Article IV & Articles of faith

… There is a paper trail that details the economic agenda of the troika and the eurogroup, and it is thousands of pages long. Article IV of the IMF’s Articles of Agreement requires that member countries have regular consultations with the Fund, and the result of these meetings is a paper that describes the current state of the economy and makes policy recommendations. A look at 67of these Article IV consultations, as they are called, for the 27EU countries during the four years 2008–2011 shows a strikingly consistent pattern.

There are recommendations for reducing public sector employment and wages; cutting spending on pensions and health care; tightening eligibility for unemployment insurance, and other measures to increase labor supply; legal changes that reduce the bargaining power of labor; and other changes that would tend to increase inequality. Since these papers are a product of negotiation between finance ministry officials and IMF staff — headed by European directors — they represent an elite consensus of sorts that can be far removed from what the citizens of these countries would want or vote for. Not surprisingly, these are also the policies that have often been implemented — especially under pressure in the more vulnerable eurozone countries — since 2010….

… European authorities are trying to create a new image of mass unemployment, a reduced welfare state, and worsening income distribution as the new normal for Europe, just as stagnant wages and sharply rising inequality became the norm in the post-1980 U.S. economy. In their narrative, the electoral gains of right-wing, anti-immigrant, and racist parties are due to “anti-European” sentiment; in this one term they lump valid criticisms — from across the political spectrum — of the neoliberal straitjacket they have constructed for the eurozone. But it is their own policies and the resulting damage that has moved, for example, French workers to vote for the National Front. [Link]


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