Here’s a letter to the Washington Post:
Rather than deliberate over which world-class bureaucrat will be the next head of the IMF (“Fight to succeed IMF head Strauss-Kahn may pit Europe against developing nations,” May 19), why not simply abolish that misfit outfit?
The IMF’s original purpose was to help cash-strapped governments maintain their currencies’ fixed exchange rates as directed by the 1944 Bretton Wood system. But that system gasped its dying breath in the summer of 1971, when – with Pres. Nixon’s closing of Uncle Sam’s gold window – all pretense of an international system of fixed exchange rates was abandoned.
Undeterred by the total disappearance of its purpose, the IMF – flush with continuing streams of subsidies, especially from American taxpayers – morphed into a “development” agency. The quotation marks around “development” are no mistake. There’s no evidence that the IMF’s efforts as a development agency have had any positive effects, unless by “positive effects” you include creating among many poor countries a culture of dependency upon foreign “aid,” along with propping up authoritarian regimes.*
As my great teacher Leland Yeager observed, “self-important international bureaucracies have institutional incentives to invent new functions for themselves, to expand, and to keep client countries dependent on their aid.”
Isn’t it time to close the window on funding for the IMF?
Donald J. Boudreaux