Christine Lagarde, the former French Finance Minister and current Managing Director of the International Monetary Fund, was treated to an Occupy-style mic-check at the University of Amsterdam on Tuesday. During a lecture at the university’s economics department, a group of students rose up to interrupt (or rather start) the discussion, confronting the Fund’s chief with a number of inconvenient questions.
Attendees had been asked to send in questions before the “debate”, but the protesters were angry that their critical notes appeared to have been ignored. By standing up and submitting the IMF chief to a mic-check, they tried to get their concerns across anyway: “why is technocracy better than democracy?” one activist asked. Another asked Lagarde why the IMF submits developing countries to Western imperialism, to which the upper-class moderator tellingly responded that “we will not do that question”.
In a sign of the academic freedom at the University of Amsterdam, and civil liberties in the Netherlands more generally, the students — who reportedly included Dutch Occupy protesters, Spanish indignados and Greek activists associated with ReINFORM – were immediately escorted away by security and event organizers. Dutch daily NRC Handelsblad reports that some of the event organizers seemed to act like a “gang” in their willingness to use physical force while removing the activists.
And yet the peaceful way in the protesters allowed security to remove them from the lecture hall revealed that the only real threat they ever posed to the Managing Director was an intellectual one; a threat organizers were apparently not willing to expose their special guest to. This is not a surprise: the IMF has been at the heart of a major controversy for its management of European debt crisis from the very start.
In January, Olivier Blanchard, the Fund’s chief economist, co-authored a rare self-critical IMF working paper in which he confirmed that the Fund has so far been much too optimistic about the ability of Europe’s heavily indebted periphery to cut its way out of debt. According to Blanchard, the IMF’s growth models severely underestimated the “fiscal multipliers” of austerity, leading to major forecast errors.
Last month, former IMF chief economist Kenneth Rogoff and his deputy Carmen Reinhart were publicly humiliated when a 28-year-old graduate student from the University of Massachusetts showed that their highly influential 2010 paper — in which the Harvard economists claimed that a debt-to-GDP ratio of above 90 percent significantly slows down growth — was riddled with statistical errors. This “dethroning” of Reinhart-Rogoff was taken as another major rebuttal of the global austerity push.
Yet the protesters in Amsterdam today pointed us towards a much more important question than the somewhat arcane debate over whether or not austerity can induce growth. Ultimately, as the students rightly pointed out, this is a matter of democracy. Do ordinary citizens still get to decide over the type of policies that affect their lives? If the people of Greece, Portugal and Spain truly ruled their own destiny — as the myth of representative democracy would have us believe — would they really opt for a life of austerity, unemployment and shattered dreams?
It’s time the economics profession got over the false internecine debates between the austerians (representing the right-wing of capital) and the Keynesians (representing its left-wing); the real questions are political. How is it that a small clique of unelected transnational technocrats gets to decide on the policies that condemn millions to a life of misery? This is the real puzzle we should be addressing — and we clearly can’t count on the economists to do that for us.