They are absolutely right. We now have 30 years of evidence documenting that IMF bailouts have actually promoted poverty and delayed market reforms in the nations receiving the Fund’s so-called “assistance.”
Will someone please tell this to Speaker Newt Gingrich. Gingrich not only supports refinancing this multi-billion dollar foreign aid boondoggle, he is lobbying behind the scenes to corral Republican votes for the Clinton administration request. Here we have the makings of yet another high-profile betrayal of the conservative movement by the 105th Congress.
Rather than pumping more funds into the IMF, the proper course of action would be for the GOP to once and for all close down this corrupt agency. As former Treasury Secretary William Simon has noted, “IMF policies are typically ineffective and even counterproductive.”
Fortunately, Senator Lauch Faircloth (R‑NC) is heroically leading the opposition to the IMF bailout. Faircloth notes that IMF funding is corporate welfare that subsidizes U.S. banks and Fortune 500 companies who have foolishly invested and lent in economically unstable nations. As Faircloth puts it: “With the IMF we have privatized the returns on investments abroad, but socialized the risks.” Exactly. This is precisely how the savings and loan crisis developed in the late 1980s.
Faircloth is up against a vast, well-funded corporate welfare/foreign aid establishment. Supporters of the IMF include a who’s who of corporate and political elites from the left and right. The corporate community which is a direct beneficiary of IMF bail-out funds has started a massive P.R. campaign to save their welfare checks. Last month General Electric, General Motors, IBM, ITT, Exxon, Chase Manhattan, BankAmerica, Time Warner, Times Mirror, and dozens of other firms with their snouts in the federal trough published full two page ads in both the New York Times and the Washington Post (this costs roughly $200,000) demanding Congress to approve funding for the IMF and the United Nations. The empire is striking back.
Among the gold cuff-linked corporate lobbyists for IMF funding are such Republican heavy hitters as: James Baker, Henry Kissinger, Lynn Martin, Bob Dole, Nick Brady, Gerald Ford, and George Bush. Now there’s a convincing cast of characters! Last week Kissinger traveled to Asia and gave a speech attacking the U.S. for not yet approving IMF funds. What a patriot!
These statist elites promote increased funding for the IMF even though it has a dreadful track record of promoting free markets and economic growth. As Johns Hopkins economist Steven Hanke recently noted, “Few nations graduate from IMF emergency loans. Most stay on the IMF dole for years on end.” One recent Heritage Foundation study found that of 137 mostly developing countries that have received IMF rescue funding from 1965–1995, only 44–or less than one-third–have graduated from needing assistance. Incredibly, 81 countries have actually seen their dependence on the IMF grow over time.