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Failure to Follow IMF Advice Led to Crisis

January 10, 2002

Re "Not All Economies Fit the IMF Mold," Commentary, Jan. 7: Robert Kuttner provides another example of efforts to attack market-oriented economics by distorting the facts concerning the Argentine crisis. Of course legitimate complaints can be raised about particular policies advocated by the IMF and the U.S. government, but the Argentine crisis is not the result of market fundamentalism. It was not economic liberalization that caused the crisis but Argentina's huge budget deficits and overvalued currency. The avoidance of both is a key element of the IMF economic model.

The IMF did not impose Argentina's ill-fated fixed exchange rate. This was a national decision. It is hard to follow the logic of the argument that the Argentine tragedy should be seen as discrediting the IMF, because the failure to follow its advice led to the crisis.

Thomas D. Willett

Horton Professor of Economics

Claremont Colleges

*

Bravo to Kuttner for his wise words about the shortcomings of the International Monetary Fund. The policies it has imposed on indebted countries support a corporate agenda at the expense of people and the environment. Argentina is a fine example of the IMF's failure. The system is designed to create winners and losers, with a bias in favor of the banks that make the money and against the working people who produce the real wealth. It is also a system designed to be unstable, because it must either grow or collapse. Which country will be next?

Julia Dashe

San Diego

*

Kuttner tries to make a case that IMF policies have been the cause of Argentina's current financial problems. Remarkably, he manages to write the entire column without mentioning the causes most often mentioned by Argentines themselves: rampant corruption and bloated government. Remember that it was protesting Adolfo Rodriguez Saa's Cabinet as being corrupt that caused people to come out on the streets. If anything correlates with economic development, it is clean government.

Bruce Walker

San Pedro

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