Despite his arrogance and lack of rigour, there is a troubling kernel of truth in Joe Stiglitz's critique of the IMFby Stephanie Flanders / August 20, 2002 / Leave a comment
It’s not often that an IMF seminar turns into the academic equivalent of the Jerry Springer show. But then it’s not often that a Nobel Prize winner and former senior official of the World Bank publicly accuses the IMF of wreaking economic and social havoc on millions of the world’s poor.
Joe Stiglitz had come to the meeting for a friendly discussion of his book, Globalisation and its Discontents, which draws on his experience as a member of Clinton’s Council of Economic Advisors (CEA) from 1993 to 1997 and as the World Bank’s chief economist until early 2000. Instead, he got a cri de coeur from one of the IMF’s more mild-mannered senior officials.
Ken Rogoff, the IMF’s director of research, is best known for obscure technical studies on the behaviour of international currency markets. But his introductory remarks on this occasion were anything but opaque.
“Joe, as an academic, you are a towering genius,” he said. “As a policymaker, however, you were just a bit less impressive.” Rogoff accused Stiglitz of “carelessly slandering” IMF staff in a book that was “long on innuendo and short on footnotes.” And he took no prisoners in discussing Stiglitz’s blueprint for making the IMF a better place, calling it “at best highly controversial, at worst snake oil.”
“You seem to believe that when investors are no longer willing to hold a government’s debt, all that needs to be done is to increase the supply and it will sell like hot cakes. We at the IMF -no, make that we on planet earth-have considerable experience suggesting otherwise. We earthlings have found that when a country in fiscal distress tries to escape by printing more money, inflation rises… Perhaps the laws of economics are different in your part of the gamma quadrant….”
Stiglitz was said to be “shell-shocked” by Rogoff’s tirade. No one had heard a senior official at either institution make such a strident ad hominem attack on a colleague’s ideas since-well, since, Stiglitz.
In his book, Stiglitz speaks of his increasingly public efforts to persuade his colleagues in the US administration and the IMF that they were wrong. By and large, he feels himself to have failed. In east Asia, in Russia, and elsewhere, IMF policymakers ignored his advice, with what he thinks are disastrous consequences. Irritated by his frequent sallies, the then Treasury Secretary, Larry Summers (for whom I was working…