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Christine Lagarde is wrong! And not only for the obvious reasons

I have started interpreting Thursdays as days when I tell you about something I have read more generally. Naughty, I know! Soon we’ll be back to some exciting books; did you know that the Geek Manifesto is coming out? But for now, I’ll have to stick with the broad definition.

About a week ago, Christine Laragrde, the managing director of the International Monetary Fund (IMF), really put her foot in it by saying in an interview for the Guardian that she is more worried that African children have no clean drinking water than about the Greeks. This is obviously wrong for someone in her position but then compared to what the IMF and its directors have done in the past it is probably not out of scale.

Apart from that, this statement was wrong because it transmuted a structural, economic problem into a moral one. How so? Well, the moral issue in this statement is about the relative value of suffering. Is it more justifiable and right for Greek children and older people to starve in Europe than for African children to be thirsty? Once put like that, this statement has absolutely no ‘leg to stand on’: it seems to me that the two are equally wrong and there is no moral justification for giving priority to either.

There was an undercurrent in Lagarde’s statement as if the starving people in Greece should be held responsible for their situation because of a problem with tax evasion. Here she is also wrong: tax evasion is a structural problem that comes about because of incompetence, lack of infrastructure and corruption. These are all characteristics of governments. I would agree though that the Greeks know how to elect them (who am I to talk anyway; the recent behaviour of our government in the UK doesn’t really inspire confidence).

Lagarde was wrong because when it comes to blame in both cases it is with governments. Greek people are suffering economic hardship because of government’s failure to collect taxes; African children don’t have drinking water because of corrupt governments, on-going tribalism and war, and extreme inequality.


But this is not all. Lagarde, in fact, should be much more concerned about Greece than about drinking water in Africa because of the potential consequences. Many personal finance bloggers shy away from mixing the economy and politics. I have never been able to understand why; aren’t these two faces of the same coin. Isn’t it true that the state of the economy is linked to certain political developments?

History tells us that whenever there is economic hardship we ought to expect some political trouble; be it extreme governments on the political left or right, civil unrest or dictatorships.  Political unrest and revolutions are not the act of deprived people; these are the organised reaction of people whose living standards have declined sharply.

Such sharp decline in living standards we see in the South of Europe: Greece, Spain, Portugal, partially Italy. There has already been unrest in all these countries. To top it all, they all have a history of dictatorship: the rule of the colonels in Greece, Franco in Spain, and military dictatorship in Portugal.

Given that, if I were Christine Lagarde, I will worry much more about the hardship of the Greeks than about water in Africa.

Most people have been brainwashed into thinking that it is unfair for the rich countries in Europe to support the poor South. This is like being told that you are terminally ill and worrying about your pension!

What do you think?


8 thoughts on “Christine Lagarde is wrong! And not only for the obvious reasons”

  1. Hi Maria,

    “Many personal finance bloggers shy away from mixing the economy and politics. I have never been able to understand why…”

    As much as you adjust for tone, some subjects do NOT lend themselves to intelligent conversation. Wait until you are completely skewered for presenting valid and logical arguments on your own site, and you may choose your battles a little bit more carefully. I think there is a lot of good to do outside of politics. At the end of the day, you have to decide whether the energy expended defending your position and enlightening those who mindlessly regurgitate the dribble from the talking heads is worth your time. Alternatively, you may decide it is better to build a blog, business, platform, etc a different way. That’s my rationale for the lack of a political voice on my blog.

    I am not sure I agree with how you reframed the question. Personally, I don’t have a problem with Lagarde’s example at all. I think she is suggesting when you have a culture that is routinely lying at every level (from Joe citizen to the leadership) and who have a perplexing sense of entitlement, it is hard to see their plight as sympathetic as a disenfranchised culture suffering at the hands of a corrupt government. I think she is suggesting that helping one culture is the lesser of two evils, which is a fair “moral” argument to make.

    • @Roshawn: Wow, Shawn, it looks like this one really got you going. On the first point, you see, strangely I have never had a nasty comment on this blog apart from the porn site spam but it gets filtered out. This may mean that I have been playing it really safe or that nobody really give a toss about what I may or may not say (claiming irrelevance here).

      I have positioned myself in the ‘make people think’ kind of area – this is what I do, this is where my talent is (one of many :). I have said on a number of occasions that we never make decisions about monye; all these are about our life. I believe this works not only at the level of the ‘personal’ but also at the level of society. Decisions about the economy are much broader and incorporate decision about life-style, politics and ideological choices.

      Which brings me to the next point: I come from the Balkans and don’t believe that Greeks, or Bulgarians for that matter, have a sense of entitlement. We have survived there for a very long time – approximately about 18 centuries, really. For most of our shared history we have fought somebody because they wanted to take our state. But at the same time the state is ours – you expect that the state will ‘lend a hand’ just like you expect your land to produce crop: you look after the land and it looks after you. As to mass cheating, well, I am not sure how much of this is actually a fabrication of the media – there has to be an easy, emotional explanation so that people identify with it. I don’t doubt that in Greece some people don’t pay tax; but I recently discovered that in the UK there is rather significant barter and cash economy and this is not subject to tax either, not to mention the semi-legal methods of tax evasion that the rich every where use.Probably, the IMF and the EU should also recognise that admiting Greece in the euro (as the euro itself) was a big political project and the Greek economy was not ready for it. Once in trouble nothing could be done in Greece. The same is happening in Portugal and Spain at this very moment – there is a structural fault and it will have to be corrected.

      Saying that you do not care about starving retired people who have worked for forty years and PAID there taxes and pension contributions is still wrong.

  2. Go, Maria. Politics is an emotional issue. Personal debt, not so much. For me, that is the nutshell view of ‘political commenting shyness’. Are PF and political views entertwined? Of course they should be. Life can be so weird. Thanks for another thoughtful post.

  3. I LOVE when PF bloggers mix finance and politics – the two, in so many cases, are intrinsically linked.

    That said, I do see what you mean about her turning an economic problem into a moral one, and vice verse. What gets me is that the Greek problem has larger ramifications. The Greek issue is keeping Europe down, which is keeping the U.S. down, which – in turn – is probably keeping charitable contributions to places like Africa artificially low as people save more and help less. It’s a global economy, and everything’s connected; surely, Lagarde should have known that.

  4. I like good discussions also, but I don’t have much to say about this except that all quotes must be taken in context of their larger message. What was the whole purpose of her speech and the paragraph in which this statement was made?

    I’m just glad I don’t have the media following my quotes or I’d be in a hot bath too many days.


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