maury Obstfeld said she had "misinterpreted" the content of the document to add that it is rather "a process of evolution and not revolution" on the fundamentals economic.

However, Obstfeld, reputed economist at the University of California, Berkeley, and joined the IMF last September, replacing Olivier Blanchard, acknowledged that "the shock of the financial crisis led to a broad rethinking of macroeconomic policy and financial in the global academic community ", something that the institution" part ".

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