The IMF Riot

The IMF is usually called in to provide credit when a welfare state runs out of borrowing power and begins to default on its debts. The mission of the IMF is, of course, to rescue the banks who advanced the funds to the countries in question, and it does so by forcing the state to cut off the flow of free goodies. As the welfare state ceases to be able to dispense money and favors to its clients, they become unhappy. They hit the streets demanding that the free goodie flow be turned on again.  Washington’s blog notes that the riots became a standard and expected feature of IMF-imposed austerity programs.

The IMF riot is painfully predictable. When a nation is, “down and out, [the IMF] takes advantage and squeezes the last pound of blood out of them. They turn up the heat until, finally, the whole cauldron blows up,” as when the IMF eliminated food and fuel subsidies for the poor in Indonesia in 1998. Indonesia exploded into riots, but there are other examples – the Bolivian riots over water prices last year and this February, the riots in Ecuador over the rise in cooking gas prices imposed by the World Bank. You’d almost get the impression that the riot is written into the plan.

Of course it is written into the plan, the tone of the piece is naive beyond belief for someone as experienced as Joseph Stiglitz. You can hardly expect to withdraw entitlements on a large scale without setting off a reaction from the previously entitled, who generally demand that the state seek a new source of funding for their entitlements, typically “the rich.” Think it won’t happen here? Then watch this.

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