The IMF goes against its liberal doctrine

The more the rich augment their wealth, the less growth takes place. This time it is the economists of the International Monetary Fund who prove it, in a study published on Monday. Starting from the observation that the gap between rich and poor is at “its highest level in decades”, particularly in rich countries, the economists searched to identify the causes. According to them, when the revenue of the richest 20 percent increases by 1 percent, economic growth decreases (-0.08 points). “Suggesting that the benefits do not trickle down” to the poorest, they write. Conversely, a similar rise in the income of the poorest 20 percent boosts growth by nearly 0.4 points, according to the study. But the economists do not stop there: “More lax hiring and firing regulations, lower minimum wages [...] and less prevalent [...] trade unions are associated with higher market inequality”, affirms the study. Without considering that the “growing” influence of the richest and the stagnation of low wages tend to favour financial crises. The results of the report go against the grain of liberal theories, expounded, notably, by the IMF. Something for Christine Lagarde to think about in negotiations with the Greek government.