The question I propose to address here is: what kind of responsibility is borne by politicians, and accompanying technocrats, when their mistakes generate so much suffering among the people? This is the central question in the document prepared by the International Monetary Fund (IMF), released last week, on the troika's intervention in Greece since the year 2010.
It mentions at least two very grave matters that question the action of the IMF itself, the European Commission (EC) and The European Central Bank (ECB). They underestimated the impact of austerity on the average citizen's life (GDP fell by 17 percent in three years, when a reduction of "only" 5.5 percent was expected; unemployment has reached 27 percent, against a calculated 15). And, no less significant, the chosen formula for restructuring the Greek debt permitted many private investors to reduce their exposure, transferring debt to public investors: a socialization of losses. Can this result be termed anything but catastrophic for public well-being, and indeed something similar to an immense swindle for public finances?
The spokesman for Olli Rehn, the European economic affairs commissioner, could only stammer in response that Greece has not left the euro, that the reform plan is going well, and that the IMF report is not endorsed by the director and is thus not official. The response clearly sought to switch channels, and distract attention from problems bred of prescriptions that were deeply mistaken (wrong data) or simply false (doctored data), because they were based on ideological obsessions.
Since the recession began, debate has been centered on whether economists have worsened it
Since the recession began, debate has been centered on whether economists have worsened it with theories that either ignored key factors in what was happening (benevolent thesis: ignorance), or intentionally excluded these factors (malevolent thesis: ideology) to foster a given political agenda favorable to reverse redistribution of wealth.
Remember what happened within the IMF in 2011, four years into the crisis. The Fund then released an internal audit titled The Role of the IMF in the Phase Previous to the Financial and Economic Crisis, based mainly on anonymous opinions of its economists.
Sample remarks: "We believed in the self-regulation of the market; in the solidity of great financial institutions, which then had to be nationalized;" there was "a high degree of group thinking and intellectual co-opting, and a general belief that a financial crisis in the advanced economies was impossible;" there was a silencing of critical voices that surfaced in the IMF; a fostering of a "complacent" reading of the recession; "the incentives are oriented to generate consensus with the predominant opinion;" "to express strong contrary points of view can ruin your career;" "there were disincentives to tell the truth," etc.
This audit, prepared when Dominique Strauss-Kahn was at the head of the institution, and referring chiefly to the time when Rodrigo Rato held that post, has received little publicity in more recent times, and we do not know whether the internal situation it describes has been corrected, or whether, as a character in Jonathan Coe's recent novel The Closed Circle puts it, "Yes, I have learned from my mistakes, and I am sure I can repeat them perfectly."
Some Spanish interlocutors of the troika that comes to oversee our banks say that the IMF's "men in black" tend to be more sympathetic and less rigid than those of the EC and the ECB. The important thing, now, is for Christine Lagarde's IMF not to repeat, in the near future, its earlier conclusions on what happened in Ireland, Portugal and Spain, and to denounce - when finally it cannot avoid doing so - another intentional sabotage at the level of the average citizen's standard of living. It must not let this go unnoticed.