How would you like your mortgage interest rates and whether or not you are thrown out of work to depend on decisions by Nigerian, Mexican, Vietnamese and Belgian bureaucrats in the International Monetary Fund?
That's where we are headed, and you can bet that the weak-kneed saps in our government will go along in the interest of "multi-nationalism."Many years ago when there was a gold standard and fixed exchange rates, the IMF had a defined role. It was to help countries with balance-of-payments difficulties maintain their currency values, thus preserving a stable exchange rate system.
When the fixed exchange rate system was abandoned in 1971, the IMF was left without a job. But being a big international bureaucracy, it did not want to close its doors and began instead looking for a new role.
It found one a decade later, when the Third World debt crisis hit. The IMF assumed the role of international economic policeman, issuing orders to Latin American and African countries on how to conduct their affairs in order to have the foreign exchange needed to service their debts. Since none of the countries could get new money from the West without an IMF-approved plan, the IMF had them over its barrel.
In a few cases the IMF policy prescription helped, but in most instances the results were inflation, unemployment, and rising political instability, allowing demagogues to move the countries further to the political left.
The IMF, however, got a taste of power. Soon they decided to branch out and exert their influence over U.S. policymakers as well.
They got their opportunity with the appearance of the U.S. budget and trade deficits. These deficits proved, the IMF argued, that the United States was as badly managed as the backward countries of the Third World. Moreover, they said the U.S. deficits were destabilizing the world economy.
In fact, our budget deficit in proportion to our income is below the average for industrialized countries. And our trade deficit has been the only thing holding the world economy together. Without an expanding U.S. market in which to sell, the Third World's plight would have been much worse, and our European and Japanese allies would have experienced massive unemployment.
The IMF, however, knew that most Americans are conservative and view deficits as bad in themselves. Unable to take over our economic policy in the way they did in Latin America, the IMF began scolding and proffering advice that would solve our "crisis."
In its latest report, released last week, the IMF warned that the United States was endangering economic growth in the industrialized world and demanded strong action to cut U.S. domestic demand.
That's code word language for causing a recession and throwing Americans out of work.
The IMF, being a primary agent of international socialism and bureaucratization, has never been happy with Reagan's tax rate reductions during the 1980s. It threatens to thrust aside the bureaucratic management of the world's economies.
The IMF wants us to raise our taxes. This is what it means when it claims we face a "particularly urgent" task of increasing our domestic savings and calls for a "decisive effort" to improve our fiscal position.
In ordinary language, the IMF is telling us to raise our taxes and balance our budget so we can help finance the deficits of other countries.
While the IMF blames world imbalance on American overconsumption, our president is about to ladle more of our tax dollars into the IMF's coffers.
Sooner or later, Bush will abandon his pledge not to raise our taxes. In Bush's elite world, he rubs far more elbows with "prestigious" international bureaucrats than he does with ordinary Americans.
(Paul Craig Roberts is the William E. Simon professor of political economy at the Center for Strategic & International Studies in Washington and is a former assistant secretary of the treasury.)