IMF and World Bank: how good or bad overall ?

[steve2470]

Before I came to DU, I admittedly accepted the corporate media frame that both the World Bank and IMF were "forces for good", so to speak.

Now that I've been here 9 years, I'm unsure of their overall worth. Yes, I could go read Wikipedia but can someone give me a short paragraph or a link to summarize these two institutions ? Thank you for your time, sincerely. I'm always trying to learn.

[Awknid]

1. I worked at IMF

For a few years approx. 10 yrs ago. In reference to your question, the jury is still out for me. I can say that the people I worked with/for in Washington DC were the most caring, high minded people I've ever met. However, the problem (I'm told) is with those making policy. I did not know many of those. But the overall workforce - they could not have been nicer and more concerned about those with no voice, etc. in general, it was a very left-leaning atmosphere.

[Demeter]

2. Aye, there's the rub

When you start dealing with the Overlords of the 1%, it's a whole 'nother ball game.

[steve2470]

3. not sure of overall accuracy of Wiki but here is some info:

http://en.wikipedia.org/wiki/International_Monetary_Fund#Criticisms_2

Criticisms

Overseas Development Institute (ODI) research undertaken in 1980 pointed to five main criticisms of the IMF which support the analysis that it is a pillar of what activist Titus Alexander calls global apartheid.[65] Firstly, developed countries were seen to have a more dominant role and control over less developed countries (LDCs) primarily due to the Western bias towards a capitalist form of the world economy with professional staff being Western trained and believing in the efficacy of market-oriented policies.

Secondly, the Fund worked on the incorrect assumption that all payments disequilibria were caused domestically. The Group of 24 (G-24), on behalf of LDC members, and the United Nations Conference on Trade and Development (UNCTAD) complained that the Fund did not distinguish sufficiently between disequilibria with predominantly external as opposed to internal causes. This criticism was voiced in the aftermath of the 1973 oil crisis. Then LDCs found themselves with payments deficits due to adverse changes in their terms of trade, with the Fund prescribing stabilisation programmes similar to those suggested for deficits caused by government over-spending. Faced with long-term, externally generated disequilibria, the Group of 24 argued that LDCs should be allowed more time to adjust their economies and that the policies needed to achieve such adjustment are different from demand-management programmes devised primarily with internally generated disequilibria in mind.

The third criticism was that the effects of Fund policies were anti-developmental. The deflationary effects of IMF programmes quickly led to losses of output and employment in economies where incomes were low and unemployment was high. Moreover, it was sometimes claimed that the burden of the deflationary effects was borne disproportionately by the poor.

Fourthly is the accusation that harsh policy conditions were self-defeating where a vicious circle developed when members refused loans due to harsh conditionality, making their economy worse and eventually taking loans as a drastic medicine.

Lastly is the point that the Fund's policies lack a clear economic rationale. Its policy foundations were theoretical and unclear due to differing opinions and departmental rivalries whilst dealing with countries with widely varying economic circumstances.
ODI conclusions were that the Fund’s very nature of promoting market-oriented economic approach attracted unavoidable criticism, as LDC governments were likely to object when in a tight corner. Yet, on the other hand, the Fund could provide a ‘scapegoat service’ where governments could take loans as a last resort, whilst blaming international bankers for any economic downfall. The ODI conceded that the fund was to some extent insensitive to political aspirations of LDCs, while its policy conditions were inflexible.[66]
Argentina, which had been considered by the IMF to be a model country in its compliance to policy proposals by the Bretton Woods institutions, experienced a catastrophic economic crisis in 2001,[67] which some believe to have been caused by IMF-induced budget restrictions—which undercut the government’s ability to sustain national infrastructure even in crucial areas such as health, education, and security—and privatization of strategically vital national resources.[68] Others attribute the crisis to Argentina’s misdesigned fiscal federalism, which caused subnational spending to increase rapidly.[69] The crisis added to widespread hatred of this institution in Argentina and other South American countries, with many blaming the IMF for the region’s economic problems. The current—as of early 2006—trend toward moderate left-wing governments in the region and a growing concern with the development of a regional economic policy largely independent of big business pressures has been ascribed to this crisis.
In an interview, the former Romanian Prime Minister Călin Popescu-Tăriceanu claimed that "Since 2005, IMF is constantly making mistakes when it appreciates the country's economic performances."[70]

[edit]Support of military dictatorships

The role of the Bretton Woods institutions has been controversial since the late Cold War period, due to claims that the IMF policy makers supported military dictatorships friendly to American and European corporations and other anti-communist regimes. Critics also claim that the IMF is generally apathetic or hostile to their views of human rights, and labor rights. The controversy has helped spark the Anti-globalization movement.
Arguments in favor of the IMF say that economic stability is a precursor to democracy; however, critics highlight various examples in which democratized countries fell after receiving IMF loans.[71]

[edit]Impact on access to food

A number of civil society organizations[72] have criticized the IMF’s policies for their impact on people’s access to food, particularly in developing countries. In October 2008, former U.S. president Bill Clinton presented a speech to the United Nations World Food Day, which criticized the World Bank and IMF for their policies on food and agriculture:
We need the World Bank, the IMF, all the big foundations, and all the governments to admit that, for 30 years, we all blew it, including me when I was president. We were wrong to believe that food was like some other product in international trade, and we all have to go back to a more responsible and sustainable form of agriculture.
—Former U.S. president Bill Clinton, Speech at United Nations World Food Day, October 16, 2008[73]

[edit]Impact on public health

In 2009 a study by analysts from Cambridge and Yale universities published on the open-access Public Library of Science concluded that strict conditions on the international loans by the IMF resulted in thousands of deaths in Eastern Europe by tuberculosis as public health care had to be weakened. In the 21 countries to which the IMF had given loans, tuberculosis deaths rose by 16.6%.[74]

In 2009, a book by Rick Rowden titled The Deadly Ideas of Neoliberalism: How the IMF has Undermined Public Health and the Fight Against AIDS, claimed that the IMF’s monetarist approach towards prioritizing price stability (low inflation) and fiscal restraint (low budget deficits) was unnecessarily restrictive and has prevented developing countries from being able to scale up long-term public investment as a percent of GDP in the underlying public health infrastructure. The book claimed the consequences have been chronically underfunded public health systems, leading to dilapidated health infrastructure, inadequate numbers of health personnel, and demoralizing working conditions that have fueled the “push factors” driving the brain drain of nurses migrating from poor countries to rich ones, all of which has undermined public health systems and the fight against HIV/AIDS in developing countries.[75]

[edit]Impact on environment

IMF policies have been repeatedly criticized for making it difficult for indebted countries to avoid ecosystem-damaging projects that generate cash flow, in particular oil, coal, and forest-destroying lumber and agriculture projects. Ecuador for example had to defy IMF advice repeatedly in order to pursue the protection of its rain forests, though paradoxically this need was cited in IMF argument to support that country. The IMF acknowledged this paradox in a March 2010 staff position report [76] which proposed the IMF Green Fund, a mechanism to issue special drawing rights directly to pay for climate harm prevention and potentially other ecological protection as pursued generally by other environmental finance.

While the response to these moves was generally positive[77] possibly because ecological protection and energy and infrastructure transformation are more politically neutral than pressures to change social policy. Some experts voiced concern that the IMF was not representative, and that the IMF proposals to generate only US$200 billion a year by 2020 with the SDRs as seed funds, did not go far enough to undo the general incentive to pursue destructive projects inherent in the world commodity trading and banking systems—criticisms often leveled at the World Trade Organization and large global banking institutions.

In the context of the May 2010 European banking crisis, some observers also noted that Spain and California, two troubled economies within Europe and the United States respectively, and also Germany, the primary and politically most fragile supporter of a euro currency bailout would benefit from IMF recognition of their leadership in green technology, and directly from Green Fund–generated demand for their exports, which might also improve their credit standing with international bankers.[citation needed]

[steve2470]

4. criticisms of WB, again from Wiki:

http://en.wikipedia.org/wiki/World_Bank#Criticisms

Criticisms

The World Bank has long been criticized by non-governmental organizations, such as the indigenous rights group Survival International, and academics, including its former Chief Economist Joseph Stiglitz, Henry Hazlitt and Ludwig Von Mises.[37][38][39] Henry Hazlitt argued that the World Bank along with the monetary system it was designed within would promote world inflation and "a world in which international trade is State-dominated" when they were being advocated.[40] Stiglitz argued that the so-called free market reform policies which the Bank advocates are often harmful to economic development if implemented badly, too quickly ("shock therapy&quot , in the wrong sequence or in weak, uncompetitive economies.[38][41]


One of the strongest criticisms of the World Bank has been the way in which it is governed. While the World Bank represents 186 countries, it is run by a small number of economically powerful countries. These countries (which also provide most of the institution's funding) choose the leadership and senior management of the World Bank, and so their interests dominate the bank.[42]:190 Titus Alexander argues that the unequal voting power of western countries and the World Bank's role in developing countries makes it similar to the South African Development Bank under apartheid, and therefore a pillar of global apartheid.[43]:133-141

In the 1990s, the World Bank and the IMF forged the Washington Consensus, policies which included deregulation and liberalization of markets, privatization and the downscaling of government. Though the Washington Consensus was conceived as a policy that would best promote development, it was criticized for ignoring equity, employment and how reforms like privatization were carried out. Joseph Stiglitz argued that the Washington Consensus placed too much emphasis on the growth of GDP, and not enough on the permanence of growth or on whether growth contributed to better living standards.[39]:17

The United States Senate Committee on Foreign Relations report criticized the World Bank and other international financial institutions for focusing too much "on issuing loans rather than on achieving concrete development results within a finite period of time" and called on the institution to "strengthen anti-corruption efforts".[44]

Criticism of the World Bank often takes the form of protesting as seen in recent events such as the World Bank Oslo 2002 Protests,[45] the October Rebellion,[46] and the Battle of Seattle.[47] Such demonstrations have occurred all over the world, even amongst the Brazilian Kayapo people.[48]

Another source of criticism has been the tradition of having an American head the bank, implemented because the United States provides the majority of World Bank funding. "When economists from the World Bank visit poor countries to dispense cash and advice," observed The Economist, as Jim Yong Kim said in 2012, "they routinely tell governments to reject cronyism and fill each important job with the best candidate available. It is good advice. The World Bank should take it."[49] Jim Yong Kim is the most recently appointed president of the World Bank.[50]