Christine Lagarde's shocking lack of compassion
Christine Lagarde, as head of the International Monetary Fund, is one of the global economy's most important figures, playing a pivotal role in the efforts to save the Eurozone. I'd like to think I don't shock easily when it comes to politics, and yet, the startling lack of compassion, not to mention knowledge of 20th century economic history, that Mrs Lagarde displayed in a recent interview in the Guardian left me, genuinely, speechless.
In the interview, Mrs Lagarde, when asked whether she had any reservations about imposing cuts she knows will hit children, the ill and elderly, brushes the question aside. First, she makes a comparison with Africa: 'No, I think more of the little kids from a school in a little village in Niger', before going on to assert 'As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time.' When asked whether she thought it was 'payback time' for the Greek people she simply replied 'That's right ... yeah.' And, what of the children? 'Well, hey, parents are responsible, right? So parents have to pay their tax'.
The headline very much appears to be, the Greeks, 'those people', are getting what they deserve. It may be useful to understand what exactly they are 'getting'. The output of the Greek economy, by the end of this year, will have fallen by over 17% compared to five years ago.
Unemployment is standing at 21.7%, while youth unemployment is at an eye-watering 54%. To be out of work, with no hope of employment, is the ultimate fear and humiliation in a capitalist economy. The ability to support oneself and one's family is at the very heart of what it means to be human, failure to do so can be soul destroying.
The experiences of a Greek electrician quoted by Reuters recently are typical of those across Greece. He says 'I have been jobless for almost a year and the unemployment benefit will soon run out. My wife is still working in retail but she hasn't been paid for three months, so how much worse can it get? We've hit bottom'.
Furthermore in Greece, only those who are employed or unemployed, but paying the, absurdly named, 'solidarity' taxes, are entitled to free health care, as one Greek mother recently discovered. The hospital where she had given birth refused to let her take home her newly born child until she had paid 1,200 euros in fees.
And, yet, Mrs Lagarde feels no sympathy for these people. Instead, she hides behind the argument that 'it could be worse'. Essentially, suggesting that anyone who isn't the 'lowest common dominantor' should not be entitled to the sympathy of others. Her attitude to the crisis displays an unflinching belief in austerity that verges on the sadistic. Compassion is a beautiful thing, a desire to help those in need is one of the most positive and enduring human traits. The managing director of the International Monetary Fund, especially now, desperately needs to be compassionate, to care for this crisis’ many victims. Instead, one can detect in her answers a smug satisfaction that the Greek people are being served their just deserts for years of laziness, profligacy and tax evasion. This retreat to negative stereotyping and ‘it serves them right’ economics is completely inappropriate.
In reality, the Greek people cannot, and should not, be blamed for their current woes. The fundamental problem is, and always has been, the indebtedness of the Greek government. For years Greek politicians simply lied about the size of their deficits, not only to the Eurozone, but also to their own people. This considering, can the average Greek be blamed for their government's fiscal problems?
Furthermore, there is a chronic lack of confidence that has, for the past few years, constantly undermined Europe's economy. Far from being the fault of 'those people', this is a result of the ineptitude, incompetence and inaction of Europe's political elite over the last few years, something I have written on more extensively before. Mrs Lagarde as head of the IMF and, before that, President Sarkozy’s finance minister, played a central role in that particular saga, and must share her portion of the blame.
C'est pire qu'un crime, c'est une faute.
Speaking from a practical perspective, Mrs Lagarde's belief that the answer to the current crisis is austerity, austerity and, then for good measure, some more austerity, is foolish. Of course, the Greek government must reduce its budget deficit, to do so it must make difficult decisions, raise taxes and cut public spending. But to pursue austerity with the speed and ferocity being demanded by the IMF and Eurozone can only be self-defeating. Without growth, fiscal consolidation is near-on impossible.
It may be useful at this point to use an historical comparison. In the 1930s many governments, on both sides of the Atlantic, responded to the growing economic crisis by making stringent cuts in public spending. Far from 'restoring confidence', this policy, in the words of Historian Mark Mazower, 'almost certainly deepened the depression'. Hopefully, Francois Hollande will be able to force Europe's elite to embrace a more explicitly 'pro-growth' agenda, although this is far from certain.
This interview has exposed a shocking lack of compassion and good judgement at the heart of the International Monetary Fund, one cannot help but feel a change of leadership and perspective are desperately needed, before comparisons with the 1930s move from the purely economic, to the political.