◼ ECONOMICS Bloomberg Businessweek November 11, 201932
● Legislationtosimplifythefiscalregimebeing
debatedin congresscouldboosttheeconomyCorrallingBrazil’s
TaxCode
Atmorethan7 feet,it’stallerthanLebronJames.
Andwith41,266pages,it’sabout 85 timeslonger
thanthecollectedstoriesofFranzKafka.
ViniciosLeonciospentmorethan1 million
reais($250,100)toassembleanoversizevolumeof
Brazil’staxcodetodemonstratetheabsurditiesof
thesystem.Forfun,heperchesontopofhiscre-
ation.“It’sanattempttomakethestupidityofthe
Braziliantaxlegislationvisible,”saysthetaxlawyer.
FreshoffitssuccessinwinningcongressionalTHEBOTTOMLINE Lagardewillneedallherpoliticaland
technocraticskillstomaneuvermonetarypolicytowardgrowth,
despitebureaucracy,nationalism,populism,andjustplainparsimony.hadlostinterestinGreekPrimeMinisterAlexis
Tsipras’slengthyexplicationsandweredistract-
ingthemselvesontheirphones—Lagardenever
stoppedlisteningtotheGreekside,diligentlyand
determinedlyaskingquestionsandtakingnotes.
Onanotheroccasion,shedefusedtensionsby
handingaroundbagsofM&Ms.
Lagarde’spoliticaldexteritycouldbecrucialin
persuadinggovernmentstodomoretosupport
theeurozoneeconomy.She’sbuilta warmrela-
tionshipwithGermanChancellorAngelaMerkel,
andFrenchPresidentEmmanuelMacronis said
totrusther.SheusedherfirstspeechasECBchief
onNov.4 to call for “strength, resolve, and cour-
age” in responding to the challenges laid bare by
the current slowdown.
It’ll be a tricky balancing act. While the IMF has
a remit to advise member states directly and pub-
licly—for example, urging Germany this year to beef
up its digital infrastructure—ECB presidents must be
careful when stepping on policy terrain that gov-
ernments are sensitive about. Irk too many mem-
ber states, and they may come back and threaten
the ECB’s independence. Both Draghi and his pre-
decessor, Jean-Claude Trichet, repeatedly urged
politicians to deliver structural reforms and fiscal
support, to no avail.
At Governing Council meetings, Lagarde will be
one of 25 policymakers, each with an equal vote
if consensus can’t be reached, and most with far
deeper monetary policy experience than she has.
Some of her new colleagues were themselves can-
didates in the race to succeed Draghi. Lagarde told
Bloomberg Television last month that she’ll “start
with teamwork” in her new role, allowing disagree-
ments but, once a decision is made, getting every-
one to move together. She also said she’d hesitated
over taking the job—yet, after consulting people
who knew the requirements well, she felt she had
the diplomatic skills, political sense, and under-
standing to do it.
Lagarde is interested in issues that are relevant
to the ECB, such as inequality and the economic
impact of climate change. However, these stray out-
side the central bank’s primary mandate of price
stability. If she wants to update the organization,
her first step may be to investigate why it’s strug-
gling to achieve even that goal; to that end, she may
initiate the first comprehensive review since 2003
of how the ECB operates.
While at the IMF, Lagarde went out of her way
to bolster her profile and reputation for openness,
writing a blog and speaking to all types of journal-
ists, including a 2011 interview with Vogue, in which
she declared a passion for Chanel. She was knownfor walking to work in Washington, complete with
security detail. Sheets, the former U.S. Treasury
undersecretary, says that she played a key role in
bringing the IMF into the modern age. “The insti-
tution is no longer your father’s IMF,” he says. “It’s
more plugged in to the zeitgeist, which is absolutely
essential for remaining relevant in the debate.”
The one topic that Lagarde is expected to engage
in loudly at the ECB is female empowerment. Her
track record at the IMF isn’t especially impressive,
with women making up only about a fifth of the 29
senior managers listed on its website, though she
did appoint the institution’s first female chief econ-
omist, Gita Gopinath, in 2018.
Lagarde likes to recount that her own interview
upon joining the IMF in 2011 took place before an all-
male panel. Her arrival at the ECB will be déjà vu:
She’ll be the only woman on the Governing Council,
at least until the arrival of Isabel Schnabel, a new
German nominee for the Executive Board.
The men who will be her colleagues, how-
ever, should be on notice. Not too long ago, when
Lagarde was picked up at the airport during a visit
to Europe, she gave one of her official greeters a
once-over, inspecting him head to toe, and then
grumbled that, while wearing jeans was probably
acceptable on a Sunday, forgetting to shave was not.
�Jana Randow and Sandrine Rastello, with Viktoria
Dendrinou and Helene Fouquet“The institution
is no longer
your father’s
IMF. It’s more
plugged in to
the zeitgeist”