If equality leads to stability & growth, why doesn’t the IMF tell Governments to act like it?
IMF managing director Christine Lagarde delivered a speech today in Washington on “Back to Rio—the Road to a Sustainable Economic Future”, which contained some interesting elements, to say the least. Strangely, her positive comments about equality never seem to make it into the IMF’s assessments of Government austerity measures (eg her admittedly lukewarm support recently for Britain’s economic policy) or the conditions the IMF places on countries seeking loans.
On this occasion, she cited recent IMF research showing that
“countries with more equitable distributions of income are associated with greater macroeconomic stability and more sustainable growth over the longer term”
and she announced an upcoming IMF paper
“showing that government spending and taxes play a vital role in reducing inequality.”
She stated that “jobs must be at the forefront of any strategy for inclusive growth” and spoke of the need for “decent and steady employment.” And whilst she said that the IMF is “not a labor institution, and should not become one … we are collaborating closely with the International Labor Organisation on employment and labor market issues [and] are also working with the International Trade Union Confederation, which represents the world’s unions during these difficult days.”
Elsewhere in the speech, Lagarde reiterated the IMF’s joint work with the ILO, World Bank and other UN agencies on the social protection floor initiative “which helps poor countries set up basic levels of protection at an affordable cost”. An ILO Recommendation on the issue has been debated over the last two weeks in Geneva and is about to be adopted by the ILO Conference.
My thanks to the ITUC’s ever watchful Washington officer, Peter Bakvis, for alerting me to these choice remarks. I look forward to the IMF telling George Osborne to reinstate the 50p top rate of tax, give us all a VAT holiday and install creches in London’s poshest clubs for all their new women members.