IMF chief acknowledges record unemployment and inequality threatens recovery
Ahead of the IMF and World Bank meetings in Washington DC a week ago, a flurry of workshops, seminars and conferences took place, bringing together governments, unions, employers, economists, campaigners and NGOs. IMF chief Dominique Strauss-Kahn, possible contender for the French Presidency, argued that inequality and joblessness led to social unrest of the sort seen in the Middle East and North Africa, and that “growth beset by social tensions is not conducive to economic and financial stability”. He acknowledged that “unemployment is at record levels” and “in too many countries, inequality is at record highs.” And without naming names, he said that “fiscal tightening can lower growth in the short term, and this can even increase long-term unemployment, turning a cyclical into a structural problem.”
He therefore set out a social democratic manifesto not commonly associated with the IMF. Starting off by quoting Keynes on the need for jobs and equality, he concluded:
We need policies to reduce inequality, and to ensure a fairer distribution of opportunities and resources. Strong social safety nets combined with progressive taxation can dampen market-driven inequality. Investment in health and education is critical. Collective bargaining rights are important, especially in an environment of stagnating real wages. Social partnership is a useful framework, as it allows both the growth gains and adjustment pains to be shared fairly.
His remarks came in a debate on The Global Jobs Crisis: Sustaining the Recovery through Employment and Equitable Growth, hosted by the Brookings Institution of Washington and moderated by Kemal Dervis. ITUC General Secretary Sharan Burrow also spoke, with comments from Stephen Pursey of the ILO and Nobel Prize economist George Akerlof.
Of course, only a cynic would suggest that DSK was speaking to a French audience, or question how his views could be squared with IMF involvement in forced austerity measures across Europe….