Saturday, May 26, 2012

Lagarde unguarded in the Guardian

Mister Burns, er, a freakishly tan IMF chief Christine Lagarde gave a fascinating interview on, among other things, her views about the Greek debt crisis.

Here's a great excerpt:

So when she studies the Greek balance sheet and demands measures she knows may mean women won't have access to a midwife when they give birth, and patients won't get life-saving drugs, and the elderly will die alone for lack of care – does she block all of that out and just look at the sums?

 "No, I think more of the little kids from a school in a little village in Niger who get teaching two hours a day, sharing one chair for three of them, and who are very keen to get an education. I have them in my mind all the time. Because I think they need even more help than the people in Athens." 

She breaks off for a pointedly meaningful pause, before leaning forward. "Do you know what? As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax." 

 Even more than she thinks about all those now struggling to survive without jobs or public services? "I think of them equally. And I think they should also help themselves collectively." How? "By all paying their tax. Yeah." 

 It sounds as if she's essentially saying to the Greeks and others in Europe, you've had a nice time and now it's payback time. "That's right." She nods calmly. "Yeah." 

And what about their children, who can't conceivably be held responsible? "Well, hey, parents are responsible, right? So parents have to pay their tax."

Wow, ok. So taxes fix every thing eh, Christine?

And, while the sentiment on poor children in Niger is quite noble, the IMF doesn't do squat about education in Niger. A restructuring/forgiveness of Greek debt is not going to cut aid to Niger.

The IMF was asleep at the wheel as Greece loaded up on debt and became totally uncompetitive. The IMF was asleep at the wheel as the Eurozone drifted into untenability. Now its head is blaming the Greek people and implying that if they'd just do the right thing and pay their taxes, there would not be a problem.

And that's pretty much a pile of horsesh*t.


Jacob T. Levy said...

That's Burns, not Smithers.

Angus said...

AARGH. I am a hopeless old person. Thank you JTL!

Brad Hutchings said...

Funny how it's OK for her to be freakishly tan because she is a card carrying member of the 1%, but some single mom in New Jersey is the subject of our collective ridicule.


Anonymous said...

And in an equally flattering photo of Lagarde:

Tom said...

Paying taxes just encourages the legislature to spend even faster. So, "tax cheats" are really patriotic heroes helping to put the brakes on rampant wasteful spending.

There should be a monument.

TheoB said...

Asleep at the wheel? The IMF have no say and plays no part until a country knocks on its doors, hat in hand.

The Greeks are living in denial. The politicians have suspended tax collection until after the election. Disgusting.

Ryan said...

I disagree with you almost end to end here.

1) Lagarde implies, with her "village in Niger" story, that what's happening in Greece isn't nearly as bad as what is happening elsewhere in the world (and given that Greece is currently looking to borrow a whole lot of money from the IMF, this is relevant). She's right. Greece isn't a village in Niger, it's a pretty nice place by global standards.

2) Greeks are fantastic tax cheats. The nicest spin you can put on this is it's become a cultural value* to the point you should just assume it as the default behavior, and restructure the tax system to account for it (The latest Papandreou tried to do that, but gave up and quit).

3) The Greeks can either raise their tax revenues, cut their spending, or find some greater fool to lend them even more money to get out of the immediate mess. Cutting spending is roughly her answer to the "dead old ladies" question, however tendentious it might be (question could be phrased more accurately as "...demands measures she knows may mean deadweight civil servants are thrown out of work, and the elderly hairdressers will have to retire years later..."). Raising taxes (which mainly means collecting the massive unpaid underground economy tax bill, by some estimates enough to close the current account deficit all on its own) is roughly her Greek plan. The IMF declines to play the greater fool absent some combination of those factors, and who can blame them?

The global concern for Greece has nothing to do with its putative future dying mothers, children, and old women. It has everything to do with what happens outside Greek borders. Lagarde is clear-eyed on that.

*That said, you try being run by the Ottoman Turks for 400 years and see if your land doesn't acquire the attitude that cheating the government is your culture

Tom said...

Ryan's "nicest spin" fails, since I have already made a much nicer spin.

Ryan said...

Ha ha! Fair enough Tom, that is a great spin.

sfw said...

I find it strange that Lagarde who is on a tax free salary thinks that she should lecture others on the importance of paying tax. Ahh the sounds of hypocrisy.