XX/YOUR MONEY OR YOUR LIFE!
supervised policies to harsh criticism. Jeffrey Sachs was a leading
exponent of shock-therapy policies in Latin America in the mid-
1980s- the most brutal examples of which could be found in Bolivia
- and in Eastern Europe at the beginning of the 1990s. By 1997,
however, he was pillorying IMF and US-inspired policies in Southeast
Asia. Unfortunately, this didn't stop him from overseeing the imple
mentation in Ecuador of a ruthless austerity package in late 1998.
In the mid-1990s, Paul Krugman argued that increased free trade
and global commerce would pave the way for growth in all those
countries that joined in the globalisation process. As the crisis
deepened and began to affect Brazil in 1998, Krugman suggested
that the Brazilian president put in place coercive measures, for at
least six months, to regulate capital flows. Robert Reich wondered
aloud why the Clinton administration and other world leaders
continued to defend tight-money and austerity policies at a time
when such policies created a deflationary spiral. For one thing, he
said Third World countries should not be forced to make huge cuts in
public spending and to increase interest rates before they are eligible
for loans (Le Monde, 21 November 1998).
In the June 1998 edition of Transition, in a broadside against the
Washington consensus, World Bank vice-president and chief
economist Joseph Stiglitz denounces the IMF's shortsightedness. He
argues that although there is indeed proof that high inflation can be
dangerous, there is no such proof that very low inflation rates
necessarily favoured growth. Yet, for the moment, the IMF (and the
World Bank, too, lest we forget) continue to promote the low-
inflation dogma, even if this means destroying any possibility of
economic recovery.
Nor have editorial writers at the Financial Times held back in their
criticisms of the IMF: 'The IMF's way of dealing with crises must also
change. Its standard remedy was not appropriate for Asia, where the
problem was mainly private-sector debt. Too much IMF money was
used to bail out foreign creditors' ('How to change the world',
Financial Times, 2 October 1998).
Making a major break with tradition, Stiglitz has even 'dared' to
criticise the role of the sacrosanct markets in Latin America: 'The
paradox is that the panicking market has, for reasons totally
unrelated to the region, demanded that Latin American investments
deliver unreasonably high interest and dividends to cover the
perceived risks. By driving interest rates up and stock prices down, the