One benefit of being on Medium is that I’ve been happy with the book recommendations other Medium contributors have made for me. “Globalization and Its Discontents” was no exception.
Author Joseph Stiglitz has some pretty heavy credentials to write a book like this. He was the economics advisor for the Clinton administration and was a vice-president of the World Bank. He has firsthand experience with many things in international macroeconomics.
This was a long book to read. But Stiglitz is an excellent writer, making complicated things easy for this amateur economist to understand. He often repeats his many messages in several ways and in different places. Maybe he wants to make sure readers understand his world view.
During his tenure with the Clinton administration and World Bank, Stiglitz had secondhand experience working with the International Monetary Fund (IMF). So he is giving us his perspective, watching from his unique vantage points.
To recap, the IMF was formed in 1945 to help stabilize countries going through financial crises. One of its creators was John Maynard Keynes, the famed economist.
I think I can summarize this book in this one paragraph. According to Stiglitz, the IMF has morphed into something different than its original mission. It has fixated its policies to conform to a neoliberal agenda. This means the recipe to rescue a faltering economy is to get its political leaders to accept privatization, low inflation, open trade, and government austerity. All else that it takes to create a functional society is not important to the IMF. What inadvertently happens, according to Stiglitz, is world financiers find ways to profit from an IMF bailout. And in the zero-sum game of international finance, there has to be losers. So the common people of that “helped” country have been left holding IMF loans for little benefit to their own lives. In essence, Stiglitz prefers a gradualist approach to altering a faltering economy rather than the popular shock therapy, which has questionable outcomes.
Stiglitz offered recommendations to reform the IMF. Since he wrote this book in 2002, it would be interesting to see if the IMF has reformed itself in the directions Stiglitz suggested. I don’t know. In 2017, he did write a sequel to this book.
Whether or not reforms have been made, it seems a powerful international bureaucracy had gone rogue before 2002. Its sponsoring nations could not rein it in before great damage was done.
“Why?” you might ask.
Well, here is my hypothesis. Those sponsoring nations are themselves working with a flawed foundation in their democratic governance, especially for the 21st century. These politicians all have their open ideologies to get elected, hidden agendas, and various controversies. To expect them to bring reform to something like the IMF seems a little too hopeful, especially when the IMF has built itself into a bureaucracy that is almost untouchable. And there are always other issues to distract politicians from reforming bureaucracies like the IMF.
For the very few of you who will read this column, I am giving you another example to seriously consider my alternative democracy called “Tiered Democratic Governance (TDG).” Institutions like the IMF need to be monitored and guided by the checks and balances of democracy. Our national politicians should be overseers of these kinds of institutions.
The politicians coming from the TDG will be of a much different mindset. They won’t be using these institutions to further their own popularity with the voters. Rather, these politicians will look at the facts and trends and try to figure out what is best for society overall, not best for ideologues or financiers or sponsoring nations or the next election.
Here is what the TDG asks of its early builders. It asks them to spend about 10 hours a month with their neighbors writing a local TDG constitution. If a builder is elected to the executive of this local TDG, then the builder should continue with this 10-hour-a-month investment to enhance the TDG.
As the TDG grows and matures and eventually assumes governance, it will find the people that can take on the difficult tasks of governance—like being effective overseers of institutions like the International Monetary Fund.
It seems unbelievable that neighbors meeting today to build a new kind of democracy could actually have a positive effect on big government 20 years from now. Why should neighbors make this time investment?
For that question, I shall direct you to another article I have written: Pascal’s Wager and the TDG.
Published on Medium 2021
