Neoliberalism may be falling out of fashion

[JohnD]

https://www.ft.com/content/3d8d2270-1533-4c88-a6e3-cf14456b353b

"The World Bank and the [International Monetary] fund were excoriated in the 1980s and ‘90s for making the poor pay for basic health provision or presuming that deficits were bad for growth. That is long gone.

Here is the new Washington consensus: Spend big on public health. Fiscal probity, long the core of IMF prescriptions (the joke was that the initials stand for “it’s mostly fiscal”), is no longer about reining in public spending but about getting value for money — and spending more where the value can be found. That means doing whatever it takes to produce and deliver vaccines globally.

The IMF’s Fiscal Monitor publication estimates that getting the pandemic under control everywhere would “yield more than $1tn in additional tax revenues in advanced economies, [cumulatively], by 2025, and save more in fiscal support measures”.

In other words, what governments spend on vaccinations can pay for itself many times over. The fund argues strongly for education spending, too, to make up for lost learning in the pandemic and help workers cope with structural changes going forward."

 

[JohnD]

"In parallel with all of this, the IMF continues to preach prudence, but that means something very different from a decade let alone a generation ago. Strikingly, the fund endorses “recovery contributions” — what others might call temporary solidarity surtaxes — from rich individuals and corporate windfall profits.

The message from the erstwhile headquarters of “neoliberalism” is that to make public finances sustainable, the wealthy and those who have profited from the pandemic should contribute more to the common cause. The IMF even suggested that rich countries could consider net wealth taxes, apparently channelling leftwing US senators Elizabeth Warren and Bernie Sanders. "

 

[JohnD]

"The White House does not take directions from the multilateral institutions located a few city blocks to the west. But it does not hurt Biden that the global guardians of economic orthodoxy have endorsed the most radical US programme in generations, especially when some Americans are engaging in friendly fire.

Politics is the art of the possible — but what is possible is often determined by what is conceivable. The new Washington consensus could prove as politically powerful as the old one."