Economics and similar, for the sleep-deprived

A subtle change has been made to the comments links, so they no longer pop up. Does this in any way help with the problem about comments not appearing on permalinked posts, readers?

Update: seemingly not

Update: Oh yeah!

Wednesday, May 25, 2011

Taking the politics out of politics, and the international relations out of international institutions

Outclude me, please, from the chorus of people who (this happens on a more or less cyclical basis as one or other of the Bretton Woods jobs comes up) are outraged and horrified that the USA gets one and Europe gets the other. Prime example of the genre, Martin Wolf:

[Christine Lagarde, as it happens] is not a perfect candidate: her economics are limited. If she were to become head of the organisation she would have to rely on the advice of those around her. If she were to get the job, it would be essential for whoever replaces John Lipsky, the American first deputy managing director, who is due to depart in August, to be a first-rate economist.

A "first rate economist". Presumably meaning someone with a PhD and possibly even an academic publishing record, from a high-status (which basically means American) university. Hmmmm. Not a fantastic recent track record, those guys, have they? Whatever it was that got us into the current mess, it wasn't a dearth of "first rate economists" Giorgos Papakonstantinou is a first-rate economist.

This is real "too important to be left to generals" territory. A "merit-based" selection process for the IMF top job is effectively assuming that all the issues the IMF faces are technical (not political), and that the problem is to find someone with sufficient technical economic skills to pick the right solution from a mass of confusing alternatives.

In fact, in general the IMF tends to face situations in which there are only about three or four real options, one of which is usually both massively obviously the best idea, and politically very difficult for some powerful constituency or other. That's why it's a political job. And the allocation between the USA and Europe was agreed at the original Bretton Woods conference as part of a very dicey compromise between the only two blocks which can print unlimited hard currency. It's an international institution, and one of the biggest problems in designing such an institution is to persuade the major powers that it is worth their while working through the institutional framework rather than through bilateral diplomacy. That's why the UNSC has permanent members, for example, and it's why France and Germany tend to get first dibs on important Commission posts.

I am no fan at all of the IMF (or of the way in which history is being rewritten to cast them as opponents of pointless austerity). But it does at least kindasorta work as an international institution, which is why I'm in favour of not fixing it. The basic effect of a "merit-based" selection process would be a) one more tax-free job for a mugwump with the right CV, and b) all the important operations currently carried out by the IMF would be stitched up in back room deals, generally featuring either Christine Lagarde or someone who looked very like her.
15 comments this item posted by the management 5/25/2011 03:06:00 AM

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