Globalization and Its Discontents - Joseph Stiglitz
I was given this book by a lefty idealist friend for my birthday in an attempt to reign in my free market views a little. Its actually written by an ex-chief economist of the World Bank, and is well argued. It altered my perspectives a bit. Though to be fair even Stiglitz feels that the IMF and World Bank can be a force for good with the right policies. Which is my view also.
Whilst the book does explain some economic terms, I imagine that a healthy understanding of economic theory would be desirable before reading it. (At least if you want to read it quickly.)
It can get a bit repetitive in places too.
My summary:
The IMF ****** up, in a number of different countries, by blindly applying basic economic theory (with all its underlying assumptions.)
My understanding of what Stiglitz's key lessons learned for the IMF are:
Privatisation - Can be beneficial. However its not good unless there is sufficient regulation in place to prevent abuses of monopoly power by newly privatised companies. (Think Russian Oligarchs)
Free flow of capital - Can be beneficial, but not in fragile emerging market economies. Limited capital controls over hot money flows can actually increase market stability. (Malaysia vs Thailand)
Bailouts - Lending huge piles of money to countries which are then used to bail out western creditors is not sound economics, as it distorts the risk vs reward equations banks use when lending to emerging economies. Banks that make bad lending decisions should be forced to eat the bad debts that arise, they shouldn't be bailed out by developed world taxpayers.
Employment - Is a key factor in economic models and should be included when considering what the best policy might be for a given country. Many past IMF policies have not taken employment levels into account.
Fiscal policy - Enforcing contractionary fiscal policies on countries in a downturn isn't fair. The US and European countries regularly use fiscal stimulus to try and soften/prevent recession, and it oftens works for them.