4 ms·

"[..] and also while sometimes it has worked [..]" Can you give us some examples where this IMF standad solution has worked?

tonyedgecombe 8y ago
Britain in 1976, I think it was the first bailout by the IMF and was controversial at the time.
sgt101 8y ago
UK 1976, Mexico 1980's, India and Kenya in the 1980's too. It's a pretty dire record though. I think that it's easy to argue that where there have been positive results that's mostly by accident. The UK is the best example of this - there was an IMF rescue and liberalisation but also an oil discovery which recapitalised the commercial base of the country and allowed an infrastructure building program.
- intended 8y ago
  If you are betting on an Indian styled recovery, then your odds are exceedingly low. Not only did we have a great economist as finmin, but also a lot of people who grew up to later take on major roles as bureaucrats and politicians. And all of that worked because we had a PM who was able to thread the needle and make it work without giving in to any political group. It’s a very very small window, and the resulting growth was pent up demand being brought online.
  - sgt101 8y ago
    I couldn't agree more; as I said, the record is dire and where it's been seen to work I think a counter factual can be constructed that could have produced as good or better results. That's not to say that the IMF couldn't do far better, just not by using the formula of fail that they've stuck to for the last fifty years. Greece is going to be the proof point for me - all of the pain no gain at all. I give it eighteen months.
  - kamaal 8y ago
    >>If you are betting on an Indian styled recovery, then your odds are exceedingly low. And very painful. Nobody talks of the pain in the immediate after math of the 1992 reforms. A huge section of people >40 years of age were crushed under computer based automation in factories and industries that followed. Several companies were shut down. Scores and scores of people lost jobs, and dumped into a labor market that had way high demands of productivity and skill they had to offer. This was with a huge number of both public sector and private sector companies. Heck even Bank employees suffered. All of a sudden a whole spectrum of jobs were just not needed(Accountants, Typists, Postmen etc etc) Several families suffered quite bad. I was lucky that my dad was a driver, and those skills were reusable outside. But there were plenty of 'Supervisors' and other 'Desk job' people, who just got ruthlessly eliminated out of the economic scene. Basically its not easy, for the existing population masses to face huge economic changes rapidly unfolding in months/decades.
    - sgt101 8y ago
      I think that the lesson is that you can't avoid reality in the long run and government's role is to manage the transitions with the least destruction of human capital possible. This is what is so notable about Greece - there has been an utter disregard of the destruction of people's place in their community. I believe that this was due to the fact that the imposing authority was so overwheeningly powerful and so disconnected from Greek democracy.

tonyedgecombe 8y ago

Britain in 1976, I think it was the first bailout by the IMF and was controversial at the time.

sgt101 8y ago

UK 1976, Mexico 1980's, India and Kenya in the 1980's too. It's a pretty dire record though. I think that it's easy to argue that where there have been positive results that's mostly by accident. The UK is the best example of this - there was an IMF rescue and liberalisation but also an oil discovery which recapitalised the commercial base of the country and allowed an infrastructure building program.

intended 8y ago
If you are betting on an Indian styled recovery, then your odds are exceedingly low. Not only did we have a great economist as finmin, but also a lot of people who grew up to later take on major roles as bureaucrats and politicians. And all of that worked because we had a PM who was able to thread the needle and make it work without giving in to any political group. It’s a very very small window, and the resulting growth was pent up demand being brought online.
- sgt101 8y ago
  I couldn't agree more; as I said, the record is dire and where it's been seen to work I think a counter factual can be constructed that could have produced as good or better results. That's not to say that the IMF couldn't do far better, just not by using the formula of fail that they've stuck to for the last fifty years. Greece is going to be the proof point for me - all of the pain no gain at all. I give it eighteen months.
- kamaal 8y ago
  >>If you are betting on an Indian styled recovery, then your odds are exceedingly low. And very painful. Nobody talks of the pain in the immediate after math of the 1992 reforms. A huge section of people >40 years of age were crushed under computer based automation in factories and industries that followed. Several companies were shut down. Scores and scores of people lost jobs, and dumped into a labor market that had way high demands of productivity and skill they had to offer. This was with a huge number of both public sector and private sector companies. Heck even Bank employees suffered. All of a sudden a whole spectrum of jobs were just not needed(Accountants, Typists, Postmen etc etc) Several families suffered quite bad. I was lucky that my dad was a driver, and those skills were reusable outside. But there were plenty of 'Supervisors' and other 'Desk job' people, who just got ruthlessly eliminated out of the economic scene. Basically its not easy, for the existing population masses to face huge economic changes rapidly unfolding in months/decades.
  - sgt101 8y ago
    I think that the lesson is that you can't avoid reality in the long run and government's role is to manage the transitions with the least destruction of human capital possible. This is what is so notable about Greece - there has been an utter disregard of the destruction of people's place in their community. I believe that this was due to the fact that the imposing authority was so overwheeningly powerful and so disconnected from Greek democracy.